Setting out a new path for development aid

    Organization for Economic Cooperation and Development’s Development Assistance Committee Chair Erik Solheim at the 2016 Global Forum on Development. Photo by: Andrew Wheeler / OECD / CC BY-NC-ND

    World leaders have agreed to the most inclusive, diverse and ambitious development agenda ever: the Sustainable Development Goals.

    By doing so, we acknowledge that development challenges are global challenges, which have to be solved in a green and environmentally sustainable way. Reaching these goals will require all hands on deck, working together.

    Over the last two decades we have made huge progress reducing poverty and are on track to eradicate extreme poverty by 2030 — but success is still elusive. For the poorest countries, there is no doubt that aid plays an important role in supporting their plans and paths to development. For countries such as Malawi, Tanzania and Mozambique, aid is essential for health, education, and the creation of livelihoods — without which, human development and an end to poverty cannot be achieved.

    The member countries of the Organization for Economic Cooperation and Development’s Development Assistance Committee donated a record high $131.6 billion in 2015. That is a lot of aid money contributing to a better world. But we need to remember that we will not find the really big investments in development cooperation. Both aid and private investment are needed to move the world. By believing in the market and the private sector, China, Ethiopia, South Korea and other countries have had enormous development success.

    The debate within the development community on the importance of markets and private sector is a thing of the past. Aid and investment must go hand in hand.

    And we need to recognize that the world has changed a lot since the Marshall Plan was established in 1948. We must move away from the perception that the OECD-DAC is an exclusive club of traditional donors that alone takes decisions on what counts as development cooperation. We need to change this, so that growing economies and recipients of aid have an active role in how the decisions are made.

    The world no longer consists of a small group of rich countries giving development aid to a far bigger group of poor countries. Some developing countries are richer today than some of the developed countries.

    Private investments are far more important than aid in many countries. There are an ever growing majority of countries being both recipients and providers of development aid. And big countries such as China and foundations such as the one created by Bill and Melinda Gates play a major role in developing countries, contributing far more than some OECD member countries.

    Setting out the rules for development aid is important in order to be able to compare and measure different countries contribution to poor countries. A shared quality framework is also an important to tool to evaluate the success of the money given. Throughout the years, the OECD has developed ways of measuring this by peer reviews and extensive regulations for development aid.

    Even though the DAC has modernized the work and included more partners in recent years, we need to better reflect today’s world. Our future work will have to be even more inclusive and broader. China and other major countries, recipient countries, foundations and others need to have an active role in setting out the path for the future development aid.

    That is why we now set down a panel that will propose options for a transformation and reformation of the DAC. The panel will make proposals and recommendations, focusing on the evolution of the committee and its work in line with the Sustainable Development Goals. In addition, the panel will look at how the DAC can contribute to global efforts and our relevance and impact. The panel will also evaluate the working methods and structure of the committee.

    On our way to a better life for the poorest and a greener world, we need to work closer together, both recipients and providers of development aid. By sharing experiences and working with the same framework, both developing and developed countries will be better equipped to make sure all aid is spent well and effectively. I am optimistic that the new, transformed DAC will continue to be essential on our way to reaching the new and ambitious SDGs — aiming for a future of peace, prosperity, and dignity for all.

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    About the author

    • Erik Solheim

      Erik Solheim is chair of Organization for Economic Cooperation and Development’s Development Assistance Committee since January 2013, and incoming executive director of the U.N. Environment Program. With a solid background in climate, the environment and peace building, Solheim was also Norway’s minister for international development from 2005 to 2012.