Devex Newswire: Roll over ODA. Meet CPA instead

We are lifting the lid on official development assistance, or ODA, to explain why the countries receiving aid have no say over how most of the money provided by wealthy donor nations is spent.

Also in today’s edition: The criticism keeps coming, more than three years after the United Kingdom axed its aid department — as do the calls to restore it.

A foul ODA?

Official development assistance is the gold standard for development aid, a measure increasingly tarnished by falling flows to the countries that need it most — and by wealthy donors diverting more to pay their own bills for hosting refugees.

Even when ODA does reach the places it is intended to help, that does not mean all that money is genuinely in the hands of recipient nations to spend as they wish on the social and economic projects that will push forward development.

It is time to learn about another snappy three-letter abbreviation: CPA, or country programmable aid.

A Devex deep dive into the statistics kept by the Organisation for Economic Co-operation and Development has uncovered just how much the headline ODA figures mask the much-smaller sums of CPA made available — once items including humanitarian aid, debt relief, administrative costs, and NGO core funding are stripped out.

Miguel Antonio Tamonan has crunched the data, for Devex Pro members, to explain how CPA spending has barely budged even as total aid allocations have risen — and why it has dipped as a proportion of bilateral ODA.

There are 31 wealthy member countries of OECD’s Development Assistance Committee, but only nine can say they spent more than half of their bilateral aid on CPA over a two-year period.

Flipping the focus, Miguel has also shone a spotlight on the countries which received almost every cent of their bilateral ODA in a form that qualifies as CPA. In two countries, it was the entirety of their aid flows. He also digs into how much CPA actually went toward projects and how much was swallowed up in budget support.

Read the interactive analysis: How much ODA reaches low- and middle-income countries? (Pro)

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‘Fraud is not being found’

More than three years after the United Kingdom’s separate aid department was folded into the renamed Foreign, Commonwealth & Development Office, fresh evidence of the damage done is still being uncovered.

The week began with FCDO itself admitting to a “severe” risk of an ongoing loss of development skills and expertise — and the bad news has rumbled on with an exposé of how the so-called merger has contributed to a failure to tackle fraud in the aid budget.

The U.K. watchdog, the Independent Commission for Aid Impact, uncovered how FCDO’s new finance system, called HERA, “caused payment delays and staff having to use offline workarounds, heightening fraud risk.”

On a site visit to one African country, staff blew the whistle on “how easy” it was to “defraud the system,” also describing how HERA “continues to confuse and frustrate, consuming disproportionate amounts of staff time that could otherwise be spent on managing programmes.”

Inevitably, the U.K.’s steep aid cuts played their part. There was a lack of oversight or training and, extraordinarily, fraud liaison officers were spending 90% of their time on other duties.

The pitiful sum identified as having been swindled will astonish you. ICAI concluded it was utterly implausible and probably meant “fraud is not being found.”

Read: UK’s failure to tackle aid budget fraud blamed on cuts and merger (Pro)

ICYMI: ‘Severe' risk to aid work from controversial merger, UK government admits (Pro)

+ Catch up on all our U.K. aid sector coverage.

DFID debate won’t die

Will this continuing criticism influence the debate over whether to restore an aid department, which in the U.K. means “what will Labour do?” — given the opposition party is almost certain to win this year’s general election?

Keir Starmer’s party has yet to reveal its hand, as it toys with whether to settle instead for a ring-fenced agency with greater autonomy within FCDO, an option seen as less costly and disruptive by some Labour figures.

However, a powerful opinion piece penned for Devex by Romilly Greenhill, the chief executive of the Bond network for international development organizations, argues against any halfway-house approach, insisting only full separation will deliver.

Greenhill’s article points to the huge pressure on FCDO from the world’s multiple wars and how those conflicts in Afghanistan, Ukraine, Sudan, and now Gaza have exposed a government “severely depleted” of country knowledge and expertise.

A restored aid department would enable “a stronger focus on development across government, ambitious capability rebuilding, and high-level cabinet representation,” she writes.

Opinion: An independent UK aid department will rebuild our reputation (Pro)

ICYMI: Do Labour’s plans for UK aid stack up? (Pro)

The other Moreno

Luis Alberto Moreno has a high profile in development circles. Formerly Colombia’s minister of economic development, he spent 15 years as president of the Inter-American Development Bank, until 2020 when he stepped down and was controversially replaced by a Trump administration official.

Now, his businessman brother is also entering politics. Bernie Moreno won the Republican Senate primary in the U.S. state of Ohio last week as the candidate backed by Donald Trump. Bernie has supported Trump’s claim that the 2020 election “was stolen,” taken hardline positions on abortion and immigration, and says the U.S. should send no further aid to Ukraine.

Some believe he could help win over more Latino voters to Trump’s side ahead of the presidential election in November. It’s quite the 180 for Bernie, though. Until just a few years ago he held far more moderate positions, even describing Trump as a “maniac.”

This is an extract from the Weekender, our insider newsletter for Pro members and read by global development leaders. Not yet gone Pro? Sign up with the 50% discount offer now to get access. Pro members can also join our event next Wednesday on what a second Trump or Biden presidency could mean for U.S. aid.

Growing the US DFC

The United States International Development Finance Corporation, or DFC, is in better shape than its predecessor to meet the world’s ever-growing demand for infrastructure investment, but it “could and should do more.”

So argue two leading figures from the Wahba Institute for Strategic Competition at Washington, D.C.’s Wilson Center, who want the U.S. government institution to be unleashed — and who have seven ideas for achieving that.

The proposals put forward by Mark Kennedy and Jeffrey Kucik in their opinion piece for Devex cover everything from board structure and pay levels to the streamlining of environmental reviews and how to expand the list of nations eligible for investment.

They come as the funding gap for new roads, seaports, energy grids, digital connections and “other essential building blocks of economic growth” in low- and middle-income countries is predicted to mushroom to more than $4.5 trillion by 2040 — and as DFC is up for reauthorization.

“As the U.S. Congress begins talks to reauthorize DFC, emboldening the agency would allow it to activate more money for more projects, helping meet the critical needs facing emerging markets and developing economies,” the authors write.

Opinion: 7 ways the US DFC can make its investment more impactful

+ Join us on April 4 for a Devex Pro event — a conversation with DFC Deputy CEO Nisha Biswal to get her insights on where development finance is headed and what it means for global development. Save your spot now and get your questions ready.

In other news

A staggering 1 billion meals were wasted daily in 2022, according to a new U.N. study, which also tracks countries’ efforts to halve food waste by 2030. [Al Jazeera]

Thailand’s Parliament passed a same-sex marriage bill on Wednesday, marking a historic step toward becoming Southeast Asia’s first nation to recognize LGBTQ+ marriage equality. [France 24]

Spanish military planes dropped 26 metric tons of aid to Gaza in a coordinated effort with Jordan and co-financed by the European Union to alleviate food insecurity for up to 1.1 million people. [Reuters]

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