A farewell to oda? Look who’s talking?

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A farewell to ODA? The future of development finance …

A farewell to ODA? The future of development finance
Globale Verantwortung, KOO, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE)
Jan Vanheukelom
24 October 2013, Vienna
Over decades, most donors kept on making empty promises to spend 0.7% of their GDP for
official development assistance (ODA). With 2015, the target year to reach the Millennium
Development Goals, in sight, discussions on development finance and the reform of ODA are
in full swing. Many donor countries are in favour of broadening the definition of ODA, while
NGOs are already worried about high levels of “inflated aid”.
But to what extent does ODA actually matter for developing countries’ progress? In terms of
volume, public domestic resources (tax), Foreign Direct Investment as well as remittances
and other private finance flows are far more important sources of finance in most countries of
the Global South. What are the differences between those flows, and are ODA and the 0.7%
aid target still relevant for international development?

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  • 1. A farewell to ODA? Look who’s talking? Jan Vanheukelom 24 October 2013
  • 2. What is the perspective in receiving countries? It depends who is talking: • Donors in partner countries: • NGOs: • Partner country governments: • Partner country organised citizenry: • What about the voices of The Poor… And to whom: • Donor governments to their constituencies: driven by ideas, mistrust, interests, politics.. • Partner country governments to donors And how: • Open? As Equals? With hidden agendas? Page 2
  • 3. How important is ODA for them? Again the question: who is talking? Case studies European Report on Development Nepal Rwanda Cote Peru d’Ivoire Income status LIC LIC Lower MIC Upper MIC ODA as % of GNI 4.7% 20.2% 6.2% 0.36% Migrants in EU as % 4.1% 8.9% 9% 29.1% Page 3
  • 4. Voices from governments • Nepal: the King, MDGs and ODA - DFID • Rwanda: a domestic contract - UVIN • Cote d’Ivoire: how sweet it is… • Peru: couldn’t care less – Voices from the poor: • Security • Dignity • Freedom to enterprise, market, move, own … When did ODA responded to such aspirations? • Burundi: police reforms • South Africa: the Ladies in Black Page 4
  • 5. How can they profit from a redefinition of ODA? It depends on :  Who is talking  The impact of a redefinition on volume of ODA  The quality of aid • Government of Uganda: • Or journalist in Uganda: critical of budget support – • Government of South Africa • Civil society in SA • Government of Ethiopia • Opposition in Ethiopia: critical of all aid Page 5
  • 6. A farewell to ODA? Welcome Development Finance (DF)? Doomed to repeat the same mistakes with DF if we ignore the lessons from ODA What is it that we have learned from ODA? Some of my favorites (so I am talking) • Political dimensions in development have been underestimated • There is some good diagnostics, but such a slow uptake of the findings and messages • Shift to domestic actors and power plays • Shift from transactions to transformation • Shift in emphasis: Global Public Goods/Bads • Shift in emphasis: it’s not about us. • Page 6
  • 7. What has “AUSTRIA” learned from the ODA experience? • In terms of he ODA architecture? • What have been the effects of measuring inputs? What about the outputs? • What about the goals? • How to achieve them? • Whatever we come up with in terms of transfers • Understanding politics and institutions will be crucial - Page 7
  • 8. Annex: Possible scenario’s (from ECDPM ODA study 2012) Scenario 1: Do not stretch ODA definition but also report on other types of development finance • Broader aggregate (ODA is just one type and an increasingly smaller share of FFD) • Other official flows = more inclusive picture: Concessional & non-concessional flows Public & private flows From both OECD and non-OECD countries Type of flows: investment, loans,… • …But many of these flows do not meet the conditions for eligibility as ODA, either because they are not primarily aimed at development, or because they have a grant element of less than 25 per cent. ECDPM Page 8
  • 9. SCENARIO 2: Adapt ODA definition and reporting system • Continue to focus on ODA alone but substantially revise its definition • Do not focus on global FFD but broaden the ODA concept to incorporate climate change, security assistance, private flows • Option could go against recent trends in policy discussion (such as Busan) in favour of more inclusive concept of development ECDPM Page 9
  • 10. Key conclusions of the study 1. Preference not to broaden ODA definition and scope 1. The current FFD reporting system (mainly revolving around the ODA target) is no longer fit for purpose (cfr Busan) 1. Need for measuring a more inclusive FFD picture Post 2015, including non-ODA types of FFD and contributions by non-OECD members ECDPM Page 10
  • 11. Useful (re)sousers • • • • “Modernising the comparability of donor contributions post2015”, Keijzer, N., Spierings, E., Vanheukelom, J. (2012) ECDPM “Global Action for an inclusive and sustainable future”. The European Report on Development, Chapter 2 – country cases and political economy analysis In response to a radical proposal from Anges Deaton to do away with official aid, read Chris Blattman:http://chrisblattman.com/2013/10/17/is-aid-aroadblock-to-development-some-thoughts-on-angus-deatonsnew-book/ “Aid as a second-best solution. Seven problems of effectiveness and how to tackle them”, Manning, R. (2012), UNU-Wider www.ecdpm.org Page 11