How Does the Aid System need to Change? Reflections from the OECD’s new aid boss
For the aid system, the SDGs call for transformation rather than “business as usual”. Everybody is talking the talk but how ready and willing are we to change our own ways of working to enable the transition and crowd in the actors who will play the greater part of delivering on the SDGs?
My own organization epitomises the challenges we face. I chair a committee within the OECD that was set up in a dualistic world in which rich countries extended aid to poor countries, mainly through state-to-state co-operation, but since then the world has become more pluralistic and the development community more diverse. Today many people live in middle income countries (like India, Brazil and Turkey) that both receive and extend development assistance, and an increasing share of aid comes from private foundations and donors outside the OECD.
So does that make the Development Assistance Committee (DAC) a relic of the past? Well, my job is to prove you wrong if that’s what you think. All institutions must constantly evolve to stay relevant. With the 2030 Agenda for Sustainable Development in place we need to speed up this evolution. At last week’s DAC meeting, members agreed to embark on a reform process to make sure the DAC delivers for the SDGs.
Other international institutions face similar challenges. A week ago, the UN Secretary–General Antonio Guterres presented his plan to reposition the UN development system. This consists of 38 concrete ideas built on eight principles. In particular I welcome the principles of accelerating the transition to implementing SDGs, focussing on financing for development and developing a new generation of UN country teams tailored to the specific needs of each country.
The reform of the DAC will be about adapting to the SDGs and increasing its relevance in a changing context. Let me give three examples of how I see the DAC modernising and adapting:
We should focus on ensuring development impact and mobilising resources. Aid still matters to low-income and conflict-ridden countries, but we need to constantly ask ourselves what works and how we can improve impact. To improve results, it is also more and more important that countries’ development policies stimulate and collaborate with other financial sources, such as private foundations’ investments, private capital and pension funds.
We should reach out to a broader range of development actors, beyond the DAC membership, to influence and be influenced, and to explore new development approaches. The eco-system of development stakeholders is changing with new donor countries, more private sector initiatives, NGOs and philanthropic organisations increasingly serving as sources of capital flows.
We should improve self-assessment and transparency. The core tasks of DAC are relevant and important, but we can improve our practices to increase access to information and hold each other to account.
Together with such necessary changes the DAC must keep delivering on its core functions. It has a unique role in upholding quality of development cooperation. The DAC must continue to define and measure development co-operation and through that be the guardian of the definition of Official Development Assistance (ODA). Setting standards for aid and facilitating members’ mutual accountability for development efforts will be no less important going forward. Peer learning and exchange of views is highly valued by the OECD members.
I have worked with the member countries since I took up this position last fall and to get the overall direction for this reform approved by the committee at this week’s meeting was an important step. The committee will now present a more detailed action plan to the high-level meeting later this year, when member country ministers can endorse it. (To see the general direction and arguments for reform in more detail – download the High-level panel’s report.)
Through a reformed DAC, members aim to contribute not only through development assistance but also through using its convening power to stimulate better practices among development stakeholders and facilitate new partnerships.
When we succeed the committee will have moved from a club to a hub, a hub not just for the rich countries that founded the OECD, but for all stakeholders involved in making development cooperation contribute to implementing the 2030 Agenda.
OECD is The Organisation for Economic Co-operation and Development, an intergovernmental economic organisation with 35 member countries, founded in 1960 to stimulate economic progress and world trade.
DAC is the Development Assistance Committee of the OECD since 1961. It is a forum for many of the largest funders of aid, including 30 DAC Members. The World Bank, IMF and UNDP participate as observers.
ODA means Official Development Assistance and is flows of official financing to promote the economic development and welfare of low and middle income countries.