Setting the bar high for the G20 development agenda

Today’s post is from  Brian Atwood, chair of the OECD Development Assistance Committee.

Yesterday I had the opportunity to address the G20 Working Group on Development and to thank its representatives for the contribution they have made to a new global consensus on development. The Government of Korea deserves much credit for insisting on development as a crucial component of any formula to ensure global economic stability, and for promoting the Seoul Development Consensus—an ambitious effort to place development high on the agenda of the world’s economic powers.

An important upcoming event on this agenda is the High Level Forum in Busan later this year. This will be the fourth in a series of forums convened to look at urgent issues of development flows and their value for money. Earlier forums set forth what are now widely recognized principles of aid effectiveness. The principles were based on an accumulating body of evidence that increased development resources were not necessarily translating into enhanced performance—and a keen awareness that improvement was needed.

While the same concerns are still with us today, the dynamic for the Busan forum is entirely different. While earlier forums were donor-driven, today, developing countries are setting the agenda and are active and essential parties to the process. And they have high expectations from their development partners. They want better cooperation, ownership of their own development agendas, and alignment of resources to their strategies. They are asking for more transparent and more predictable resource flows. And they are looking for measurable results. They want DAC donors to coordinate better with non-DAC providers of assistance, and they want to know how this will be done. Finally, from Busan, they expect an agreement that can be monitored, to make commitments tangible.

As Chair of the OECD Development Assistance Committee (DAC) and someone who has taken part in the OECD/DAC and followed it since the 1990s, I can testify that among the members of this group, the awareness that we cannot operate in a donor vacuum has grown enormously since the first forum on aid effectiveness. Perhaps the most dramatic reflection of this growth has been the evolution of the OECD/DAC-sponsored Working Party on Aid Effectiveness. Today, half of the members of this forum represent developing countries. Civil society is at the table, as are the multilateral organizations, the UN, the World Bank, the IMF and the regional banks.

Even so, we know that there is still much the DAC needs to do. We know, for example, that we must:

  • be more transparent in all that we do, creating the systems that will give our partners and our own citizens real-time information on our resources and programs;
  • be more predictable about our plans, revealing our forward-spending intentions so that partners can also plan;
  • find better ways to integrate global funds and national needs;
  • reduce the fragmentation that impedes rather than facilitates strategic development goals;
  • come to the assistance of fragile states, who often have less funding than their needs and performance warrant;
  • clarify the role of official development assistance (ODA) to ensure that it supports the emergence of “the developmental state” and leverages other, larger, flows of resources without being captured by special interests;
  • and open our doors and our minds to those who are proud to practice what is broadly called “South-South cooperation”, nations whose standing to assist others is based on their own success in poverty reduction and the affinity that is a natural by-product of a shared experience with poverty.

Busan will be a success if it provides the political impetus to ensure that not only DAC members, but all development players follow through on what we know will produce positive development results.

We are on the verge of a new era of development cooperation. Development cooperation programs can catalyze, help build capacity and fill revenue gaps, but they defer to the ownership of our partners and their own, accountable governments.

The OECD/DAC believes that the Working Party on Aid Effectiveness will continue to be an indispensible vehicle for this new era. We also understand the need to engage the United Nations even more fully. Our operational relationship with UNDP and the UN Development Cooperation Forum are already strong, and they will certainly become even deeper as we sharpen the focus on developing country strategies and results. The DAC also seeks to engage even more fully with other national providers of assistance, with civil society organizations and with the private sector.

We recognize that if Busan outcomes are to be institutionalized internationally they must be monitored objectively. The OECD/DAC’s Development Cooperation Directorate—an entity that has no operational role and no programs that need rationalizing—is well placed to provide this monitoring, as it has done in the past.

One of the important challenges of Busan is to create a post-Busan structure that will engage political leadership at a high level, along the lines of a global development forum bringing together DAC members, emerging economies, leaders from the developing countries, civil society and the private sector. As a ministerial-level body, such an entity could bring more policy coherence to development, recommend ways to leverage ODA to attract private sector investment, monitor compliance with agreements reached in Busan, and act as a political voice for development.

To me, the message is clear: there should be no political obstacles to a meaningful agreement in Busan. An ambitious agreement at Busan will go far in reaching the MDGs, as well as goals set more recently by the G20. It is fundamental to set the bar high. The global challenges that confront G20 leaders—financial, security, food, infrastructure, health, education—cannot be solved without development progress.

 Useful links

 OECD work on aid effectiveness including the Paris Declaration and the Accra Agenda

Busan High-level Forum on Aid Effectiveness: An opportunity not to be missed

Today’s post is from  Brian Atwood, chair of the OECD Development Assistance Committee. It is also published in the print edition of Das Luxemburger Wort on the occasion of Les Assises de la coopération luxembourgeoises

According to a recent UN report, $2.5 billion (approximately €1.84 billion) will be needed to respond to the devastating drought and famine that has hit the Horn of Africa. Although the international community is working hard to provide relief, funding is still short and aid is still arriving too slowly. Despite the participation of dozens upon dozens of aid and relief organizations, there is no likelihood that the situation will improve before the end of the year.

In a recent blog, my colleague Stephen Groff, Deputy Director of the OECD Development Co-operation Directorate, said: “the crisis in the Horn of Africa is indicative of development failure. Early warning systems predicted it a year ago.” Early and coordinated action could have produced countless savings—in terms both of costs and, more important, of human suffering.

We must learn from this situation, because it highlights many of the challenges we face today in an increasingly complex development landscape. Global challenges such as food insecurity, climate change and armed conflict cut across national borders and reinforce the notion that development is a truly global priority. And indeed, the number of organizations and countries working on development is greater than ever before. Yet at the same time, this burgeoning activity—and the broad range of instruments being used to promote diverse outcomes—have brought increased transaction costs, overwhelming developing nations’ capacity to cope.

In 2005, when donor and partner countries agreed on the Paris Declaration on Aid Effectiveness, they signed up to a shared set of principles designed to reduce transaction costs, among other measures to improve the quality and impact of aid. The Paris Declaration was groundbreaking not only because of these guidelines, but also because it provided a series of time-bound, action-orientated commitments and targets against which partners agreed to be measured and monitored during the following five years.

Since 2005, these aid effectiveness principles have been embraced by developing countries, civil society organizations, international organizations, and donor countries alike. We have seen the Paris Declaration principles used as the foundation for a wide range of agreements, including the Bogotá Statement on South-South Cooperation (2010) and the Dili Declaration on Fragile States (2010). They have served as global norms for best practice, raised expectation levels from all sides working in development, and helped to focus divergent interests on ambitious but measureable goals.

Ensuring value for the money we spend on aid and development can mean a lot. A recent study funded by the European Commission estimates that a more ambitious application of the Paris Declaration principles and the subsequent Accra Agenda for Action—agreed in 2008 to accelerate implementation on key targets—would have saved the EU and its member states over €5 billion. The direct benefits on the individual donor side would have included reduced administrative costs, more cost-effective sourcing of goods and services, and more predictable and useful aid flows; numerous indirect effects in recipient countries would also have been expected. What’s more, should the EU countries have found the political will to coordinate their allocations of aid to countries, this €5 billion in savings would have more than doubled.

This represents, of course, a huge lost opportunity. And while the evidence gathered in the last round of monitoring of the implementation of the Paris Declaration shows us that we are headed in the right direction, progress is modest and reforms are far too slow in coming. Stronger leadership and sustained political commitment is needed to drive changes in both donor and developing countries. All partners in development must be willing to take ownership of their development agendas and hold each other accountable as they work together toward common goals.

The upcoming Fourth High Level Forum on Aid Effectiveness (HLF-4) in Busan, Korea (29 November-1 December 2011) will offer an opportunity for the international community to renew, refresh and reshape as necessary its commitments to making aid and development work better. The Busan forum is underpinned by developing countries’ demands for effectiveness—and for ownership of their own destinies. It is designed to push the development community to act in a more rational, less fragmented, form.

This is an opportunity not to be missed. With the unprecedented number of people coming to Busan—leaders from donor and developing countries, international organizations, civil society organizations, parliaments and business—we have a chance to forge a truly inclusive and effective partnership around development.

Let’s not make this another story—like the Horn of Africa—of missed opportunity and human tragedy, or the subject of another report on what could have been saved.

Useful links

 OECD work on aid effectiveness including the Paris Declaration and the Accra Agenda

Fourth High Level Forum on Aid Effectiveness Busan, Korea, 29 November – 1 December

Aid: Should the OECD hand over to the UN?

Click to find out more about 50 years of DAC work

In May, the Insights blog and The Guardian co-hosted a debate on the OECD’s role in official development assistance (ODA). Jonathan Glennie of the Overseas Development Institute argued that it was time for the OECD Development Assistance Committee (DAC) to hand over to the UN. Brian Atwood, DAC chair, replied.

In July, the ODI organised a debate in London, at the Houses of Parliament. You can listen to Jonathan Glennie and Brian Atwood , as well as His Excellency Ernest Rwamucyo, High Commissioner of Rwanda to the United Kingdom, by clicking on the links below. Daleep Mukarji, ODI Council Chair, introduced the debate.

Among other questions, the debate explored the growing role and influence of non-traditional development actors such as China, and what could be achieved at this year’s Busan conference on aid effectiveness, and beyond.

Audio downloads

Introduction and Jonathan Glennie (MP3, 18.9mb)

Brian Atwood (MP3, 16mb)

Ernest Rwamucyo (MP3, 25.1mb)

 Useful links

OECD work on aid effectiveness including the Paris Declaration and the Accra Agenda

Fourth High Level Forum on Aid Effectiveness Busan, Korea, 29 November – 1 December 2011

Climate Finance – Lessons from Aid Effectiveness

ESA’s SMOS satellite showed dry soil in Somalia even in April. Click to see an animation.

Today’s post is contributed by Stephen P. Groff, Deputy Director of the OECD Development Co-operation Directorate

Few will argue that we need to mobilize funds to support developing countries in dealing with the effects of climate change.

At COP16 in Cancun, Mexico, world leaders agreed to a set of “new and additional” pledges amounting to $30 billion in Fast Start Finance between 2010 and 2012, and an additional long-term goal of $100 billion per year by 2020.

This is good, of course, but not good enough. As we have learned over the past 50 years of experience with development cooperation, finance alone is not sufficient. Ensuring that funds are used as effectively as possible, and that they provide the best value for money, is essential for both providers and recipients.

So precisely what have we learned from decades of experience of development cooperation? What can we gather from the growing body of knowledge around “South-South cooperation” to inform how we take forward climate financing? A lot.

Of course, there are differences between climate change finance and development cooperation (or “aid”). Without a doubt, external finance for climate change is unique in terms of scale given the size and complexity of the challenge. Dealing with this will call for the transfer of an unprecedented volume of resources. The projected $100 billion per year, while intended to be from both private and public sources, comes near to matching the record level of annual “official development assistance” (ODA) flows: $129 billion in 2010.

But differences aside, the task of financing climate change action is ultimately about transferring large volumes of finance for specific development objectives across national boundaries – something we have been doing since the Marshall Fund was established to help rebuild Europe after the Second World War.

So what should we be thinking about in the run-up to COP 17 in Durban, South Africa? One of the first lessons we draw from the past 50 years is that greater volumes of development finance do not automatically translate into better development results. Externally led activities that do not build national capacity have proved unsustainable and ineffective.

Over the past decade, the principle of locally-led development has been confirmed and endorsed as the lynch-pin for improving impact from aid resources. In 2005, the Paris Declaration secured commitment from developed and developing countries around country ownership, as well as four more basic principles that are central to better results. The Accra Agenda for Action (2008) reaffirmed the centrality of country-owned development, likewise placing emphasis on the value of heterogeneity in development cooperation partnerships, and on the need for mechanisms to monitor and assess whether development finances achieve their objectives.

The Fourth High Level Forum on Aid Effectiveness in Busan, South Korea (29 Nov – 1 Dec 2011) will close a cycle that has largely focused on aid and mark a transition to addressing the challenge of how we apply what we know in order to make development – not just development assistance – work better.

These lessons must inform our efforts as we design instruments for climate change finance. In preparation for COP 17, negotiations are underway on a “Green Climate Fund” and other global instruments. They should ensure that external finance is driven by nationally-owned strategies, and channeled through recipient countries’ own institutions and authorities.

Keeping in mind other development principles endorsed in Paris – such as alignment and harmonization – also offers a real opportunity to avoid wheel reinvention. Climate change financing shares characteristics with vertical funds – and faces many of the same challenges – as it is provided to address a relatively narrowly-defined purpose. As negotiators look to build global instruments that will strengthen and support nationally-owned strategies, they should minimize complexity in funding channels and seek to avoid the undesirable characteristics of vertical funds.

Making harmonization of external flows a pre-condition and avoiding proliferation of sources of climate funding can radically reduce transaction costs that undermine nationally-owned plans.

With that said, a national strategy is not enough. Strategies need to be supported by enabling legislation and action plans that make them real. A recent study In Southeast Asia shows that, even where national climate change strategies are in place, the necessary frameworks are often missing. Weak domestic policy can lead to incoherent outcomes and fragmentation of funding channels – a mix that doesn’t bode well for success.

As we move forward, flexibility will be key in responding to evolving arrangements and contributing to institutional development at the country level. The aid effectiveness principles set out in the Paris Declaration can help us retain this flexibility, while ensuring that the design of new instruments is informed by the lessons we have learned from the past 50 years of development cooperation.

Useful Links

OECD work on climate change

African Climate Change Finance and Development Effectiveness Dialogue

The road to Busan

An editor I once worked for had a golden rule for his reporters and editors: We don’t do process. By that he meant that news stories should focus on what had happened, not the tedious ins and outs of how it had happened. Not bad advice it you want to write a vivid story, and many journalists would probably subscribe to it. Indeed, it may help to explain why there’s such a gap in public awareness regarding two of the landmark development declarations of the 2000s.

The first, the Millennium Development Goals, is known worldwide. Under eight main headings, it sets down a series of anti-poverty goals to be attained by the year 2015, including a memorable pledge to cut by half the number of people living on less than a dollar a day.

The second declaration is less well known, in part, perhaps, because it’s all process. While the Millennium Development Goals are about what development should seek to achieve, the Paris Declaration on Aid Effectiveness is about the processes developing and developed countries should follow to achieve those goals. The language of the declaration and its five core principles can be a little obscure, but the message basically boils down to this: Development won’t happen sustainably unless developing countries themselves – and not donors – take the lead in setting priorities and coordinating activities.

Since it was adopted in 2005, the Paris Declaration has been widely credited with helping to reshape relations between donor and developing countries – development expert Homi Kharas describes the process that created the declaration as a “watershed”. But whether enough has really changed is a matter for debate: It’s probably fair to say that developing countries still feel their donor partners could do more.

How much more? That question, and many others, will be keenly debated at a major conference on development and aid effectiveness in November in the Korean city of Busan. The issues on the table are previewed in an article by OECD colleague Stephen Groff in the latest issue of Global Asia.

As Steve points out, this forum – the latest in a series over the past decade – “will be the first international meeting of its kind to focus on aid in the new development landscape”. That landscape is, indeed, new: Traditional donors in North America and Europe are facing squeezed budgets and rising pressure to get value for money for their aid budgets. Newer donors, like China, India and Brazil, are becoming ever more important players in development. And there’s the evolving political and social situation, in which, as the Arab Spring has shown, things can change in a heartbeat.

Busan will look back at what the Paris Declaration, and other agreements, have and have not achieved. But, as Steve points out, it will also look forward. “In Busan, there is the opportunity to build a fresh — and flexible — global development partnership that will include today’s diversity of actors and approaches,” he writes. “In these times of economic uncertainty, the world simply cannot afford anything less than effective aid and Busan is a critical milestone on the path to more effective development.”

Useful links

OECD work on aid effectiveness

Paris Declaration and Accra Agenda for Action

Development co-operation at the OECD

For effective development, listen, learn and measure more than GDP

Click to go to the conference website

Our final post from the Annual Bank Conference on Development Economics (ABCDE) is from Jon Lomoy, Director of the OECD Development Co-operation Directorate

Hal Varian, Google’s chief economist, famously remarked recently that being a statistician would be the sexiest profession of the 21st century. After hearing discussions at this week’s Annual Bank Conference on Development Economics, I think he may be on to something. The conference has confirmed my view that good data is an essential ingredient for development. I’m not just talking about how data has illuminated many of the excellent conference papers and debates. I’m also talking about how data helps governments design and measure better policies for better lives.

So how should governments measure whether lives are indeed getting better? In a 2009 report commissioned by the French Presidency, Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi showed that the data used to measure success have a major influence on what societies strive to achieve – if we measure only GDP, we will strive only for growth.

But after focusing on growth for a long time, we now know that we need to look at a much more nuanced picture of societal progress – it takes more than income to make lives better. What about better health? What about a cleaner environment? These issues are important to people, and we need to start measuring them better and more prominently.  In this context, I am looking forward to seeing the outcomes of the OECD’s new Better Life Initiative, which allows individuals to build a personal index using their own better life indicators.

The question of what constitutes effective development and how it should be measured is also sure to figure prominently at the Fourth High-Level Forum on Aid Effectiveness in Busan, Korea (29 November – 1 December 2011). While all countries might agree that reduced infant mortality and higher literacy rates constitute “development”, I am sure that many other priorities will differ from country to country. Discussing these priorities and deciding how to measure them will be crucial, and will rely on solid data. 

Organisations such as the OECD and the World Bank, with their vast experience in producing and using good data, can certainly support such discussions. However, what we have learnt at this week’s ABCDE is that we also need to become much better at listening to our partner countries’ needs and learning how they see development. Now you may or may not view that idea as sexy, but I hope you agree that it is extremely important.

Useful links:

World Bank’s open data

Aid flows

OECD International Development Statistics online

Paris21 Statistics for development

Development aid: no more cogs tyrannic?

Click to find out more about 50 years of DAC work
In today’s post, Jonathan Glennie of the Overseas Development Institute continues the debate with OECD DAC Chair Brian Atwood on the role of the OECD in the architecture of international aid. You can also follow the debate in today’s Guardian.
Brian Atwood will be the moderator of New paradigms for development at the OECD Forum on 25 May. Speakers include Paul Collier and Dambisa F. Moyo.

 

In his reply to my blog suggesting a shake-up of global governance of aid effectiveness Brian Atwood, the chair of the OECD’s Development Assistance Committee (DAC), quotes his colleague Jon Lomoy, Director of the OECD’s Development Co-operation Directorate: “Hopefully in the future, there will be no more central cogs – rather, I see the OECD as part of very efficient machinery in which each of the pieces contributes to a truly balanced, equitable and prosperous whole.”

That is a good starting point, and one that I expect most agree with. The question is what it means in practice, and how to get there from here.

Let me first say that it is possible to exaggerate the importance of a change in global architecture. People on the ground, trying to make aid work on a day-to-day basis, will probably have more pressing concerns than the management of global bureaucracies that are at best only partially effective. On the one hand such changes are notoriously hard to achieve, let alone get right, and on the other hand even when changes are fairly positive, complex problems usually remain complex.

Most important of all is national level management of aid, regardless of global goings-on. If each country developed its own mini-Paris Declaration and insisted that all donors (DAC and non-DAC) stuck to it, aid effectiveness would improve dramatically. The Kigali Statement signed at the development partners meeting in Rwanda in November last year is an example to follow, as is the regional agreement of the Pacific islands back in 2007.

Nevertheless, as a government representative from Uganda said at a meeting I was at recently, “[Global aid governance] doesn’t matter that much on the face of it, but when you look a bit deeper, it does. I feel freer in, say, Malawi to discuss aid effectiveness than I do in Paris. And I would give different answers on a questionnaire from the OECD than I would on a questionnaire from [a more inclusive global body].” So it is an issue worth discussing, although not obsessing about.

What would an effective and inclusive global governance structure to support national level management of aid effectiveness look like? Actually, it is not that hard to imagine.

The OECD DAC Working Party on Aid Effectiveness (known as the WP-EFF) is an increasingly inclusive body comprising bilateral and multilateral donors, emerging economies, aid dependent countries and private sector and civil society representatives. It has emerged in recognition of the view that recipient countries should increasingly take the reins of this reasonably successful campaign to improve aid effectiveness.

The problem is that, as its name implies, its home and administrative support are provided by the OECD, a club of rich countries with all the instincts and interests of rich countries. To take one symbolic example, the first draft of the Busan outcome document is currently being written by the co-chairs of the WP-EFF (good) assisted by a team of OECD staffers (not good).

Anyone and everyone has been invited to submit ideas and comments, and a serious debate will take place in June onwards about the text. But as anyone who has been involved in international negotiations knows, the first draft matters. It not only needs to be neutral, it needs to be seen to be neutral. A Partner Country Contact Group is being established that has been invited to input a coordinated position, but this is not the balanced whole that Jon Lomoy envisions. 

A simple two-stage process would move us in the right direction. First, the WP-EFF should formally delink itself from the OECD DAC. The DAC club of donors would have the same status as a corresponding recipient club (like the Partner Country Contact Group) and both would help manage and support the WP-EFF. Crucially, the DAC would continue to play its vital role in monitoring data and indicators.

Second, the WP-EFF should eventually come under the auspices of the United Nations. The UN’s Development Cooperation Forum met in Mali last month to talk about aid effectiveness in an entirely separate process to the OECD-led aid effectiveness talks which culminate in Busan in November this year. It is plainly a waste of time and money to have two parallel processes claiming to oversee aid effectiveness, one based in the OECD, the other at the UN. It is also ridiculous to spend millions on an aid effectiveness process that does not involve China, Brazil or the Arab donors in any serious way.

The UN is the only body that can credibly bring all the different interests together under one roof, setting out rules of the game for the present era of development.

It is not the case, however frequently it is asserted, that the UN is ineffective while the OECD is effective. Of course it can be easily criticised – no global bureaucracies can escape rampant flaws. But possibly the most important globally agreed targets in history, the Millennium Development Goals, have been handled both inclusively and effectively by the UN.

And it is the MDGs which provide the model for this move of aid effectiveness coordination from the OECD to the UN. Few remember that the origin of the MDGs is the 1996 OECD report Shaping the 21st Century: the Contribution of Development Co-operation. The report set out six goals, and these eventually became the MDGs adopted and managed by the UN at the turn of the millennium.

In summary, the OECD should see Busan as an opportunity to pass on the responsibility and power of managing this important process to a body that is more representative of the interests of poorer countries which, ultimately, are the ones that matter. The first principle of the Paris Declaration is ownership.

Useful links

OECD work on aid effectiveness including the Paris Declaration and the Accra Agenda

Annual Bank Conference on Development Economics (ABCDE conference) 30 May 1 June at the OECD