Aid in a changing world

Solheimmain

By Erik Solheim

The eradication of poverty and new sustainable development goals post-2015 will be agreed at a meeting with Chinese President Xi Jinping, American President Barack Obama and the rest of the world leaders at the UN in New York next year. The implementation of the goals will be at the national level. States will set their own priorities and lead the efforts in collaboration with developing partners.

Eradicating global extreme poverty by 2030 will require political will, the right policies and mobilisation of the required resources. Political will brought people out of poverty in Singapore, China and Brazil and continues to do so in Ethiopia and Ghana. Good policies are the most important thing. The only difference between a South Korea with $548 billion of exports and a North Korea with $3 billion is good and bad policies, not people, culture, religion geography or natural resources. Development assistance is important, but most of the resources required for sustainable development will come from other sources.

Leadership will be important on the global and national level, but technical details and funding frameworks must be worked out prior to the handshakes and signing ceremonies. This is where the Organisation for Economic Co-operation and Development (OECD) plays an important role. It has core competences on a range of issues relevant for poverty reduction. OECD work on policy areas such as development co-operation, tax, financing, investment, statistics, environment, and education are extremely relevant and directly linked to future poverty reduction policies. OECD countries also contribute the vast majority of development assistance in the world and the majority of foreign direct investments originate in OECD member countries.

The world is changing, and it is changing fast. The times when global affairs could be determined by the US, Europe and a handful of OECD countries is long gone and will never come back. The rise of the South is defining all of our global challenges such as poverty reduction and climate change. Countries like China, Mexico and Turkey are important providers as well as recipients of aid, and South-South co-operation is growing. The private sector also plays an increasingly important role in development. Private foundations contribute to global public goods, businesses invest and create jobs while private citizens send remittances worth more than official development assistance. The Global Partnership for Effective Development Co-operation is a response to this changing world. Established at the Fourth High-Level Forum on Aid Effectiveness in Busan, Korea, it represents a prime example of the kind of new partnerships that we need in today’s world, where the OECD works jointly with the UN to support developing countries, providers, civil society, and other key development players to implement better policies and improve resources for development.

erikquoteThe purpose of the Global Partnership is to identify policies and funding mechanisms for development problems. This can only be done in a partnership between development assistance recipients, traditional donors, new providers, private sector and civil society.

The Global Partnership provides a venue for discussion on policies for development and resource mobilisation. We know a lot about the policies required to end poverty and the details are outlined in the OECD Development Co-operation Report 2013. Public provisions of basic health and education, cash transfer programs, agricultural reform and microcredit schemes have worked before and will work again. In Busan, providers and recipient countries also agreed to the New Deal principles for engagement with fragile states and states in war and conflict. Developing countries must set their own priorities and providers must align behind the government and support with development assistance. Under the New Deal for Somalia, providers contributed one billion dollars to improve security, justice and government services under the leadership of the new government. Discussions can produce very real results.

Improving the effectiveness of development finance to end poverty and spur sustainable development is a priority of the Global Partnership’s work. Eradicating poverty and reducing inequalities while protecting the climate and our environment will require billions of dollars. Development assistance from OECD countries will not be enough, but it can be an important catalyst. Better coordination with China, Arab states and other new providers can increase development co-operation. There is no reason why Chinese infrastructure investments in Africa should not be complementary to OECD contributions. Furthermore, development assistance can better leverage private funds. Loans, guarantees and export credit can generate much larger flows of private investments. Taxes are important for development, and smart aid can help unlock these domestic sources of development finance. A Tax for Development project in Kenya has returned more than 1000% more than it costs while a new mining code in Guinea is set to bring in 1 billion dollars annually. The Development Co-operation Report 2014 will provide much more detail about the role of the OECD in development finance.

The purpose of the Global Partnership for Effective Development Co-operation is to identify policies and funding mechanisms for development problems. This can only be done in a partnership between development assistance recipients, traditional donors, new providers, private sector and civil society.


EriksSolheimsmlErik Solheim is the Chair of the OECD Development Assistance Committee (DAC). He is also serving as the United Nations Environment Programme’s special envoy for environment, conflict and disaster. Solheim previously served as Norwegian Minister for the environment and International Development.

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