Image by Gerhard Bögner on Pixabay
Whether time moves linearly or circularly, is subject to debate in the natural and social sciences. Meanwhile, the FFD4 process suggests the primacy of circularity, at least when reading the draft outcome document’s references to “Official Development Assistance” (ODA). In brief, the document calls for scaling up the volume of ODA (colloquially foreign aid) along with suggestions for improving the quality (effectiveness) and governance structures of ODA. However, these key points on ODA are largely similar to respective sections of the 2015 FFD3 outcome document.
A sympathetic interpretation of such continuity is that developed countries in particularly still need to deliver on their foreign aid promises regarding aid volumes and have to be reminded accordingly, once again. At the same time, such reform proposals, which have remained largely the same over the last ten years, may not be appropriate given the recent radical changes in foreign aid.
The ongoing abolishment of the U.S. Agency for International Development (USAID), major cuts of UK foreign aid and a series of similar cuts in other European countries represent the biggest shake-up in aid since the financial crisis in 2008. While announcements of the end of the aid paradigm might be premature in light of similar downturns and bounce backs in the past, the current moment does represent an opportunity to reflect on the underpinnings of aid more fundamentally. Such reflection can address foreign aid’s current crisis of waning support and eroding relevance by offering new answers to the current policy inertia.
For the FFD4 debate, I propose three structural reforms that go beyond the incremental approach of the draft outcome document.
First, the document should call for clear separation of poverty reduction related ODA and climate finance related ODA beyond merely “enhancing consistency and transparency”. Over the last decades, the purposes of ODA have proliferated and its accounting rules have become increasingly hollow to the point where most experts recommend a complete overhaul. Although there is widespread consensus among scholars and practitioners on the technical inadequacies of the current ODA reporting system, there is little political impetus for change among those predominantly Western governments with vested interests in upholding the current setup under the auspices of the OECD Development Assistance Committee. A fundamental reform option is to split reporting for poverty and growth related ODA from climate related ODA and align it with the UNFCCC process – essentially moving part of ODA reporting towards the UN.
Second, the effectiveness of foreign aid needs to be reconceptualised as a politically mediated goal accounting for the primacy of national interest among the so-called donor countries. The current draft calls for “country ownership […], focus on results, transparency, mutual accountability and strengthened partnerships”. This codification of effectiveness stems from 2005 and has become increasingly irrelevant politically. While these principles are desirable from a normative standpoint, they do not capture the political drivers of foreign aid in an “age of national interest”. Instead, donors want to exert geopolitical influence in competition with China or aim to please domestic audiences by focusing on migration aid spending. Reconceptualising effectiveness does not equate a submission to such interest-based aid. Rather, updated FFD-4 language asking governments to communicate own interests more transparently would constitute a fundamental change. A transparent and thematic-specific acknowledgement of self-interests renders them tangible for joint deliberation and accountability in aid relations.
Third, an underutilised but impactful dimension of aid reform lies in the bureaucratic structures of development organisations. How development organisations integrate evidence into their programming, how they train their staff and how these organisations learn from mistakes are decisive in determining effectiveness of foreign aid, but remain underexplored. Before Elon Musk’s misguided initiative to close USAID, the past USAID administrator Andrew Natsios in 2010 already described a “counter bureaucracy” that generated superfluous layers of bureaucracy focused on easily measurable indicators. Today, oversight of programmes can even cost more than the programmes themselves. Similar dynamics exist in the German aid system. Yet, a broader uptake of such findings is often met by a reluctance to discuss failure openly, which is peculiar in a sector where one can expect that “80% of things don’t work”. The FFD4 outcome document should therefore foster such reflection by addressing the internal reform dimension of development organisations. Specifically, the FFD process can call for an international comparison of organisational effectiveness and efficiency, also drawing on surveys of country-level perceptions of different development organisations for instance.
Amid the current turbulence of a foreign aid sector in crisis, an incremental approach that appears to be stuck in time should make way for bolder structural reforms as outlined above. Otherwise, the next FFD conference might not contain any references to foreign aid at all – despite the prevailing circularly of the FFD process.
This blog post is part of a series on the 4th FfD conference by the German Institute of Development and Sustainability (IDOS). Please also read the previous contributions to this series:
- The Group of 77 in the FfD negotiations, by Anna Novoselova
- How Seville Can Sow the Seeds for a New Spring: Financing (Sustainable) Development Must Turn Universal!, by Adolf Kloke-Lesch
- Trump and FfD4 – the Elephant in the Room Starts to Speak (and Destroy), by Sören Hilbrich, Yabibal Walle, and Clara Brandi
- Rationalising Tax Expenditures – a Core Element of Financing for Development, by Christian von Haldenwang and Agustín Redonda
- Forging Consensus: Navigating Trade Controversies in the FfD4 Zero Draft, by Clara Brandi
- Cumbersome but Essential – The United Nations Financing for Development Process Ahead of its 4th Conference, by Kathrin Berensmann, Clara Brandi, Sören Hilbrich, and Yabibal Walle
All blogs express the views of the author(s).
