- The future of official development assistance (ODA) must change. ODA has been responsible for reducing world poverty by 1 % per year. However, with new donors such as Turkey, Indonesia and China, development aid is likely to become more ‘horizontal’ and the focus will change.
- Mobilising resources for development cooperation and climate change are not mutually exclusive, as we are moving towards a more integrated, effective agenda.
- New support for greening infrastructure and environmental policies does not mean that there will be less support for traditional areas such as health and education – the aim will be to build ‘green growth’.
- A new development aid focus could be on mobilising human resources rather than financial resources to face the challenges ahead.
- Partnerships between private business in donor and recipient countries will bring benefits to both sides.
The 2002 Monterrey Consensus on Financing for Development set the stage for financing for development, with many countries working to reach the target of 0.7 % of gross domestic product for development funding. This has been an enormous success with an annual 1 % reduction in world poverty since 1990.
Official development assistance (ODA), the framework for development aid, has worked well over the last 40 years, but now is the time for change. The three new major funding areas include sustainable development, climate change and biodiversity. Traditionally, aid has been viewed as a horizontal process with funds moving from the North to the South, but with the entry of new funders such as China, Indonesia and Turkey, it has become much more horizontal.
Priorities have changed. The focus is moving towards issues such as good governance and the imperative to establish the rule of law. Supporting development aid cooperation is no longer seen as the panacea for reducing poverty. It is now acknowledged that the private sector has an important role in boosting growth. Aid will now focus on creating a stable investment environment to encourage the private sector by developing good trade and financial management policies and by engaging in fair, transparent negotiations for natural resources.
The private sector has become increasingly interested in Africa. Africans need the private sector to help build the infrastructure their continent needs to develop, including better transport and better access to energy, electricity and new technologies.
Tertius Zongo, former Prime Minister of Burkina Faso, said that over the last 10 years the country has seen a massive growth of 78 %. While ODA has helped Burkino Faso develop trade policies, he realised that if the country is to grow it needs to encourage the private sector to develop its resources. However, it is difficult to encourage the private sector with taxation levels of 45 %. To address this, he asked development partners to step in with financial support to reduce taxation levels to 25 %.
Japan is the second largest development aid donor in the world, but in line with other developed countries its demographics are changing. By 2030, 22 % of the population will be 65 and over, which will change its commitment to ODA. Aid will be focused on natural disasters or conflicts for the poorest countries. For middle-income countries it will be used to mobilise domestic resources, create win-win situations for the private sectors of the donor and recipient countries, and to share knowledge. A new focus will be on nurturing human resources in developing countries to meeting the huge challenge of climate change.
A decade has changed everything. Today, Africans are experiencing the devastating effects of climate change. They are asking for support to develop renewable energies and to build green infrastructure.
When speakers were asked whether this new emphasis on fighting climate change would take funds away from other development needs such as health and education, they were adamant that these priorities could continue to be funded. The priority is to create growth that is 'green', which does not destroy the environment or biodiversity, and which will improve health and education facilities.
Only 0.2 % of world GDP would be needed to eradicate poverty entirely if it was dispersed correctly. This amount of income could be generated between now and the end of the year.