A farewell to ODA? The future of development finance Globale Verantwortung, KOO, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) Jan Vanheukelom 24 October 2013, Vienna Over decades, most donors kept on making empty promises to spend 0.7% of their GDP for official development assistance (ODA). With 2015, the target year to reach the Millennium Development Goals, in sight, discussions on development finance and the reform of ODA are in full swing. Many donor countries are in favour of broadening the definition of ODA, while NGOs are already worried about high levels of “inflated aid”. But to what extent does ODA actually matter for developing countries’ progress? In terms of volume, public domestic resources (tax), Foreign Direct Investment as well as remittances and other private finance flows are far more important sources of finance in most countries of the Global South. What are the differences between those flows, and are ODA and the 0.7% aid target still relevant for international development?

1. A farewell to ODA?
Look who’s talking?
Jan Vanheukelom
24 October 2013

2. What is the perspective in
receiving countries?
It depends who is talking:
• Donors in partner countries:
• NGOs:
• Partner country governments:
• Partner country organised citizenry:
• What about the voices of The Poor…
And to whom:
• Donor governments to their constituencies:
driven by ideas, mistrust, interests, politics..
• Partner country governments to donors
And how:
• Open? As Equals? With hidden agendas?
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3. How important is ODA for
them?
Again the question: who is talking? Case
studies European Report on Development
Nepal
Rwanda Cote
Peru
d’Ivoire
Income
status
LIC
LIC
Lower
MIC
Upper
MIC
ODA as
% of
GNI
4.7%
20.2%
6.2%
0.36%
Migrants
in EU as
%
4.1%
8.9%
9%
29.1%
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4. Voices from governments
• Nepal: the King, MDGs and ODA - DFID
• Rwanda: a domestic contract - UVIN
• Cote d’Ivoire: how sweet it is…
• Peru: couldn’t care less –
Voices from the poor:
• Security
• Dignity
• Freedom to enterprise, market, move, own …
When did ODA responded to such
aspirations?
• Burundi: police reforms
• South Africa: the Ladies in Black
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5. How can they profit from a
redefinition of ODA?
It depends on :
 Who is talking
 The impact of a redefinition on volume
of ODA
 The quality of aid
• Government of Uganda:
• Or journalist in Uganda: critical of budget
support –
• Government of South Africa
• Civil society in SA
• Government of Ethiopia
• Opposition in Ethiopia: critical of all aid
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6. A farewell to ODA? Welcome
Development Finance (DF)?
Doomed to repeat the same mistakes with
DF if we ignore the lessons from ODA
What is it that we have learned from ODA?
Some of my favorites (so I am talking)
• Political dimensions in development have been
underestimated
• There is some good diagnostics, but such a
slow uptake of the findings and messages
• Shift to domestic actors and power plays
• Shift from transactions to transformation
• Shift in emphasis: Global Public Goods/Bads
• Shift in emphasis: it’s not about us.
•
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7. What has “AUSTRIA” learned from the
ODA experience?
• In terms of he ODA architecture?
• What have been the effects of measuring
inputs? What about the outputs?
• What about the goals?
• How to achieve them?
• Whatever we come up with in terms of
transfers
• Understanding politics and institutions will
be crucial -
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8. Annex: Possible scenario’s (from
ECDPM ODA study 2012)
Scenario 1: Do not stretch ODA definition but
also report on other types of development
finance
• Broader aggregate (ODA is just one type and an
increasingly smaller share of FFD)
• Other official flows = more inclusive picture:
Concessional & non-concessional flows
Public & private flows
From both OECD and non-OECD countries
Type of flows: investment, loans,…
• …But many of these flows do not meet the
conditions for eligibility as ODA, either because
they are not primarily aimed at development, or
because they have a grant element of less than
25 per cent.
ECDPM
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9. SCENARIO 2: Adapt ODA definition and
reporting system
• Continue to focus on ODA alone but substantially
revise its definition
• Do not focus on global FFD but broaden the ODA
concept to incorporate climate change, security
assistance, private flows
• Option could go against recent trends in policy
discussion (such as Busan) in favour of more
inclusive concept of development
ECDPM
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10. Key conclusions of the study
1. Preference not to broaden ODA definition and
scope
1. The current FFD reporting system (mainly
revolving around the ODA target) is no longer
fit for purpose (cfr Busan)
1. Need for measuring a more inclusive FFD
picture Post 2015, including non-ODA types of
FFD and contributions by non-OECD members
ECDPM
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11. Useful (re)sousers
•
•
•
•
“Modernising the comparability of donor contributions post2015”, Keijzer, N., Spierings, E., Vanheukelom, J. (2012)
ECDPM
“Global Action for an inclusive and sustainable future”. The
European Report on Development, Chapter 2 – country cases
and political economy analysis
In response to a radical proposal from Anges Deaton to do
away with official aid, read Chris
Blattman:http://chrisblattman.com/2013/10/17/is-aid-aroadblock-to-development-some-thoughts-on-angus-deatonsnew-book/
“Aid as a second-best solution. Seven problems of
effectiveness and how to tackle them”, Manning, R. (2012),
UNU-Wider
www.ecdpm.org
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