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Reimagining Official Development Assistance: Why the Time for Reform Is Now

Official Development Assistance (ODA) is facing mounting pressure as global challenges such as climate change, pandemics and humanitarian crises demand increasing resources while development budgets are shrinking. Donor countries are responding to these challenges by shifting their resources away from ODA’s original aim of tackling poverty and supporting growth in developing countries, raising questions about ODA’s integrity and credibility amid growing calls for reforming the development finance system. In this context, and with less than five years remaining to achieve the UN sustainable development goals, we have published a new report bringing together reflections and proposals from leading experts and practitioners on the future of ODA, to inform policymakers considering pathways for reform.

The volume aims to provide a roadmap for rethinking the global development finance architecture—and ODA’s role within it—in a world that demands greater clarity, accountability, and inclusivity in addressing global challenges. While the authors —from the director general at UNOPS to a former DAC chair—broadly agree that change is needed to clarify ODA’s purpose, opinions differ on the best way forward.  Some advocate for incremental adjustments and a more cautious evolution, while others call for a complete transformation.

What are the pressing challenges facing ODA?

As noted above, ODA has been stretched to address a growing array of objectives, leading to a “crisis of purpose.”  At the same time, the changes over time to ODA rules and definition, while reflecting the changing nature of global challenges, have diluted ODA’s focus, undermining its credibility and effectiveness.

The challenges to ODA have taken place within a broader development finance system that has become more fragmented, with trust between countries eroding due to unmet commitments and inconsistent responses. Intensifying geopolitical tensions and the shift towards a multipolar world are challenging the traditional North-South paradigm. Furthermore, economic stagnation, fiscal constraints and the rise of populism facing many donor countries are also impacting the approach to development cooperation and are raising questions about the rationale for, and commitment to, spending resources for international purposes not directly directed towards advancing increasingly narrowly defined national interests.

Three pathways for reform

In a previous policy note, we identified three broad approaches to ODA reform that have gained traction over time, each presenting a distinct vision for the future of development finance: 1) A “Beyond ODA” concept, integrating a broader array of financing sources alongside ODA; 2) A tiered approach which separates country-focused ODA for poverty reduction from global public good (GPG) spending; and 3) A universal commitment, which supports the idea of introducing a pooled system where all countries contribute based on their ability to pay.

Various contributions to this compendium, informed by existing literature and debates as well as discussions from an expert working group on the future of ODA that took place in Paris last Spring, speak to these different approaches. In line with “Beyond ODA” thinking, Susanna Gable and Kalpana Kochhar's piece calls for an inclusive, fit-for-purpose financing framework to allocate development resources strategically and in an innovative manner. OECD’s Olivier Cattaneo’s proposed actions are perhaps more aligned with the tiered model as he suggests safeguarding ODA’s core objectives, while using its capacity to leverage private financing for GPGs. Our own proposal, along with Jean-Michel Severino’s, are also aligned with this second pathway, calling for the need to clarify the legitimate purposes of public spending beyond borders into distinct categories. Meanwhile, in their respective pieces, Gerardo Bracho from Mexico, and former DAC chair Susanna Moorehead caution against ambitious proposals that seek universal global commitments, such as Global Public Investment, questioning its practical implementation.

Risks of inaction outweigh risks of action

Without reform, ODA’s credibility and effectiveness will likely erode further. Outdated governance structures will deepen mistrust among partner countries, weakening ODA’s capacity to address global challenges. Spreading resources too thinly across competing priorities risks diluting our ability to support the world’s populations most in need and navigate an increasingly complex development landscape.

However, reform is not without its risks. Some argue that a radical reform could undermine existing commitments and transparency that forums like the OECD’s Development Assistance Committee (that governs ODA) bring and could face greater barriers to implementation. Furthermore, if new forums for discussion were to be created in parallel to the ones that already exist, the system risks becoming even more fragmented. Yet, while more incremental reforms may mitigate these risks, they could be insufficient to address the systemic challenges facing ODA. How to balance bold steps with pragmatic approaches requires careful consideration, and we hope that our report will provide a basis to discuss these issues in more depth.

A call to action and search for consensus

While today’s geopolitical climate—including ongoing conflicts in Europe, Africa and the Middle East—presents a challenging backdrop to have these conversations, we believe that it is essential to keep channels of international cooperation and communication open. And reforming ODA is an important step to ensure that development finance responds to today’s challenges, builds trust, and creates a sustainable future for all.

The next twelve months, including the Fourth International Conference on Financing for Development in June 2025, represent a critical opportunity to pursue a realistic and politically feasible ODA reform. A first step would be to reach consensus on the imperative of taking this agenda forward as well as on the purposes of ODA, on the governance structures required to reflect today’s diverse development landscape and on the means of addressing global challenges without compromising ODA’s core mission. This volume serves as a starting point for such discussions.

 

Disclaimer

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.


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