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Last week, CGD and Social Finance launched a new high-level Working Group to consider Development Impact Bonds, a new mechanism to enable private investment in development outcomes. Owen Barder and Rita Perakis explain.
There is nothing new about the idea that development assistance is an investment: spending money today in the hope of future benefits. Putting money into immunizing kids or giving them an education is an excellent investment in the future well-being of those people. But if there are financial returns they are often far in the future and cannot be directly linked back to the investment. For many development investments the returns are mainly social, not financial. And the absence of financial returns on a reasonable timescale could be why there is no market for investing in development. There is a small pool of investors who are willing to be paid in good karma; but most would rather be paid in dollars, sterling or euros.
Owen Barder unpacks the results agenda, now so much discussed in the aid and development community, here. It’s brilliant. He sets out four different motivations of various parties in the community for their recent focus on the “results agenda”. I asked myself which motivation has driven my devotion to the idea of Cash on Delivery Aid (COD Aid).
Brian Atwood, the chair of the Development Assistance Committee at the OECD (and administrator of USAID from 1992 to 1998), was one of the key figures at last week’s Busan High-Level Forum on Aid Effectiveness. He had to help find a balance between broadening the alliance to include new and emerging donors with pushing for further and faster reforms among the main existing donors and multilateral institutions. He has shared with us his reflections on the progress made in Busan, and I encourage you to read them below. He argues that the agreement reached there has set a new direction in the effort to rationalize the global architecture for development.
“The defining division these days is increasingly: open or closed? Are we open to the changing world? Or do we see its menace, but not its possibilities?”
—Tony Blair, A Global Alliance for Global Values, September 2006
It is easy to be cynical about international summits and their carefully drafted communiqués. But they sometimes matter more than people expect. (If they didn’t, why would government officials put so much time and effort into negotiating the text?) Even if the text is often a bland compromise, these meetings can help to move an issue forward, by locking in a new consensus which forms the platform for further progress.
This post was originally featured on Owen Barder’s Owen Abroad: Thoughts on Development and Beyond blog.
Will the largest aid donors hide behind China to excuse their inability to make substantial improvements in foreign aid? How can Busan balance the desire to be more universal with the pressing need for real changes in the way aid is given?
Living in Ethiopia for the last three years, I saw aid working every day. I saw children going to school, health workers in rural villages, and food or cash preventing hunger for the poorest people. The academic debates about aid effectiveness seem surreal when you are surrounded by tangible, visible evidence of the huge difference aid makes to people’s lives.