Multilateralism: the international aid agencies, their owners and competitors: do we still need them all?
Mark Malloch Brown, Administrator - UNDP
Michael Roeskau, Director - Development Cooperation Department - OECD
Andrew Rogerson, ODI
1. Andrew Rogerson introduced the session, noting that it would follow up on the previous week's seminar. In terms of the framework on aid for 2005-2010, this session would deal with the multilateral and bilateral aid agencies, asking where their roles would take them, and addressing some of the controversies involved.
2. Mark Malloch Brown affirmed the need for reform in multilaterals. UNDP is under a process of reform which limits the amount of development tasks taken on in the interests of better performance. This has been welcomed by developing country governments but there is much more to do, namely, improving the coherence of UN country teams.
3. What goals are there for reform? The objectives for UNDP are the Millennium Development Goals, which are now broadly accepted. There are some worries that these may be short-lived, not just because the development community can be fashion prone, which can endanger sustainability. More importantly, the MDGs can be seen as being unimportant to middle-income countries, while in sub-Sahara Africa, and, broadly speaking, the least-developed countries, they could be too ambitious.
4. The MDGs do have relevance to middle-income countries. For those who will outgrow some of them quickly, the MDG exercise is still useful. In Eastern Europe and the former Soviet states, for example, it has revealed massive social poverty arising from concentration of private-sector activity in urban centres at the expense of other communities. President Lula of Brazil is an MDG campaigner because they are relevant to the Brazilian requirements on the global co-operation effort.
5. In terms of countries to which the MDGs are more 'relevant', current trends do show that halving those living on less than $1 a day will not be achieved until 2147. However, short of showing the MDGs as too ambitious, these trends are being received with outrage. People are raising vital questions as to why we should accept this.
6. Application of the MDGs is growing. At an advocacy level, local ownership by civil society organisations and governments can help to get the world involved, making the MDGs coherent in their aims. Donors (bilateral or multilateral) can then turn to other partners for implementation. The Monterrey Consensus stated that the MDGs would need a doubling of ODA (Official Development Assistance; this objective has not yet been reached, but is close. The MDGs have become a national policy issue.
7. The MDGs cannot be carried out without UNDP. The UN is neutral, not a creditor with its own interests, not in the pocket of particular countries and only offering disinterested advice. To achieve the MDGs, there will be a need for UN technical assistance and capacity building, not just advocacy. NGOs do not have the government stature and access. Neither can bilaterals offer a substitute for the UN position. DFID and others have a geographical focus whereby they attempt to help fewer countries in order to focus on their priorities. These countries are often the same ones for many bilaterals. This creates a two-class development world, not a performance-based one. No donor, multilateral or bilateral, has lived up to the ideal of a performance-based world, and there are many 'forgotten countries'. An issue for the UN, therefore, is global coverage. In terms of the development division of labour, the UN also supports budget support, from the new Global Fund and the Millennium Challenge Account, for example. However, managing these flows is critical, to stop local governments running before they can walk. The UN has a role in helping recipients manage increased resources flows. This is where its neutrality and its country presence are important.
8. Along with ODA management, non-ODA components will be improved, making successful trade rounds dealing with subsidies, for example. Here, more multilateral assistance is needed, not less. And doubling ODA can be achieved with the assistance of regional banks, the World Bank and the UN. At present, developing countries are far below the level of resources they require, and they need to have all they can absorb. To achieve this, we cannot simply grow the UN or the World Bank. Remodelling is necessary: they must be more accountable, democratic, and transparent in operations and results. Both local citizens and donor-country voters and taxpayers must be able to witness change. This will stop development from being the invisible 'black box' of the UN, the World Bank and the bilaterals. Clear results - getting children into schools, improving access to water, etc - constitute the global social agreement which underpins the MDGs, through the citizens of both North and South. Without this contract, the world cannot be sustainable. Mr Malloch Brown concluded that the multilaterals are critical to this objective. There is extra demand on the system, so we must deepen and further reform, not lessen it.
9. Michael Roeskau dealt with the role and substance of bilaterals (read presentation). There was systemic approach to the setting up of the Bretton Woods institutions and the UN, but the roles of the bilaterals and multilaterals have now taken over. And in the 1970s, funding to multilaterals was at 10%; now it is at 30%. This may, though, represent a peak, as figures for 2002 have shown a slight fall. Bilaterals are reducing their money to multilaterals. Does this represent a 'new bilateralism'? Probably not, but this certainly does not mean that they are dying. DAC, on its inception in 1960, had nine members. Now it has 23. Increases are true even for countries where ODA constitutes less than 0.1% of GNI. EU accession countries, for example, have their own aid administrations. Countries like Thailand, China and India tend to want to have it both ways; the DAC opinion on this is that it causes problems for harmonisation. Bilaterals, though, are a powerful tool in encouraging the public and mobilising funds and foreign-policy incentives: asserting aid is tantamount to national sovereignty. There is an important national role beyond the multilateral international scene. In the long-term, multilateral funding is better for those with small aid administrations, who do not have enough for an ODA commitment: they can give money to the World Bank HIPC initiative, for example, who can then design and manage the programme.
10. All donors are part-owners of multilateral aid institutions. They assert this power in financing issues, but not in coherence of aid policy. This gives great leeway to UNDP and the World Bank. The link between the bilaterals and multilaterals is only slight. There is some integrated momentum, but at country-level, the common objectives of the MDGs are necessary to help the impetus of common implementation. It would help more if there were more harmony on donor procedures, results-based management and aid effectiveness. A substantive area which is escaping the multilaterals and bilaterals is how to locate themselves on single issues. GFATM, for example, deals with global public goods, not on a country's priorities. Meaningful cooperation here between the multilaterals and bilaterals would be much better than competition. Mr Roeskau concluded by saying that the synthesis between the two areas would mean better coordination, leading to better methods on policies and their adjustment.
Main discussion points:
- How would the reforms stated affect the geopolitical context, particularly regarding the UN's neutrality in Iraq? The humanitarian context is where the UN's neutrality is likely to be compromised. The political and humanitarian contexts are too close to the conflict in Iraq and Afghanistan, for example. The UN should be self-critical; its public face is too Western. There has not been enough encouragement of Muslim relief agencies. UNDP needs to demonstrate that they cooperate with the coalition in Iraq but do not collaborate with it. The Red Cross has also been a target. This is because of an environment where the rhetoric of both the terrorists and those 'fighting' them is 'you are either for us or against us'. The middle ground is difficult to achieve. The UN is having meetings on regaining this space.
- In terms of budget support, what would be the role of recipient governments, and what would happen for poorly performing country governments? Won't we find that it is the countries with too much aid who are the ones who can't absorb it? What else can be done at a smaller level, with regional governments and civil society actors, for example? Budget support will not just be 'thrown at ministries'. The UN does support budget support to local national governments. But increased funds cannot be put through ministries without improving the human institutional capacity. Budget support and capacity building must go together. The latter is not an alternative. In poorly performing countries, there can be basic support to health and education, which will slowly build up. The issue of controlled capacity building is paramount - there will be no liberal largesse whereby too much aid is left to poor performers. In terms of alternatives to budget support, there will be franchising out and a sharing of power with civil society organisations. The innovation and experimentation of NGOs will empower this.
- On what criteria are countries chosen by bilaterals, and what can be done about forgotten countries? At present, countries are chosen on geopolitical grounds and according to whether they are old colonies, but there are no development criteria in this analysis. Multilaterals are better in the case where bilaterals had withdrawn their overheads. For example, the UN has 5-6,000 employees and 5-6,000 consultants in forgotten countries. An international system which can be trusted is needed. The MDGs are a way of herding forgotten countries back in (for example, landlocked and island states, whose infrastructure deficits have meant they have been isolated from markets), as they are not just quantitative, but also qualitative. They offer a platform for league-tabling, which helps reveal gaps.
- Should the UN both coordinate and implement? If not, which role should it focus on? To uphold the system, it should give coordination to competitors such as the World Bank and the EU, and consensus to donors and recipients on the MDGs. These should be under joint ownership, with the bilaterals also playing a role. Meanwhile, it should implement, because of its country presence, but not dominate. It must not crowd out the NGOs.
- What is the private-sector role in multilaterals: should it be more than the Davos rhetoric on commitment to global prosperity? There is a huge role for the private sector. In developing countries, the economy is often in private hands, but in enterprises of one person or less, often with great corruption. These should be brought into the mainstream, diversifying developing economies. Multilaterals and bilaterals can encourage public-private partnerships.
- If we don't meet the MDGs, will they disappear? And how would we learn from it? 2005 will be the critical year for this. This will be when the Five-Year Millennium Summit will take place in New York, to review whether we are short on the goals and funding. We must make donors take them on board more - the UK chairing of the G8 and EU is of vital importance.
- Will the MCA undermine multilateral efforts? This is, as yet, uncertain. It is a good experiment in hands-off development: if developing countries fulfil its criteria, then they will get money. However, it was not discussed with other donors. It is good that the US is giving more in aid, but coherence could be fragmented.
- What is the long-term life of the MDGs in the social area? What are the problems for it? In terms of social outcomes, there should be no problems. What fails is when we confuse them with successful development. MDGs transform countries as a whole but are an outcome, not a development strategy.
25 January 2004
This event, in ODI’s The Future of Aid 2005-2010: Challenges and Choices series, looks at the different roles of various multilateral and bilateral actors within the aid community, looking at where they are heading and what controversies may surround the different roles among them. ODI hosted Mark Malloch-Brown and Michael Roeskau to discuss these topics. The event was chaired by Andrew Rogerson.