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Development effectiveness for the SDG era: five reasons why we need a new agenda

Written by Romilly Greenhill

The ground-breaking 2005 Paris Declaration on aid effectiveness – and its successors in Accra and Busan – was important in its time. It reflected decades of evidence highlighting that aid was less effective than it should have been: failing to support government plans, lacking domestic ownership, and placing an excessive burden on countries receiving aid.

For the first time, donors and developing countries agreed a set of principles to improve aid effectiveness, specific indicators and targets, and a monitoring process.

But now that we’re in the Sustainable Development Goals (SDG) era, we need a new agenda on development effectiveness. There are five reasons why:

1. New financing options

Developing countries have a much larger range of financing options than they did a decade ago, and are being more assertive in their choices.

In Kenya, traditional donors now account for only 40% of external financing in the roads sector, compared to more than 90% in 2005, with China now the largest bilateral donor.

Donors need to provide the kind of finance that countries want: money that supports their priorities and strategies, and is delivered quickly. Otherwise, they risk becoming redundant.

Developing countries governments are not so interested in how donors work together, how transparent or accountable they are, or whether their aid is tied. These views may reflect government rather than wider country priorities, but they are still worth listening to in an ‘age of choice’.

The new development effectiveness agenda should include new commitments to speed up the delivery of finance.

2. New delivery models

Aid channelled to the private sector is growing in importance, especially aid channelled through Development Finance Institutions (DFIs). We assume that this aid should follow agreed development effectiveness principles – but I’m not so sure.

Investing in DFIs should probably be in line with country-owned plans, but there is a risk that this cuts off some investment opportunities that could be valuable for the country. Wider ‘democratic’ ownership of DFI investments may not always be appropriate, when investments need to be made based on profit and financial viability. Aid through DFIs should focus on results, but these cannot – and sometimes should not – be the same as the results that governments prioritise.

But one area in which development effectiveness principles certainly should apply is on transparency. The new agenda needs to commit to greater transparency for aid invested in private enterprises.

3. New goals

The SDG agenda includes a myriad of new goals and targets, but one cross-cutting objective stands out: to leave no-one behind. External development cooperation is critical to this, and this means changing the way we think about development effectiveness.

Leaving no-one behind will require support to many actors, not just governments, and so development effectiveness principles need to be adapted to cover, for example, aid to sub-national governments, civil society organisations (CSOs) or social movements. Using government systems or aligning behind government results frameworks may not always be the best option when the government itself is unwilling or unable to support marginalised groups.

The development effectiveness agenda needs to be less government-centric, and focus on a wider range of recipients (as well as providers).

4. New evidence

Even if the world had not changed over the past decade, it is not obvious that the long-term, predictable, government-led, planned approach underpinning the Paris agenda would still be the right one.

New research has shown that ‘doing development differently’ – applying a more flexible, adaptive, context-specific and locally driven approach – can be more effective, especially in fragile and conflict affected states.

This can also mean looking at ownership of different actors, not just governments, and adjusting results frameworks according to locally determined feedback. More broadly, the ‘doing development differently’ approach may question whether the target and indicator driven foundation of the Paris, Accra and Busan approaches is really helpful.  

5. New context

Finally, we need to get honest about Paris. Aid effectiveness is important – in the sense that no-one wants to see aid wasted or results failing to be achieved – but the Paris, Accra and Busan agendas have not caught fire politically, and are struggling even more in this era of ‘aid in the national interest.’

How can we make sure this process has real bite? The answer lies at the country level: only an international process that helps governments, CSOs, the private sector and other recipients of aid to better negotiate with donors, will have any traction. How to make this happen needs to be top of the agenda at the upcoming High Level Meeting of the Global Partnership for Effective Development Cooperation in Nairobi.

All these themes will be debated at the 2016 CAPE Conference – join us online or in person and help us to craft a new development effectiveness agenda for a new era.