ABIDJAN, Côte d’Ivoire — New donors entering the development finance landscape are facing a host of challenges. Usually with smaller budgets, emerging donors can struggle to integrate into coordination and financing mechanisms.
A growing number of countries in Central and Eastern Europe, including Croatia, Serbia, Poland and Romania, as well as central Asian countries such as Kazakhstan and Uzbekistan have recently opened formal development aid agencies. These countries are in addition to middle-income economies such as China, India, Brazil and Mexico, which also provide development aid abroad.
Compared to lending from the 30 Development Assistance Committee country members at the Organisation for Economic Co-operation and Development, the scale of foreign assistance from other countries is relatively small. But it is growing.
One concern for small donors and their recipients is the fragmentation of aid, where aid is delivered in small increments, at times through complex transactions that are costly for recipient countries to absorb. Some advocates have called for innovative mechanisms that can support pooling of resources amongst donors, or leverage the funds of multilateral entities, such as the United Nations and the World Bank.