Facing harsh realities, the global development community confronts another fraught year

EL PASO, Texas — On the U.S.-Mexico border, the dysfunctional politics of aid today are starkly apparent. Two Guatemalan children seeking asylum died in United States custody there over the past several days. Just this week, thousands of asylum-seeking, impoverished families with small children fleeing violence and disorder in Central America were unceremoniously dropped in front of bus stations by federal authorities.

Meanwhile, a new presidential policy directive is expected soon, codifying a key theme of this White House on aid: That it should be proffered in exchange for friendship and favor, and withheld for disobedience — especially for countries whose citizens are making their way to the U.S. border.

Since the United Kingdom’s 2016 Brexit referendum and the election of U.S. President Donald Trump, much has changed. In 2017, the development community feared the uncertainty of rising nationalism and what it could mean for aid budgets, competent leadership of aid agencies, and much-needed aid reform.

But by the end of 2017, we had more clarity and a substantial silver lining: The May government in the U.K. confirmed it would support the 0.7 percent aid target, the U.S. Congress rejected huge proposed cuts by the Trump administration, key official appointments went to qualified professionals, the She Decides initiative launched by the Dutch development minister raised hundreds of millions of euros to partly fill the gap in family planning funding caused by the Trump administration reinstating the “global gag rule,” and the French president and German chancellor took up the leadership mantle for international engagement and assistance.

2018 was also an encouraging year in many ways. The World Bank got a significant capital increase. And, even with President Trump’s party dominating the U.S. Congress, there were many legislative successes in 2018 applauded by development experts. The U.S. midterm elections ensured the U.S. House of Representatives will be controlled by Democrats starting this week, further strengthening the funding firewall.

Unfortunately, 2019 may not turn out so rosy. Political uncertainty and nationalist, anti-aid pronouncements are taking a toll around the world. As we enter 2019, the development community is coming to grips with harsh realities.

For one thing, there’s the real prospect of a no-deal Brexit and the disruption that will cause to NGOs, implementers, and aid workers. For another, bilateral donors are under tremendous political pressure.

The leadership of French President Emmanuel Macron and German Chancellor Angela Merkel are in question as they confront domestic upheavals. The U.K. Department for International Development is losing budget and clout as British aid is channeled through other government departments. And the U.S. Agency for International Development faces policy uncertainty, with projects that stop and start, as it fights off an internecine battle with powerful Trump administration adversaries.

The funding picture isn’t pretty

The outlines of an established global politics on aid are beginning to come into focus, and it’s a fraught landscape. Aid is now openly and directly discussed as a tool to stem migration, achieve foreign policy objectives, and derive domestic economic benefits, particularly for major donors including the U.S., China, Germany, and the U.K.

As a result, even pro-international engagement donor governments such as Canada are becoming more cautious about funding ambitions.

This is a huge challenge for 2019 — with a major replenishment for the Global Fund coming midyear and a so-called rolling $2 billion replenishment for the Global Financing Facility only halfway completed. Then there’s the World Health Organization’s Director-General Tedros Adhanom Ghebreyesus’ plan to raise $14 billion, the triennial International Development Association replenishment, and the Green Climate Fund’s race to replenish its resources with doubled commitment from Germany, but without U.S. support.

The politics of aid budgets are leading to a greater emphasis on innovative funding models that crowd-in private investment. These are exciting developments with great potential but can also be used by anti-aid forces to weaken traditional development assistance. Last year’s bipartisan achievement authorizing a new U.S. development finance institution is already being used by some as an argument against grant aid.

The U.S. President's Emergency Plan for AIDS Relief, which was reauthorized in 2018 with support from the Trump administration, will need to navigate another difficult funding year as President Trump is likely to once again propose significant cuts for the grant-based agency.

What to watch

As bilateral donors contort themselves to these political forces, the multilateral development banks are taking on more importance, filling gaps in climate, health, and education. The World Bank, fresh off a successful capital increase, will be in the spotlight in 2019 as President Jim Kim rolls-out his most ambitious agenda to-date: the human capital index. The development community will be watching closely to see if this new measure of human development gains traction and begins to impact sovereign borrowing rates and projects.

Another factor to watch will be the World Bank’s pivot to fragile and conflict-affected states, a key element of its capital increase agreement. This will be particularly challenging with regard to increasing private sector investments. The International Finance Corporation invests less than 10 percent of its budget in these states and has committed to reaching multiples of its current levels. And the Multilateral Investment Guarantee Agency will need to increasingly tap reinsurance markets to dramatically ramp up its risk guarantees in fragile and conflict-affected states, which today make up a 10th of its portfolio.

A new education-focused fund, the International Finance Facility for Education is designed to work with MDBs and aims to launch in 2019. Even amid criticism, it joins an expanding list of cross-sector initiatives that rely on the MDBs’ growing financial and convening clout. And it will increase the focus in 2019 on education as a sector, including the key question of whether this is the year the world truly takes on the “learning crisis.”

Just as the World Bank’s HCI aims to cause behavior change among governments, the Millennium Challenge Corporation is designed to incentivize sensible policy with its so-called “MCC effect.” But MCC enters 2019 without a permanent leader, as the Trump administration’s pick languishes in the Senate. At USAID too, the organization chart is riddled with “acting” and “deputy” titles filling key senior positions, even after Administrator Mark Green unveiled an ambitious reorganization.

The development community is feeling the effects of this disarray and will be watching to see what happens to these and other open positions, especially who ends up leading the new U.S. International Development Finance Corporation.

Last month, USAID unveiled two major new policies for procurement and private sector engagement. The aim is to move USAID from a traditional grants-and-contracts agency to an innovative finance and private-sector investment agency. With just two years left in this presidential term, the agency will be making a push for rapid implementation of these policies in order for them to have a lasting effect.

At the Development Assistance Committee of the Organisation for Economic Co-operation and Development, 2019 is likely to be a critical year too. Once a sleepy donor-coordinating group, DAC is an emerging battleground as donors — in particular the U.K. and some European countries — seek to redefine official development assistance to meet their domestic political priorities. DAC has a new chair taking office this year, the former DFID official Susanna Moorehead, who will face the challenging task of facilitating a new era of innovative finance and private-sector investment for development without undermining the core idea of ODA.

One decidedly independent donor that is not a part of DAC is China. In 2018, China unveiled its new bilateral aid agency, the China International Development Cooperation Agency. Amid escalating tensions with the U.S. over trade, the development community will be watching to see how three major Chinese aid initiatives develop over the year: CIDCA, the $1 trillion Belt and Road Initiative, and the Asian Infrastructure Investment Bank — which has so far operated quietly but now touts 93 approved member countries, up from 57 when it launched two years ago.

Will a potential cold war between the U.S. and China extend to development cooperation?

The development community will also be watching Australia’s upcoming elections, with the pro-aid Labor Party projected to win. Last year, Australian aid dropped to its lowest level since 2005. Could the change in government lead to a reversal of the trend?

One area the current Australian government has prioritized is disability inclusion. And just last month in the U.K., DFID announced its first disability inclusion strategy. Disability inclusion could become a cross-cutting theme for 2019, taking on a new level of importance across the global development community.

Another hot topic that has been building steam over the past few years and could take on a new prominence this year is community health workers. Community health workers are increasingly seen as a key piece of the universal health coverage puzzle and an essential element to rolling out new health technologies at the point of care. But these workers are notoriously underpaid — if they are compensated at all — and deprioritized. Will the conversation lead to real commitments in 2019?

There is much to watch in global health as we begin this year, but two items stand out. The first is the ongoing Ebola outbreak in the Democratic Republic of the Congo. Conflict and political dysfunction are a frightening backdrop to a major global health challenge. The second is Modicare, the massive health insurance scheme announced by the Indian government to cover more than a half-billion people with health insurance starting this year. Observers have noted this announcement comes right before elections and faces huge implementation hurdles, but if Modicare is successful, it would represent a major global health achievement simply given its scale.

In 2018, the #MeToo movement came to the aid industry as #AidToo, coined by female colleagues at Devex. A key issue in 2019 is whether further tangible changes to promote gender equality and women’s leadership, and to fight discrimination and harassment at development institutions will be on the agenda this year.

With the triennial Women Deliver conference slated for June in Vancouver, Canada, this could be a moment when more organizations announce policy and leadership changes.

Uncertainty is the new normal

The U.S. government is currently shutdown, technically its third shutdown in one calendar year. This latest shutdown comes after a major rescission attempt by the Trump administration, which would have taken back money from aid agencies that was already appropriated by the U.S. Congress. This is a new kind of normal for the global development community.

More uncertainty abounds in the U.S. and beyond.

Will Senator Jim Risch of Idaho, who will replace the retiring Bob Corker as chairman of the Senate Foreign Relations Committee, even care about global development? And if that’s unsettling, what about the fact that Sweden — a major donor country with an annual budget of $6.2 billion — still doesn’t know, four months after elections, who will be prime minister, and, at a time of rising nationalism there, what that might mean for its aid policies?

How will the unexpected announcement of a U.S. troop withdrawal from Syria and drawdown from Afghanistan affect humanitarian and development efforts there? As Venezuela continues to spiral tragically downward into a full-blown humanitarian crisis, what’s the endgame for the country, its people, and its neighbors?

And as we are whipsawed from crisis to crisis, what about the “slow-motion car crash” of climate change? Or the rising threats to family planning efforts, including in Tanzania, that have led to a big miss on the global targets for 2020?

The U.S. presidential campaign kicks off in earnest this year, with Democratic candidates beginning to announce their intention to run. Global development issues — from climate to migration to foreign aid — may be on the ballot, and perhaps to a degree we’ve not experienced. Some may take hope from candidates with a pro-aid agenda, just as Merkel and Macron were seen as saviors for the very idea of global engagement and collective responsibility.

Perhaps 2019 will be a transition year, a kind of blip before normalcy returns. More likely, the main trend we’re in the thick of today — the growing politicization of aid leading to budget pressures and dysfunction — will be with us for some time, regardless of short-term election results.

The political genies that have been unleashed won’t easily go back in the bottle. For global development professionals used to tough operating environments, this one just happens to be closer to home.