3 must-know development finance stories in 2015

The war in Syria and global response have dominated headlines in 2015. This year we have seen a horrible regional conflict go truly global. It has now spilled aggressively across borders, setting a record 60 million refugees or displaced persons, according to the U.N. refugee agency. Nearly every donor nation in the world is playing some role in easing the crisis whether it’s trying to broker peace, contributing humanitarian assistance or accepting refugees. United Nations agencies are leading the emergency response, but are stretched thin and require additional resources and support as needs evolve. While there is currently no end to the conflict in sight, establishing peace and rebuilding Syria will remain on the international development radar for decades to come. Despite the persistent obstacles and open-ended questions surrounding Syria, 2015 was in many ways a milestone year for global development with new priorities and actors changing the development finance outlook like never before. Forward-looking plans and agreements are in place to guide future foreign aid spending. Emerging donors are opening up new funding streams. And with the help of the international development donors and partners, some developing countries are breaking the shackles of authoritarianism and others are rising to middle-income status so they can fund their own development programs. Understanding where and how donors are directing resources can influence the work of all development leaders and professionals. So in case you missed some of it throughout the year, here’s a recap of three important development finance stories Devex covered in 2015 and will continue to watch in 2016. Funding the SDGs The third International Conference on Financing for Development in Addis Ababa, Ethiopia, this past July kicked off an important period of global development goal setting. FFD3 sought to find ways to finance sustainable development and, more specifically, the post-2015 development agenda. Among the major donor commitments during the forum, the World Bank and six other major development finance institutions announced $400 billion in financing for the next three years to jump-start the next set of development goals, while the Islamic Development Bank pledged $150 billion itself. The outcome document, or Action Agenda, detailed more than 100 measures and addressed how technology, science, innovation, trade and capacity building can help support development. The conference proceedings were met with some opposition as developing countries and civil society organizations demanded more formal attention to domestic resource mobilization and tax justice, including a proposal to create a U.N. tax body to deal with tax evasion and avoidance. These issues were not fully reflected in the outcome document so expect them back on the agenda soon. In August, 193 U.N. member states agreed on 17 Sustainable Development Goals, or SDGs, which were adopted at the U.N. in September in New York, but big questions remain over if and how the international community can muster the necessary resources to adequately fund and achieve them. COP21 and the future of climate finance FFD3 was also designed as a precursor and input to the Paris climate talks in December. COP21, as the Paris talks are now widely known, targeted the overarching objective to establish binding commitments toward substantial reduction in greenhouse gas emissions. By many accounts, the 32-page agreement out of Paris exceeded expectations by rallying countries together to limit temperatures to 1.5 degrees Celsius above pre-industrial levels. To accomplish that goal, the public and private sectors pledged to decrease carbon footprints, increase investments in renewable energy, and double down on sustainable business strategies. More than 180 countries submitted national climate action plans that identify trillions of dollars in climate related needs and projects. Meanwhile, world and development leaders, including U.S. President Barack Obama and philanthropist Bill Gates, launched commitments to dramatically increase investments in clean energy innovations. The outcomes of COP21 will certainly result in increases in climate change programming and spending. But on the ground in Paris, Devex Reporter Michael Igoe stressed that the outcome document is as much an ongoing conversation as it is a final agreement and raised important questions about the prospects for adaptation finance. “Despite being the most significant climate agreement in more than two decades, it is still more of a platform for ongoing activism and discussion than a concrete program of action,” wrote Igoe who called the agreement a “jumping off point.” “What most of these emerging reactions have in common is a recognition that the Paris agreement succeeded in capturing on paper a moment of international resolve to confront the most pressing issues raised by climate change,” he assessed. Chinese foreign aid and AIIB The Chinese economy may be under some pressure, but the country continues to gain global development clout by expanding its bilateral foreign aid activity from Pakistan to the Pacific. In mid-2014, China released its second white paper on foreign aid which revealed the country’s total official development assistance spending at approximately $14 billion from 2010 to 2012. During that time, China provided aid to 121 countries. According to a Devex special report on emerging donors, China is the biggest player in the emerging donor space, with aid spending that rivals Western donors. This past September, as Chinese President Xi Jinping visited the White House, the U.S. and China agreed to explore greater global development cooperation. Analysts say more collaboration with Organization for Economic Cooperation and Development’s Development Assistance Committee donors could help the country move toward transparency and openness at a critical time when China is expanding its foreign aid portfolio. More open cooperation could also help China overcome its reputation for violating human rights and environmental standards during the implementation of large-scale infrastructure projects. One manifestation of China’s increased engagement in international development is the Asian Infrastructure Investment Bank which gained considerable traction this year. With the bank’s founding members signing the articles of agreement, AIIB appears on track to begin full operations early next year and reach its target of $100 billion in registered capital of which China has invested $50 billion. Despite dominating capital and voting shares, China has said that it will forego its veto power at the bank — a move to alleviate concerns about the bank’s transparency and governance. AIIB also released a draft safeguards policy and launched a recruitment campaign in 2015. 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