Polly Meeks
Senior Policy and Advocacy Office - Eurodad
In 2012, the Organisation for Economic Cooperation and Development’s Development Assistance Committee (OECD DAC) embarked on a process to “modernise” the definition of Official Development Assistance (ODA), in order to “ensure that ODA is directed to where it is most needed and where it can catalyse other flows and promote accountability.”
The modernisation process has covered many parts of the ODA definition:
Each element of the process has brought its own opportunities and risks for ODA, as set out in detail in analyses elsewhere by Eurodad and other CSOs.
Current negotiations focus on in-donor refugee costs and private sector instruments. These categories of spending are associated with several significant development effectiveness risks. For example, many CSOs argue that in-donor refugee costs – though vital expenditure – are not aid, and hence that their inclusion in ODA hinders transparency. Current proposals on private sector instruments, meanwhile, leave unanswered questions about how donor commitments on ownership, results, transparency, untying, and doing no harm, will be met.
In addition, and of particular significance for advocates on healthcare spending, there is a risk that both in-donor refugee costs and private sector instruments may – in different ways – divert ODA from essential services in the South.
In the case of in-donor refugee costs, the risk is that resources are diverted before they even reach Southern countries. Such diversion is already happening: indeed, high in-donor refugee costs mean that some countries are now the largest recipients of their own aid. Yet the ODA modernisation process has largely missed the opportunity to stop this, because it has focussed on technical details, rather than looking at the bigger picture of whether in-donor refugee costs should be counted as ODA at all.
In the case of private sector instruments, the diversion risk arises largely from the proposed calculation methodology, which could sometimes reward donors more generously for private sector instruments than for other uses of ODA. This risks creating a perverse incentive, which, far from ‘directing ODA where it is most needed’, could instead encourage donors to invest ODA in private sector instruments, not in health and other essential public services, even if the latter are what Southern citizens prioritise most.
At the time of writing, negotiations on in-donor refugee costs and on private sector instruments are still on-going. The DAC is hoping to reach agreement at the forthcoming High Level Meeting (30-31 October 2017), but we understand that some divisive issues remain, particularly on private sector instruments, so this timescale may prove challenging.
Those parts of the modernisation process that are agreed will be phased in over the coming year: they will be seen in the headline ODA figures for 2018, which will be reported in 2019.