14 October 2015
At End of Donor Era, Development Agencies Take on New Role and Funding
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As we enter the post-MDGs era, the development landscape is changing rapidly with new players emerging and old players taking new roles.

Part of this shift is due to the changing global balance of power.

Standing at the finish line of the Millennium Development Goals (MDGs), the development community has results to show. The number of people living in poverty in Asia and the Pacific fell from 1.5 billion in 1990 to an estimated 314 million this year. This remarkable progress showcases the success of national efforts and international cooperation. As we enter the post-MDGs era, the development landscape is changing rapidly with new players emerging and old players taking new roles. Part of this shift is due to the changing global balance of power.

The recent geopolitical shift is reflected in the new 2030 Agenda for Sustainable Development with its 17 Sustainable Development Goals (SDGs), which universally applies to all countries in the world. It blurs the lines between the categories of “North and South” and “Rich and Poor.” In this way, the 2030 Agenda is a departure from the MDGs which applied only to poor countries, except one goal that called on rich countries to step up aid funding.

The UN Development Programme (UNDP) was established in 1965 to channel official development assistance (ODA) to developing countries. It has grown into an operation with a presence in more than 170 countries. In Asia and the Pacific alone, UNDP’s experts have become trusted partners to 36 governments. Earlier this year, Singapore’s Permanent Mission to the UN tweeted that “Without UNDP, Singapore would not be where it is today.” The Permanent Representative of Nepal to the UN has lauded UNDP as the “heart and soul” of the UN’s development system. The challenge for UNDP now is to adapt to the changing, ever “flatter” world of development cooperation.

For example, fifteen years ago, 15 out of 36 developing countries in Asia-Pacific were low-income countries. Today, there are four (Afghanistan, Cambodia, Democratic People’s Republic of Korea and Nepal).

What can agencies like UNDP do to adapt to such significant changes?

First, we have to recognize that the era when development agencies implemented projects in “poor” countries with funding from “donor” countries is largely over. We then must focus on providing high-level policy advice and services required to deliver on the inter-linked, complex nature of the 2030 Agenda.

The “donor era” is over

Relative to other sources of development finance, ODA has been declining over time. According to our report on implementing the SDGs in Asia and the Pacific, ODA to the region reached US$27 billion in 2012. While that is a significant figure (and ODA remains vital for the least developed countries and small island developing states), remittances reached US$212 billion, and foreign direct investment US$626 billion.

This new economic reality has an impact on the traditional development cooperation model in which the work of agencies like UNDP was financed by donors, such as the US, Japan and the European Union. Now, as donor aid is being overtaken by other types of financing, a new market for development services is emerging. As ODA declines, governments are increasingly funding development agencies with domestic resources. The demand for UNDP’s services by governments in Asia and the Pacific, supported with their own funding, has nearly doubled in the past five years.

The development landscape is changing in another way too. While there used to be a handful of traditional donors and aid agencies, and they continue to provide significant support, today a host of new players competes with the UN as development services providers. South Korea’s KOICA and Thailand’s TICA are among them. China, India, Indonesia and Malaysia are active in South-South cooperation. Countries with new-found mineral wealth such as Timor-Leste and Papua New Guinea have started to engage in development cooperation. Some are planning to launch their own international development cooperation agencies. In addition, there are powerful philanthropists; non-governmental organizations; the SAARC Development Fund, the Asian Infrastructure Investment Bank and the BRICS’s New Development Bank, as well as the Global Fund, the Green Climate Fund and other sources of environmental finance.

Governments now have a new need: help with accessing, blending, sequencing and coordinating the flows of these resources in ways that most effectively serve SDGs outcomes. An agency like UNDP can meet this need by investing its own resources, obtained from traditional donor countries, to mobilize domestic and other resources and accelerate the progress on SDGs in partnership with the government.

Focusing on transformational change

Over the past five decades, UNDP and our partners have supported middle-income countries (MICs) to build economic, social and environmental government agencies. These institutions have developed capacity and are delivering results. However, new challenges constantly emerge and there are gaps in formulating and implementing strategies as well as in the provision of public services. MICs still demand high-quality advice to design policies and systems that can bring about transformational change. Governments are looking for assistance in incorporating the SDGs into national plans, reducing inequality, obtaining new technologies, and coping with the challenges of rapid urbanization and climate change, job creation, and sustainable growth. They look to UNDP for support with South-South knowledge exchange. There is a call for UNDP to continue to lead the early recovery work after disasters. These are all areas where we have a solid track record; these are development services where we can have the ambition of going from good to great.

In addition, countries are also interested in cutting-edge research and innovative solutions. For instance, the award-winning UNDP-Baidu Recycle app helps consumers recycle electronic products by connecting them to waste recycling and dismantling agencies across major cities in China. The app also seeks to integrate the informal e-waste recycling sector into the legitimate e-waste processing industry.

Following the earthquake in April 2015, UNDP’s partnership with Microsoft in Nepal resulted in the creation of another app that uses GPS to take coordinates for damaged buildings, calculates the volume of debris that needs to removed, time it will take, and stores in a cloud records, such as who is the property owner, their contact information, and an authorization to demolish the building. It helps to produce demolition plans that lay out the order and sequence of the work, where the hazards are, and who needs to be protected.

This app has the potential to revolutionize the post-disaster recovery work.

This is the kind of innovative solutions the governments demand: solutions that combine social, environmental and economic strategies. The traditional development agencies need to become less top-heavy, less risk-averse and more flexible to create a nurturing environment for innovative thinking.

We are listening to our stakeholders. UNDP, as well as other agencies, undertook a number of reforms making itself to be more innovative, agile, inclusive, coordinated and results-oriented organization. We launched Innovation Fund and hosted an Innovation Summit in Bangkok. We moved advisors from headquarters in New York to our Regional Hub in Bangkok, to place expertise within the region. These reforms are helping UNDP transform itself from being primarily a donor agency to being a lean, flexible and valuable development partner to the governments.

More work is needed, and more change is underway in how we operate, because only top-notch, innovative solutions, created and implemented in partnership with governments will lead to achieving the 2030 Agenda.

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