Country platforms for economic transformation and climate action

Current international development architecture is falling apart at its foundations – Official Development Assistance (ODA) is shrinking rapidly as traditional donor countries fail to meet their international commitments to support development and poverty reduction in low-and-middle- income countries.

Reduced funding has had a tremendous impact already – millions of women have no access to contraception, a lack of essential medicines, higher risks of HIV, a shortage of food in refugees camps and a weakening of civic space as many NGOs reduce their operations or close.

Many conversations are focusing on alternative sources of funding and, finally, some of the more systemic issues are re-emerging on the agendas of international development actors – global tax reforms, unsustainable debt and debt workout mechanisms that aren’t fit for purpose, illicit financial flows, role of credit rating agencies, cost of capital, power imbalances, global economic governance and equitable rights to decision making.

This emerging paradigm change of aid architecture takes the public debate to a new level, questioning role, purpose and legitimacy of aid, institutions, INGOs and even the very concept of development and how we need to move beyond fixing the broken system and reimagine a new one.

The shock of ODA cuts requires us to rethink how development and climate finance – both international and domestic, private and public – work together and how the available resources can be used for maximum impact.

To start with, we must rethink impact. It should not be just about mechanic economic growth and classic economic indicators, but rather – economic transformation, wellbeing, and more importantly – dignity and emancipation. Freedom. Freedom to choose, decide, own, lead.

Secondly, disregarding the size of public and private, international and domestic development finance, we have to acknowledge that there are several structural design problems that have prevented LMICs from achieving the desired outcomes:

1. For far too long, development policy making and strategies have been outsourced to or dominated by external actors, thus subjugating the very countries which the development community has been trying to support to get on their own feet.

Loan programmes by Bretton Woods institutions, OECD DAC rules, free trade and an ecosystem of illicit financial flow enablers are just some of the examples of externally driven rules, policy making and resource allocation on the terms set by the rich countries. OECD DAC rules defining what constitutes aid, what it’s really for, how it should be spent and where, how we measure it and how effective aid looks like have been largely driven and owned by funders, not those who aid is for.

But sustainable development can’t be funded and led from outside, which is why democratising development spaces is on the top of FfD4 conference agenda. International development finance – public and private – can never substitute domestic finance and ownership of development. It can only ever complement and support.

2. There is too great a fragmentation of international development finance institutions and implementing organisations, with funding vehicles and instruments often competing with each other, working in siloes, running parallel and similar as well as sometimes very different operational processes, exacerbating bureaucratic burden and costs, especially on the implementers’ side. This means having to comply with different systems, requirements, due diligence, reporting, audit processes etc.

3. Marketisation of development initiatives often leads to incoherence, unclear direction, vision and mission. This results in development becoming a mirror-reflection of funders’ interests and priorities rather than strategic vision of a country centring people’s most foundational needs and cornerstones of a thriving wellbeing economy.

The development sector becomes a playground for various external actors – from INGOs to DFIs, MDBs, Western governments, philanthropy and, increasingly, also the private sector – interpreting development needs and priorities in their own way without any obligation to align with national development strategies, priorities, perspectives of local communities and feminist movements whilst recognising intersecting power dynamics and vested interests.

Could country platforms be the solution?

Though the country platforms idea is not new, there is a real opportunity to turn it into a real, ambitious and practical alternative to the current externally owned, driven and fragmented, politicised development paradigm, and achieve more efficient use of available resources to tackle development and climate challenges.

We should not limit country platforms to climate action only, but broaden them to operate as a development and climate finance platforms – holistic fundraising and implementation vehicles to deliver nationally owned and designed strategies and action plans to close the development and climate finance gap.

There are several building blocks for transformative, inclusive and impactful Country platforms (CPs):

1. Country led and owned entities – national leadership is critical for ownership of problems as well as solutions, and materialisation of rights to make decisions and choices serving its people and protecting nature.
2. CPs’ direction is determined by inclusive, transparent identification of context-specific sustainable development priorities and missions, with clear whole-of-government strategies for socio-economic transformation, achieving SDGs and a just and resilient national climate transition based on robust, ambitious NDCs.
3. Meaningful engagement of local communities and local civil society as well as academia, think tanks, labour unions, feminist movements. This will ensure transparency, accountability, alignment and gender-sensitive approach representing broader people’s interests and needs and ensuring that the Leave no one behind principle is at the centre.
4. Operating as the main instrument to fundraise and mobilise domestic and international, private and public, development and climate finance to deliver its missions. Regarding international public finance, this mechanism would consolidate all bilateral and multilateral funding (MDBs, DFIs, climate funds, bilateral aid programmes, etc) ensuring that funding is then supporting country-defined priorities, strategies and plans and avoids duplication, miscoordination, incoherence.
5. National development banks (NDBs) would become central financial institutions delivering strategic projects and initiatives capitalising on their local expertise, knowledge of local markets, needs and capacities and, more importantly, a mandate to provide concessional finance prioritising impact over profits.
6. An advisory body representing funders as well as local stakeholders will ensure that spending in whichever form – grants, loans, equity, guarantees etc align with the priorities and needs of the communities.

Country platforms’ model for development and climate action will have several critical advantages and positive impacts:

• Localisation: locally led development is a precondition for truly sustainable economic transformation, and CPs will help to put the countries in the driver’s not passengers’ seat.
• Efficiency: consolidation of finance will reduce overheads and administrative burden on the funders’ and receivers’ ends, improve spending of pooled funding, detaching them from fragmented donors’ priorities, approaches and perspectives.
• By centring NDBs and providing capacity building we will be creating self-sufficient national institutions shaping local capital markets, mobilising international and domestic resources and driving coordination, alignment, complementarities and synergies.
• CPs mobilize local expertise to design strategic projects thus moving away from supply-driven to demand-driven investments.
• Bringing development and climate finance closer to where the needs are we can fundamentally change the role, capacity, power and impact of local communities and CSOs actors by engaging them as policy advisers, co-designers of solutions, implementers and watchdogs capitalising on their local expertise, connections with local communities and representation of marginalised people. CPs should help overcoming current obstacles where local CSOs sit at the very bottom of long ‘supply chains’ of development and climate finance trickling down through several layers of institutions. Distrust in local actors and their capabilities must end.
• CPs can facilitate greater use of local currency in development and climate initiatives, thus overcoming currency fluctuation risks and impacts and protecting outcomes rather than inputs.
• CPs will help to move away from a one-size-fits-all approach towards more context sensitive interventions.