OECD invites critiques as it prepares to track SDG funds

By Molly Anders 01 August 2016

The Organization for Economic Cooperation and Development is building a framework to track how much countries are investing in the Sustainable Development Goals. Photo by: OECD

In a tiny office in western Paris, Julia Benn, Suzanne Steensen and Raundi Halvorson-Quevedo will count the money the world spends on achieving the Sustainable Development Goals.

A three-person team within the Organization for Economic Cooperation and Development, Benn, Steensen and Halvorson-Quevedo are laying the groundwork for one of the foundational commitments of the Addis Ababa action agenda: building a framework to track development assistance, in its increasingly diverse forms, and incorporate incentives for donors and stakeholders to use the most proven and impactful instruments for sustainable development. They will present their framework for final approval to the United Nations General Assembly in mid-2017.

But the OECD, also home to the Development Assistance Committee that sets the rules for what donors can count toward official development assistance, is in some ways an odd choice for the job.

A member organization made up of the world’s most influential economies, the OECD historically facilitated aid and trade among the postwar powers. But in the last few years, the OECD has pivoted outward, inviting non-Western and developing nations to the table in an attempt to take the lead on issues such as global tax reform.

The OECD hopes to leverage the Development Assistance Committee’s work tracking ODA from the world’s biggest donors to fill out the rest of the picture, assessing a broader spectrum of bilateral and multilateral instruments with equal attention to donor and recipient countries.

But despite the pivot, the OECD’s membership is still dominated by the wealthiest economies in the world — a point of concern for some developing countries when it comes to measuring the SDGs.

“The OECD is painfully aware that they’re not regarded by developing countries as legitimate enough of an institution to do this kind of work,” Jesse Griffiths, director of the European Network on Debt and Development, told Devex. He and other critics argue that as long as the OECD continues to operate primarily in its members’ interests, it can’t be considered an agent for the world’s poorest.

If not, then who?

The new framework for measuring the SDG money is known for the time being as the Total Official Support for Sustainable Development. In order to be eligible for tracking, flows must support the means of implementation agreed in the Addis Ababa action agenda, align with recipient country development priorities and conform with current universal standards for aid and investment. TOSSD aims to bring transparency to the growing toolbox of development instruments.

As a complement to ODA, which measures development “effort” by donors, TOSSD will attempt to measure the full face value of what reaches developing countries, including the use of blended finance, risk mitigation and more broadly the leveraging and catalytic potential of ODA.

While Steensen’s team are in charge of putting TOSSD together, the framework’s draft document hints that it may not stay at the OECD indefinitely.

“This is a hugely contentious question,” write Homi Kharas and Andrew Rogerson in a blog for the Brookings Institution. “Neither of the most obvious answers, the well-organized but globally unloved OECD and the legitimate but under-resourced U.N. secretariat, are likely to be acceptable without some changes.”

By suggesting TOSSD could be later rehoused in an institution such as the U.N. or, as Rogerson and Kharas suggest, the World Bank or International Monetary Fund, the TOSSD team may be trying to reassure those OECD-skeptical developing countries for the short term.

Crucial governments and stakeholders in the developing world are less likely to get on board with the TOSSD framework while it’s owned by the OECD, Eurodad’s Griffiths said. He added that the OECD may want to develop the framework first, and then ask, “how can we get more people involved in using it?”

But Steensen said such critiques are par for the course when working out the ownership of global initiatives, such as those needed to implement the SDGs. “What we are proposing is really to have an international discussion about how we co-manage and co-govern [TOSSD] in a multistakeholder fashion,” she said.

This is the question the OECD is currently wrestling with internally, she said, because it’s unclear who will manage the system and its data repositories once TOSSD is in place. The OECD — already well-practiced at stashing the ODA data of the world’s biggest donors — hopes to collaborate with other regional and national repositories in order to collect the widest breadth of data possible, Steensen said.

The goal is to set up the data channels transparently and uniformly for all stakeholders, and build a system that compliments and perhaps also fills in the gaps of the OECD’s other DAC instruments.

But to do that, Halvorson-Quevedo told Devex that the TOSSD effort must do more to incorporate voices from developing economies. For example, some partners have been reluctant to share data with the OECD, and the institution’s technical savvy is hampered by its limited reach.

The potential exists with the help of other well-placed international groups, Halvorson-Quevedo said, but the global scope of the task is frustrating.

“From the very beginning it’s been an important priority for us to engage partner countries in this work,” she said, “but It’s been a real challenge for us and it's really a function of where we sit in the international system and how we are resourced.”

“We do not have networks in the developing world like the World Bank or the U.N. does, so we are really at an arm’s length from developing countries,” Halvorson-Quevedo said.

Meanwhile, Steenson added this is why engagement through international platforms will be crucial. She stressed that feedback, criticism and buy-in from the development community on the draft will go a long way in determining its success.

What counts toward change

The TOSSD framework is open for consultation until Sept. 9. The current draft suggests a structure and summarizes the thinking of the framework, and members of the international development community are encouraged to add comments or respond to a list of questions formulated by the authors.

Civil society groups have already raised a few concerns, some of which the OECD team acknowledges as challenges. Many of the concerns center on its aim to level the playing field for developing and developed countries when accounting for spending on global public goods.

“Take for example public research on an AIDS vaccine that could lead to prevention of millions of deaths in developing countries,” write Rogerson and Kharas. “Right now, this would not count as ODA because the promotion of the economic development and welfare of developing countries is not its main objective.”

TOSSD, by contrast, should make a point of accounting for those contributions which slip through the cracks of the ODA classification. For wealthier countries, getting credit for working toward global public goods presents another awkward dilemma — how to account for the developed world’s contributions to global public “ills.”

“The one really worrying thing is that donors might start counting credit toward the international objectives, for instance their efforts overseas to [mitigate] climate change,” Griffiths  said. “Now that’s OK, but then they should also get negative credit when they spend money extracting or subsidizing fossil fuels, for example.”

“The moment they go down that road, it just opens the door to bad practices,” he added.

Steensen agreed. “Obviously negative credit just wouldn’t work. For the U.S. for instance, the numbers would just explode,” she said, saying she doesn’t yet have a better solution for the “negative externalities problem.”

Another concern is how TOSSD will ensure donors aren’t getting too much credit when deploying certain private sector instruments, such as loans, guarantees and co-financing. Private sector instruments used for official development cooperation still aren’t widely regulated, though the OECD is also working on defining some of these tools, for example by establishing rules for  “additionality” to capture a clearer picture of development impact.

In the meantime, Griffiths worries donors could receive credit for assistance that’s getting returned to their coffers, such as loan repayments, guarantees, or even returns on investment, as is the case for development finance institutions.

Steensen emphasized however that TOSSD will only count what a donor “leaves in the recipient country.”

By emphasizing what reaches the recipient, Steensen said TOSSD can more easily track re-flows, like interest payments or repatriation of capital for a profit. This is also where “CSOs come into the picture,” she said, and can help assess the leveraging capabilities of assistance in-country.

Crystal clear

In the run-up to the SDGs, critics ask whether the OECD — whose members are arguably under the most pressure to hit SDG metrics — developed TOSSD not as a tool for transparency but as a way to maximize its members’ roles in the global goals.

But the objective is much bigger picture, Halvorson-Quevedo said.

“What we're really trying to come up with today is a better system by which we can start understanding the magnitude [of private investment],” she said.

“You've seen the [use of] private sector instruments increase a huge amount, and we’re not starting from scratch, we have quite a comprehensive tracking as to how you use these tools and what is moving through different institutions,” Steensen added.

The point is to use TOSSD to bring these instruments under a common framework, Steensen said, and “not to showcase” any one country’s efforts.

Steensen and her team stressed that TOSSD carries huge potential for bringing transparency to the numerous and sometimes ill-defined channels for development assistance available to aid actors today. But as the framework moves forward, uncertainty about who will take ownership makes it difficult to imagine a finished product.

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About the author

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Molly Andersmollyanders_dev

Molly is a global development reporter for Devex. Based in London, she covers U.K. foreign aid and trends in international development. She draws on her experience covering aid legislation and the USAID implementer community in Washington, D.C., as well as her time as a Fulbright Fellow and development practitioner in the Middle East to develop stories with insider analysis.


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