The future of development finance:
The OECD/DAC’s agenda for modernisation
CAPE CONFERENCE
12 - 13 November 2014
Jon Lomøy ,
Director, OECD Development Cooperation
1
Today’s development finance landscape
1) More diversification and changing relative importance of
financial flows to developing countries
Today’s development finance landscape
2) New actors and instruments
Today’s development finance landscape
3) Recipients: reliance on ODA varies across developing countries and
those most in need are starting to receive less
Composition of external finance in LDCs
and other countries, 2012
ODA growth in LDCs and other countries,
2000-12
Motivation for our agenda for modernisation
• The 2012 DAC HLM mandate: Making the OECD/DAC
statistical system fit for purpose, so that it
• reflects the broadening of the global development agenda,
• reflects the new complexity of development finance
(actors/instruments) and
• acknowledges the increased diversity of developing countries
and provides the right incentives for ODA allocations.
• The goal is to maximise resources available for
development – our statistical system should promote:
• the right incentives to maximise overall resource envelope
availabe and to encourage smart allocation and catalytic use
of resources,
• international standards for measuring and monitoring of
development finance and
• transparency and accountability of development finance.
Making the OECD DAC statistical system fit for
purpose – our reform agenda
Main pillars:
• Modernise the measurement of ODA (in particular
concessionality)
• Create a new broader measure of Total Official support
for Sustainable Development (TOSD) and better tracking
of resource inflows.
• Valorise of private finance: better capture the use of nongrant instruments (e.g. guarantees and equity) and
design an international standard to measure
mobilisation/leveraging
Making the OECD DAC statistical system fit for
purpose – our reform agenda (1)
Working on making ODA credible and understandable:
• Restore the credibility of ODA as a reliable measure of
« donor effort » by agreeing on a clear, quantitative
definition of concessionality (solve the present
inconsistency problem)
• Standardise reporting of in-donor costs: Improve
legitimacy, transparency and comparability and deal with
criticism of some “phantom aid” components
Making the OECD DAC statistical system fit for
purpose – our reform agenda (2)
Looking beyond ODA: towards a measure of TOSD
• Not a replacement for ODA nor for shying away from the 0.7%
ODA/GNI target but a more comprehensive measure that can
help track the broader development agenda of the SDGs.
• To be finalised in line with the agreed SDGs
• In practice, includes non-ODA finance for development, peace
and security, climate and other global challenges in addition
to ODA
Seeking to enhance transparency of concessional and nonconcessional resource flows to developing countries from
DAC, non-DAC and multilateral institutions (standards,
norms and partnerships).
Making the OECD DAC statistical system fit for
purpose – our reform agenda (3)
Leveraging and incentivising additional development
finance:
• The current ODA measure does not valorise the use of riskmitigation instruments (e.g. guarantees and insurance) and
the development of new innovative financial mechanisms
that could mobilise significant volumes of private flows for
development
 Working on a proposal to capture the budgetary effort of leveraging
instruments is being explored
 Working with multilateral and bilateral development agencies to
develop on a methodology for collecting data on private finance
mobilised through official actions
Criteria for success: A measurement
system that carries the right incentives
• Effectively contribute to transparency and accountability for
the monitoring of the post-2015 development agenda
• Work to assess and measure resources beyond ODA should
not be used by donors to back away from existing
commitments, including the U.N. target of 0.7% ODA/GNI
• Better targeting of ODA is critically important going forward,
especially for LDCs, fragile states and other countries in need
• DAC HLM in December 2014 is expected to sign off on key
elements of the modernisation work as part of the DAC’s
contribution to the financing for development conference.
THANK YOU
For more information
http://www.oecd.org/dac/FinancingDevelopment.htm
The mandate from the DAC ministers (2012 HLM)
– Elaborate a proposal for a new measure of total official
support for development.
– Explore ways of better representing both “donor effort”
and “recipient benefit” of development finance.
– Investigate whether any resulting new measures of
external development finance (including any new
approaches to measurement of donor effort) suggest the
need to modernise the ODA concept.
– Agree on a clear, quantitative definition of “concessional in
character”
=> By end 2014/early 2015