In 2019-20, donors will commit roughly $170 billion of public funding to an alphabet soup of international aid organisations, many of which their citizens may never have heard of. Each replenishment will be considered as a separate exercise, ignoring the reality that they are competing for limited donor resources.
CGD Policy Blogs
Economist Stephany Griffith-Jones on the role development banks can play in innovation, how they should interact with private actors and governments, and what new institutions can learn from their predecessors.
SDGs. Billions to trillions. South-South development cooperation. Development finance. If these terms resonate with you (positively or negatively), and you’ve never heard of the International Development Finance Club (IDFC), you should rectify that. At least, that’s the conclusion we’ve drawn after a year-long study of the IDFC and its member institutions. This work has culminated in a new CGD report, The International Development Finance Club and the Sustainable Development Goals: Impact, Opportunities, and Challenges.
CGD senior fellow Scott Morris on how the International Development Finance Club institutions could increase their development impact, and, in light of the passage of the BUILD act earlier this year, how the new US Development Finance Corporation can get off to a good start.
CGD research has become Exhibit A virtually every time the charge of “debt trap diplomacy” has been leveled against China in the media this past year. Yet, our research shows that many of China’s borrowers are managing their debts just fine and seem unlikely to fall into any traps.
In warning APEC leaders last week of China’s “constricting belt” and “one-way road,” Vice President Mike Pence provided the clearest signal yet that the US approach to foreign assistance will be shaped, if not determined, by competition with China. In the context of the administration’s trade war with China, this may not come as much of a surprise. But when it comes to the conduct of foreign assistance, it marks a striking turn away from the bipartisan approach to aid since the end of the Cold War—an approach defined around cooperation and one aimed at curbing the bad practices that arise when donors compete for the allegiance of aid recipients.
It is now abundantly clear that aid money will provide only a fraction of the resources needed to reach the Sustainable Development Goals. That realization came early on, and it was a central theme of the Addis Financing for Development conference of 2015, held before the SDGs were even signed.
Next week in Zambia, donors to the World Bank’s financing window for low-income countries, the International Development Association (IDA), meet to discuss IDA’s future. This “mid-term review” is both a stocktaking session and a teeing up of the next round of fundraising for the world’s largest concessional lending fund. Formal negotiations will commence next year, but the meetings in Zambia set the scene for those negotiations.
What would it look like today if major multilateral finance institutions like the World Bank had never adopted the climate agenda as a binding constraint on their operations? Unfortunately, we have a real-world approximation of that hypothetical in the form of Chinese development finance. At least, that’s a conclusion I draw from an important new report from World Resources Institute (WRI) and Boston University, Moving the Green Belt and Road Initiative: From Words to Actions.
In most developing countries, China's role as a creditor is modest—but in eight of the most debt vulnerable countries, Chinese lending is significant and growing fast.