As development agencies transition from their immediate COVID-19 response towards a medium-term strategy, their leaders see a clear need to rethink some key aspects of their underlying business models. The Development Leaders Conference 2020, hosted virtually last month by the Center for Global Development (CGD) and the Swedish International Development Cooperation Agency (Sida) brought together heads of bilateral development agencies and senior management from selected multilateral institutions to step back from their daily operations, take stock of progress, and review some of the fundamentals of their work. Now in its third iteration, this unique event brings together key decision makers in development, and encourages a frank and forward looking dialogue. While we held the gathering under the Chatham House Rule, this blog highlights some of the main discussion points and outlines what we learned from our peers.
The key question: What should ODA be used for?
Fighting the COVID-19 pandemic and its long-term effects will require greater financial resources in partner countries even as their domestic and foreign financing becomes more constrained. On top, the demand for donor funding has not only grown in size, but has become more diverse—namely the pressure development partners face to take on the challenges of climate change and expand their work in fragile contexts, while reducing poverty in partner countries. At the same time, fiscal pressures in donor countries weigh on the aid budget and intensify the demand to both demonstrate short-term results on the ground and incorporate broader domestic interests in their work. Hence, much of the discussions during the two-day conference centered around the role of official development assistance (ODA) and the principles of development effectiveness. Many among us felt that the Busan principles of development effectiveness were no longer sufficient to cover the full range of modalities covered by development cooperation. And while poverty reduction is still at the core of many development programs, broader bilateral interests, private sector finance, and the need to provide global public goods challenge the traditional perception of how to provide ODA most efficiently. Development leaders agreed on the need to go beyond a simple reevaluation of development effectiveness principles and instead rethink the evolving role and nature of ODA. Not surprisingly, there were different perspectives across participants. A few development leaders advocated for aid to be spent primarily on low-income countries while others called for a focus on global public goods. Some thought the best use of limited ODA was to strengthen local capacity while others advocated for its use to de-risk transactions bringing in private capital for low-income countries.
The challenges of COVID-19 enable us to build a more resilient community
Most actors, newer and traditional donors alike, confirmed that they are struggling with similar challenges in their pandemic response, and many colleagues highlighted the need for mutual learning based on trust and transparency. In light of the pressing needs partner countries face due to the pandemic, there was agreement to commit to a more systematic way of collaboration. To strengthen the resilience of the system, many of our peers advocated for a better partnership model by taking recipient county priorities and contexts more seriously. Some acknowledged their lack of engagement in country platforms and other collaborative instruments in partner countries pre-COVID and committed to reassess and use more of such tools to solve collective action problems. We discussed initial analysis which shows that more successful pandemic responses in both donor and partner countries are characterized by building on and strengthening local capacity. This enables increased flexibility when responding to shocks and changing circumstances. We also discussed trade-offs arising from a shift to long-term system and capacity building—where does this leave our benchmarking systems and our focus on outcomes and short-term results? Evidently, in this moment of transition we could only share lessons learnt, not final answers. However, there was agreement that incorporating a more localized approach will also be key when tackling other global challenges such as climate change with wide-ranging but equally diverse impacts on all development actors.
The Development Leaders Conference 2020 was an excellent reminder of the value of collaboration and mutual learning in times of unprecedented challenges. Despite agreement on the importance of ODA for the world’s poor, discussions on the vital question on the role of aid in a post-COVID world remain. This deserves further scrutiny, also with regards to the increasingly blurred line between poverty reduction and aid spent to address global challenges such as climate change. Additionally, we also need to ask ourselves how aid could be dispersed most efficiently. Besides the future role and the purpose of ODA, some more questions will need to be addressed moving forward:
- How can we ensure that we strengthen the resilience of “our institutions” to face the challenges of the future?
- Which principles of effectiveness should be applied to the “non-traditional” uses of ODA and, equally, to financing sources other than ODA?
- What is the role of public aid spending in leveraging private sector finance?
- While almost all agencies expect increased resources to be spent on climate, which development cooperation instruments are efficient and useful in dealing with climate change?
Given the momentum of these conversations, we commit to bridge the year until the next Development Leaders Conference by hosting a series of virtual meetings to encourage continued discussion and collaboration.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.