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May 31, 2018

Shifts in development


May 31, 2018

I attended the 6th Biennial High-level Meeting of the Development Cooperation Forum (DCF), which took place at the UN Headquarters in New York between May 21 and May 22.

The DCF is the principal platform for global policy dialogue on international development cooperation and is open to all UN member states and other relevant stakeholders. The 2018 DCF addressed the strategic role of development cooperation in achieving the 2030 agenda of building sustainable and resilient societies.

It is disconcerting to note that the policy dialogues at the international level, and the political discourse and debates at the domestic level in Pakistan are not up to the mark. Across the world, there are discussions around the 2030 Agenda and Sustainable Development Goals (SDGs); climate change; the Nationally Determined Contributions (NDCs); and several related issues that seek to make our planet a more ecologically sustainable place for our coming generations. Governments in developed and developing countries are making policies and plans on how to leverage efforts to achieve these ambitious and multifaceted development objectives.

Unfortunately, the ultimate goal in Pakistan is to ‘conquer’ Islamabad for the next five years. To this end, old foes have become friends and new alliances are being cultivated. There is not even an iota of shame in the way people change like the wind.

Let’s consider the three key messages that were put forward at the DCF meeting in New York. The first message is that the role of private financing as well as south-south cooperation (SSC) is vital to achieve sustainable development outcomes. While various speakers at the meeting reiterated that aid providers need to increase the volume of aid, it was also argued that private financing and SSC are critical to achieving SDGs. The message was that while aid is essential, private investments are more than 100 times greater than aid and far more important for poverty reduction; economic growth; job creation; and the transfer of knowledge and technology.

However, there must be an enabling and conducive investment environment characterised by rule of law; an independent judiciary; respect for private property; strong anti-bribery and anti-corruption legislation; regulations and enforcement; and strong legal protection for investors. The need for an efficient ICT and transport infrastructure as well as the availability of required skilled workforce are also important.

In the context of Pakistan, whether it is CPEC or non-CPEC investment, these templates should be earnestly followed to attract maximum private financing and investment in various sectors of the economy. A country of over 200 million people is a huge market for any potential investor. Nevertheless, political stability is vital. An unpredictable and unstable political environment is a nightmare for investors.

Besides the critical role of private financing, the second message for aid donors at the meeting was to increase both the quantity and quality of their development assistance. Although the level of aid has considerably increased in recent years, most donors -- particularly the largest ones -- need to accelerate their efforts. According to the 2017 Development Cooperation Report of the OECD, official development assistance (ODA) reached an all-time high of $142.6 billion in 2016, representing 0.32 percent of the gross national income (GNI) of developed countries.

Even though the overall levels of development assistance have continued to record upward trends since 2000, there are significant variations among donors and their aid-allocation policies and practices. In terms of aggregate development cooperation, the largest aid-providers are Japan, Germany, France, the US and the UK.

With regard to donor development cooperation efforts and the commitment to achieve the ODA target of 0.7 percent of their GNI -- as agreed upon under the UN resolution back in 1970 -- only Denmark, Luxembourg, the Netherlands, Norway, Sweden and the UK have been reaching that target. As a result, only six of the 29 DAC members have achieved or exceeded the UN target while a majority of developed countries providing development cooperation lag behind in achieving that mark. In view of this, most stakeholders have asked donor governments to increase their aid level to achieve the 0.7 percent symbolic mark.

The third message emphasised the qualitative improvement of development financing. It was reiterated at the meeting that though the quality of aid is improving, much remains to be done to achieve its true potential of development effectiveness. In order to improve the quality of aid, efforts must be made to provide support to poor countries where aid is needed the most. Offering untied aid, giving ownership to recipient countries and ensuring transparency will also have an impact.

The DCF meeting discussed challenges as well as opportunities to achieve the SDGs -- financial as well as non-financial. But there was no mention of reforming the UN systems so they can play a more efficient role in the development process. For a long time, there has been considerable criticism on the role of the UN system and how it has not been able to achieve what its aims.

Graham Hancock, in his book ‘The Lords of Poverty’ stated nearly three decades back that “more than 80 percent of all the money passing through the UN system is spent on its 50,000 staff”. Regarding the overall failure of the system, the author asserts that “over almost [50] years they should have dealt systematically with the problems they were established to solve, closed up shop and stopped spending tax-payers money”. This seems to be an extreme position. But the reality is that whether it is the UN development bureaucracy or that of the overall international aid regime, there has been significant disillusionment with the way that it has been operating for decades. Although trillions of dollars have been spent, no commensurate development outcomes have been witnessed.

According to an article published by a colleague who has been conducting research on the UN development system, “with its 34 entities and an annual revenue of US$ 26.7 billion in 2015, the UN development system is by far the biggest arm of the UN and by all accounts an important actor in the multilateral system”. The article argues that UN member states concur that its development system needs substantial reforms as the 2030 Agenda demands.

Although there is a consensus within the international aid and development community that business as usual is no option and there must be radical shifts in the way aid is being disbursed, a great deal needs to be done to restore the trust of the people in the UN and other multilateral and bilateral bodies involved in international development.

At the end of my presentation in an international conference in Berlin two years back, a participant -- a professor of economics from the University of Heidelberg -- asked me if the world can really achieve the SDGs by 2030. I replied that, in view of the current global challenges, it seems to be a distant dream. I explained that perhaps at the end of 2030, the international aid and development regime could come up with another set of development targets called the ‘comprehensive development goals’ (CDGs). And the business of aid would continue in one form or the other. I hope that I’m proved wrong.

The writer is a postdoctoral research fellow at the German Development Institute at Bonn, Germany.

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