By Mayang Guerrero Azurin
The OECD Development Assistance Committee (DAC) is a unique and relevant body in the global development co-operation architecture. Amid the rise of new international financing institutions with development mandates, new and sophisticated financing modalities and a range of complex devleopment issues to finance — a revitalised DAC positiniong itself to be the guardian of the integrity and definition of ODA becomes highly crucial.
In a move to better promote development co-operation and policy coherence for sustainable development through inclusive dialogues, the DAC concretised its promise by finally welcoming civil society as participants to its most recent High Level Meeting (HLM) in Paris.
But you still ask, why and so what?
A huge group of CSOs are those in programming and service delivery that are directly contributing to the achievement of the Sustainable Development Goals. Whether these groups of CSOs get fund by development cooperation or not, service-delivery for development are affected by development cooperation policies made at the global level.
In this sense, CSOs whose work is on democracy and participatory decision-making are putting in valuable contributions by ensuring that governments do use vital resources for the needs of the poorest and most vulnerable sectors. In short, we need to ensure that financing not only flows but that it is also aligned with effective development cooperation principles and human rights obligations.
Increased engagement on international development cooperation and DAC activities, therefore, is becoming more crucial for any CSO serious in eradicating poverty, promoting human rights, and ensuring sustainable development.
What are the key significant things that we should know?
In donor refugee costs are counted as ODA with exemptions
Today’s problems are more magnified, complex, and borderless. Developed countries which bear historical obligations to contribute 0.7 per cent of gross national income to poverty eradication in developing countries through offical development assistance (ODA) have not been exempted from these crises. As a response, donor countries have flexibly counted their expenditures in receiving refugees as ODA contributions, a trend that for some time have been carefully handled by CSOs by continuing to compel governments to hit their ODA targets when they see such contributions as gifts instead of historical obligations to developing countries, and at the same time avoiding a reflex action from donor countries of barring refugees in their borders.
This is particularly tough when world leaders have been vocal in preventing the entry of refugees. What’s even more difficult is the vaccuum in a unified position on this issue from the Group of 77, an alliance of developing nations comprising two-thirds of member-states in the United Nations, due to conflicting interests and ideologies.
The DAC decision that future in-refugee costs will be counted except for certain expenditures. It’s hard to ascertain whether this is a gain or a loss in the views of CSOs but that rules are now clear and transparent enough that we know what developed countries are actually contributing to the needs of developing countries.
Private Sector Instruments and Blended Finance
Private sector taking on the role as “partners” in development interventions has long been entwined with bloody grassroots struggles in the past, which led to institutional reforms such as safeguards, transparency and accountability mechanisms, independent evaluation, whistleblower protection, and managing for results in development cooperation institutions.
We are seeing that these reforms, however, have dramatically lost their power when the 2030 Agenda started to drumbeat the need to raise development financing from billions to trillions. This shifted the use of ODA to unlock private capital, which at the same time synched with the development of opaque financial flows and massive dilution of safeguards among multilateral development banks (MDBs).
It takes grit, resources, and to some extent, life, in making private sector accountable to its economic, social, and environmental obligations. The possibilities of seeing such tensions could potentially heighten with the united shift in priorities among international development cooperation institutions, including MDBs to work more with private sector.
Greater plugs in private sector engagement should ideally be in place, but this is not the trend despite the spirit of 2030 Agenda’s close integration of economic, environment and social aspects in development. In ADB, for example, independent evaluations reveal that due compliance to safeguard requirements are more lenient in private sector loans.
The talk on private sector instruments (PSI) in DAC is not an answer to accountability problems. Some critics see this as a process of legitimation of private sector dominance in development. The public risk is the same for any instrument: public funds are being used to guarantee for the risks and losses that private sector should instead be shouldering in the first place when investing in areas categorised as development.
The good news is that discussions in the HLM agreed that ODA can be used only with “development-oriented PSI.” A set of principles has been proposed as a compromise which entails future work among CSOs on developing rules, while nothing has been set in stone. The not-so-good news is hardly anything can fall under “development” nowadays, including remittances, trade, and foreign investments.
One of the innovations and rules being contested is the use of export credit and development finance which use leveraged ODA for private sector engaging in a) export and import and 2) those investing in huge infrastructure projects.
Before, private sector would go to international and national banks for loans called export credit agencies. As risks became greater, export credit agencies have collaborated with international development finance institutions. ODA functions as an insurance to the exporters or bankers or by means of a direct guarantee of payment to a commercial bank covering a loan to an overseas borrower to finance the supply of goods and services in the event of any default in payment by the buyer or the borrower under a loan agreement.
When export credit is used for trade finance, we should be asking, is public money being used to enable small and medium enterprises to participate in global trade? Or is it more of a gift to donor countries’ own transnational corporations by covering their losses when running their supply chains or moving their products across markets? Are the existing parameters enough for defining that a project is developmental instead of purely commercial?
When export credit is used to cover risks in investing in huge infrastructure projects, we should ask: are national and MDB transparency policies allow a greater look at the substance of contracts? Experience suggests it is nearly impossible to say who benefits more, notwithstanding continued impacts of a particular infrastructure beyond the project cycle on economy, environment and lifeways for as long as the structure stands.
Subsidising private sector activities should be regarded as a blasphemy of free trade rules when for more than decades, World Trade Organization has eliminated the use of government subsidies (of developing countries especially) under trade regimes yet now we see public funds are being used under the purview of “development.”
Opportunities and Challenges Ahead
The approval of the OECD DAC mandate opens the door for improved dialogue with CSO but like a Trojan Horse – it also welcomes engagement for other interest groups such as the private sector.
A formal CSO seat in the 41st HLM in the OECD DAC Is still considered as timely and significant for underrepresented communities. It is not the first but a progress from the observer status being extended for a long time to CSOs. We must congratulate all those who made efforts to ensure that the space given to CSOs was truly representative and substantial. The presence of a Southern CSO voice represented by Tony Tujan of IBON International side by side with northern CSOs, for example, is a good start.
Although there is a lot to take place in variuos levels and subjects to bring dvelopment cooperation closer to the aspiration to make development more inclusive to people, this is certainly one welcome move.
The importance of action from CSOs at the international level with the foremost interest of bringing the voice of affected communities need to be reinforced from all sides in such discussions over global CSOs originating from the North. Of course, it is safe to assume that we all have their best interest in mind — but in varying degrees of priorities in consideration of the primary stakeholders including donor governments, private sector funders that northern CSOs would inherently hold their organisations to account as well.
As the door for dialogue has been opened at the global level, the challenge now for global CSOs participating in this elite and technically-laden political space is how to bring the discussions relevant and actionable to CSOs working at the national level and mobilise their constituencies to hold their governments accountable in their homefronts.
The push coming from CSOs for innovation on aid effectiveness such as country level coordination did not make its way in the HLM Communique, but the generous affirmation on aid and development effectiveness and the move in OECD DAC for greater horizontal work with like-minded organisations such as the Global Partnerhship for Development Effective Development Cooperation from many members will defintely require CSOs to work collaboratively than ever before.
Meanwhile, the period where rules have not been hammered out in the areas of PSI and export credit agencies will necessitate greater cohesion among CSOs working at the global and regional levels, development finance architecture, and CSOs at the national and grassroots level who may or may not be necessarily focused on monitoring development finance but are well-entrenched in communities and policy work and have a strong sense of responsibility to make institutions accountable for environmental pollution, human rights violations, corruption, fiscal crises, as they are in the best position to conduct evidence-gathering, community action or response. and national campaigning as soon as ODA-backed private investment projects are implemented in the form of infrastructure, sectoral reforms, social programs, among others.
Indeed, the basis for vertical and horizontal linkages among CSOs has come n the face of greater private capital presence in development landscape, lack of a solid voice among the developing countries and creation of rules in the development finance institutions.
Mayang is the Policy and Communications Coordinator of the CSO Partnership for Development Effectiveness (CPDE), a global network of civil society organisations working to ensure that development cooperation is aligned to human rights and sustainable development. She has worked in engaging regional development banks in Asia on transparency and safeguards prior to specialising on development effectiveness. She also has a solid background on lobbying for parliamentary reforms and national campaigning around economic justice, inclusive development, and sustainable resource management at the national and grassroots level.