International Development Cooperation As A Global
International Development Cooperation As A Global
DOI: http://dx.doi.org/10.1590/0034-7329202200215
Revista Brasileira de
Política Internacional Abstract
ISSN 1983-3121 The three major international texts adopted in 2015 -Addis Ababa Action
h t t p : / / w w w. s c i e l o . b r / r b p i Agenda on financing for development, 2030 Agenda for Sustainable
Development and Paris Climate Agreement- place national public policies and
Philippe Orliange1 actors at the heart of international development cooperation (IDC). By bringing
1Agence Française de Développement/ IDC closer to national institutions, particularly development banks, and taking
French Development Agency, Paris, France
it further away from traditional foreign policy, this shift has challenged long-
(orliangep@afd.fr).
held IDC narratives and structures, both among developed and developing
ORCID ID:
orcid.org/0000-0002-6794-2268 countries. It has also laid the foundations for a degree of structured and
universal accountability within the international development cooperation
Thomas Zaratiegui2
2Agence Française de Développement/
system, setting the stage for a wider shift within global governance.
French Development Agency, Paris, France
(zaratieguit@afd.fr). Keywords: International development cooperation; development banks;
ORCID ID: governance; foreign policy.
orcid.org/0000-0001-9439-6234
Introduction
T he 21st century has seen its fair share of crises, be they financial,
political or health-related. They are all either a cause or a
symptom of the growing questioning of the “international liberal
order”. Yet global challenges such as climate change, growing
inequalities or loss of biodiversity, have also triggered renewed
Copyright: efforts to build collective responses. The culmination of these
• This is an open-access article distributed
under the terms of a Creative Commons
efforts was reached in 2015 with the adoption of the Addis Ababa
Attribution License, which permits
unrestricted use, distribution, and
Action Agenda (AAAA) (United Nations 2015) on financing for
reproduction in any medium, provided that
the original author and source are credited.
development in July, the 2030 Agenda for Sustainable Development
• Este é um artigo publicado em acesso in September and the Paris Climate Agreement in December. The
aberto e distribuído sob os termos da
Licença de Atribuição Creative Commons,
que permite uso irrestrito, distribuição e
Addis Ababa summit placed domestic resource mobilisation and
reprodução em qualquer meio, desde que o
autor e a fonte originais sejam creditados.
national development banks at the forefront of the effort to reach
global development goals. The New York summit substituted the
Millennium Development Goals (MDGs) with the Sustainable
Rev. Bras. Polít. Int., 65(2): e015, 2022 Orliange; Zaratiegui
Development Goals (SDGs) which commit all countries to common objectives. Finally, the Paris
Climate Conference introduced the Intended Nationally Determined Contributions (INDCs) creating
a package of national objectives and directing financial flows towards a low-carbon economy. Thus,
divided as it may be, the international community “pledged common action and endeavour across a
broad and universal policy agenda” (2030 Agenda, para. 18). The recent pandemic has only served
to reinforce this new paradigm, by underlining the existential threat of failing to cooperate.
The agreements adopted in 2015 established the basis for a new narrative on development
cooperation and led to three fundamental shifts. The first was the importance given to national
public policies. By calling countries, in particular developed ones, to practice domestically what
they preach abroad, these agreements blur the divide between foreign affairs and domestic policies.
The call for transparent domestic action to reach global goals as well as the presentation of INDCs
to frame the objectives of national climate policies have become key features of the global agenda.
The second shift stems from SDG 17’s exhortation to “revitalise the global partnership for
sustainable development” which must be read in conjunction with the AAAA and the financial
component of the Paris Agreement. To respond to this appeal, IDC is shifting away from an Official
Development Assistance (ODA)-based vision of development aid specifically aimed at poor and fragile
countries, to embrace broader, albeit vaguer, expressions of development finance. The summa divisio
between developed/donor countries and developing/recipient countries, that has long structured
both the Organisation for Economic Co-operation and Development (OECD)-led narrative and the
South-South cooperation (SSC) discourse (Bracho 2015) is losing its relevance. However, it has yet
to be substituted by a consolidated and universal platform for norm- and standard-setting able to
structure the global partnership for sustainable development (Chaturvedi 2021).
These two shifts have led to a third development whereby, for IDC to emerge as a global
public policy that supports the objectives set in 2015, and not simply be a foreign policy tool,
the institutions that design and/or implement IDC must also evolve. Yet, the bureaucratic setup
in many countries still reflects the subordination of IDC to foreign policy. The cooperative
dynamic prompted by the 2030 Agenda did not end the dynamics of tensions and competition.
France’s new law on development cooperation aligns its IDC with the 2030 Agenda but also
brings it closer to its foreign affairs policy. Meanwhile, the UK has merged its Department for
International Development (DFID), a long time reference in the aid industry- into a Foreign,
Commonwealth and Development Office (FCDO) guided by its post-Brexit Global Britain strategy.
China implemented its “vaccine diplomacy” in response to the Covid crisis.
Seven years after the adoption of the 2030 Agenda, are the systemic changes foreseen in 2015
occurring? Firstly, we will consider how the changes operated in 2015 have affected the narrative,
policies and structures of France and the UK, two “traditional” donors that have recently reformed
their IDC institutional set-ups. Since the distinction is no longer between donors and recipients
and since the objective of IDC is no longer exclusively the fight against poverty, how should
institutions who built their legitimacy on these foundations adapt? In this reassessment process,
where are these countries placing the cursor between IDC policy and foreign affairs interests?
Secondly, we will seek out changes in the Global South’s development cooperation narrative
and practices, with a specific focus on the Brazilian IDC. Through its distinct set of values and a
narrative built in opposition to traditional North-South cooperation practices, SSC has gradually
become a staple of IDC. However, while the 2015 compact vindicated SSC’s horizontal approach
to IDC, it also questions SSC’s implementation in an increasingly asymmetric Global South. As
shown by the trajectory of Brazil’s IDC, the shifts that have occurred since 2015 bring as much
promise as uncertainty regarding emerging countries’ new roles and responsibilities in the global
governance framework.
Finally, we will consider how the 2030 Agenda promotes an increasingly central role for
public development banks (PDBs), including recently created ones such as the New Development
Bank (NDB) and Asian Infrastructure Investment Bank (AIIB), and how this trend affects global
governance. PDBs have gained increased political recognition, increasingly coalescing around
multilateral organisations and holding their first international summit in 2020. The near universal
geographic coverage and financial weight (10 % of global investment) of the 450 banks that joined
the call to “form a global coalition of all PDBs around the world” (Finance in Common, 2020)
illustrate the emerging force to be reckoned with and the hybrid global governance of IDC that
has emerged with the 2030 Agenda.
The OECD traditionally identifies four types of institutional arrangements for IDC (Organisation
for Economic Co-operation and Development 2009): (1) the Ministry of Foreign Affairs (MFA)
leads and is responsible for policy and implementation; (2) a development cooperation body
within the MFA is responsible for both policy and implementation; (3) a ministry has overall
responsibility for policy and a separate executing agency is responsible for implementation; (4) a
ministry or agency other than the MFA is responsible for both policy and implementation. France’s
institutional set-up, like a majority of OECD Development Assistance Committee (DAC) members
(Gulrajani 2020), comes under the third model with the French Development Agency (AFD) as
its main IDC implementer. With the recent creation of the FCDO, the UK has gone from being
the only DAC member using the fourth model to adopting the first model. The following sections
will examine the merits and policy implications for these traditional donors of their recently
reformed set-ups, particularly in light of global shifts in IDC’s sectoral and geographic priorities.
The principles guiding France’s development policy were laid down for the first time in a 2014
law which recognised development cooperation as a public policy in its own right and aimed at
“fostering sustainable development in developing countries, in its economic, social, environmental and
cultural dimension”1.
The 2018 DAC report on France’s IDC (Organisation for Economic Co-operation and
Development 2018) identified four strengths which provide wider lessons to best reconcile the
IDC/foreign policy dialectic: (i) the strong focus on climate financing which is a crucial contribution
to France’s wider “environmental diplomacy”; (ii) the use of domestic rules and frameworks to
implement IDC, deepening national ownership; (iii) partnering with emerging countries through
development bank networks; (iv) France’s largely untied aid which contributes to its credibility
abroad. However, the report also pointed out that the French co-operation system’s institutional
structure “remains complex and fragmented”. While the Ministry for Europe and Foreign Affairs
(MEAE) is the “lead ministry” for development policy (2017 decree), it shares its strategic oversight
with the Finance Ministry’s Treasury Department. Furthermore, the legally entrenched divide
between said oversight and the practical implementation of France’s development policy by AFD
is blurred. This leads to a duplication of efforts in areas such as partnerships with non-government
organisations or governance projects.
This is partially remedied in the government’s “Programmatic law on inclusive development
and the fight against global inequalities” (JORF August 2021) which was almost unanimously
approved by France’s Parliament in August 2021. This revised legislative framework lays a new
foundation for France’s IDC by stressing the need to align public policies with the AAAA, the
Paris Climate Agreement and the 2030 Agenda. A multi-year budget plan also enshrines President
Macron’s pledge for France’s ODA to reach 0,55% of its Gross National Income (GNI) by 2022.
No longer merely “contribut[ing] to France’s foreign policy and its reach”, as described in
2014, the new law promotes development policy to “a pillar of France’s foreign policy” that
“will contribute to and ensure peace and security, by complementing diplomatic and military action,
in the context of a global integrated approach”. This semantic shift demonstrates the MEAE’s wish
to further align IDC and foreign policy, and is backed-up by the proposal that ambassadors chair
a new committee in charge of designing and implementing local development strategies. The
prominence given to global public goods, SDGs’ universality and the fight against inequalities and
climate change, characterise a development policy driven by the key challenges of globalisation.
However, it suffers from two major inconsistencies.
Firstly, the budget included in the draft law only refers to financial instruments (loans, grants,
debt relief, bilateral/multilateral), with no geographic or sectoral allocations. The new law does,
however, entrench that AFD’s portfolio must be 100% compatible with the Paris Agreement and
social inclusion objectives. Secondly, it does not substantially clarify French IDC’s geographic
priorities. Through its “differentiated partnerships” framework, the 2014 law identified priority
recipients of its IDC. The first group is Sub-Saharan African and Mediterranean countries, a category
driven by geopolitical, economic and cultural factors, which includes a number of middle-income
1 Authors’ translation.
countries (MICs) such as Algeria, Morocco, Tunisia, Lebanon and South Africa. The second group
the law identifies is “priority poor countries” (exclusively African, except Haiti), which targets “least
developed” and “low-income” countries. Finally, it also repeats the 2014 commitment to cooperate
with “emerging countries” and to “rely upon principles of shared responsibility and reciprocity, in
particular with regard to global public goods and the fight against climate change”.
The inherent contradiction between these categories has led to a gap between geographical
and sectoral priorities and France’s actual ODA spending. Of the top twenty recipient countries
between 2011 and 2016, only four are among the “priority poor countries” (Senegal, Madagascar,
Guinea, Mali) with the rest being either lower-MICs (Cameroon, India, Ivory Coast, Morocco,
Tunisia) or upper-MICs (Brazil, China, Colombia, South Africa, Turkey).
As “emerging countries” is not an OECD-established aid category (Barros-Platiau and Orsini
2021) its use for development policy and aid allocation is murky. However, it has become more
relevant in the context of the 2030 Agenda’s defence of global public goods. Indeed, many emerging
countries such as China, India, Indonesia, Brazil and Iran, are large emitters of greenhouse gases
as well as the repositories of a “megadiverse” biodiversity (“Megadiverse Countries.” 2020).
Through this reform, France’s development policy has made a great step towards meeting
the 2030 Agenda, the AAAA and the Paris Agreement. Particularly by, de facto, prioritising MICs,
including BRICS countries (Brazil, Russia, India, China, South Africa), that are increasingly key
international players in environmental and biodiversity issues. However, it has failed to remedy
the disconnect between France’s stated focus on “poor priority countries” and the priority given
in practice to Mediterranean MICs for geopolitical, economic and migratory reasons.
1997 saw France and the UK’s respective development institutional setups move in opposite
directions. While France closed its Ministry for Cooperation, the UK created DFID, taking
overseas aid policy away from the Foreign and Commonwealth Office (FCO)2. More than two
decades after its creation, DFID had become a leading global development agency, contributing
decisively to the UK becoming an “aid superpower” (Wickstead, 2020). Yet, in September 2020,
the Conservative government merged DFID and FCO once again, launching the FCDO.
The months leading to this merger saw strong internal pushback within the DFID, as well as
widespread criticism from the broader UK development community, three former Prime Ministers
as well as the House of Commons’ International Development Committee (Effectiveness of UK
aid 2020). The Integrated review published in March 2021 designed to guide the wider strategic
realignment of the UK’s foreign policy did not put these criticisms to rest. Not only did it adjourn
the definition of the UK’s IDC strategy sine die, it also stoked fears of tied aid by linking IDC to
its trade and foreign policy. Prime Minister Boris Johnson had previously described those policies
2 It was first merged by the Conservatives in 1970, then separated by Labour in 1974, reintegrated by Margaret Thatcher in 1979 and,
finally, separated from FCO after Labour’s victory in 1997, leading to the creation of DFID.
as “one and the same endeavour […], designed to achieve the same goals […] and serve our national
interest” (United Kingdom 2020).
A crucial element of UK aid’s international credibility had also long been its strong commitment
to the UN General Assembly-set objective of spending 0.7% of GNI on ODA. It had reached this
target since 2013, the sole G7 country to have done so, and enshrined it in the 2015 International
Development (ODA Target) Act (United Kingdom 2015). However, contrary to the government’s
commitment, the UK’s ODA only reached 0.5% of its GNI (approximately £10 billion) in 2021
and will remain at this percentage in 2022 (FCDO Annual Report and Accounts: 2020–21).
This decline is as much financial as the result of a long-brewing strategic impasse. Since DFID’s
inception, the fight against poverty has been the top priority of the UK’s international development
policy (United Kingdom 1997). The 2002 International Development Act (United Kingdom
2002) bound the development secretary’s spending to be “likely to contribute to a reduction in
poverty” and led to seven of the top ten recipients of UK’s aid being Least Developed Countries
(Organisation for Economic Co-operation and Development 2020). The UK’s strong focus on
the poverty agenda was taken to scale and crowned through the adoption of the MDGs. However,
the adoption of the 2030 Agenda and the Paris Agreement have since shattered “the perennial
divide between the environment and development communities” (Caballero, 2019). By doing so,
they shifted some of the donor community’s attention away from the fight against poverty and
towards the fight against climate change, thus giving more prominence to MICs.
Time will tell if FCDO manages to “[integrate] diplomacy and development to achieve greater
impact and address the links between climate change and extreme poverty” (Global Britain Integrated
Review 2021) or if the UK’s voice on global issues is further diminished as a result of the merger
(Barder et al. 2019). For the time being, between the creation of the UK Infrastructure Bank
(UKIB) in June 2021 and the projected overhaul of the Commonwealth Development Corporation
(CDC) into the British International Investment (BII), the UK’s development finance priorities
seem more local than global and thus further away from the SDGs.
At the crux of policy discussions in France and the UK is the articulation of poor-countries-
based and issues-based approaches to foreign and development policy. Despite its promise to “leave
no one behind”, the 2030 Agenda has opted for the latter, putting a greater focus on MICs both as
GHG emitters and/or “megadiverse” (2020), but also as the largest portion of “developing countries”
(close to 100 of 137) with growing middle-classes. Furthermore, developing countries are playing
an increasingly important role in the definition of global governance, particularly through IDC.
We will first consider how the shift which came about in 2015 has impacted IDC narratives and
practices in the Global South, before focusing on the trends affecting an important actor of SSC,
namely, Brazil.
Between 2010 and 2019, more than half of bilateral loans to developing countries came from
the BRICS, especially from China and Russia and to a lesser extent India and Brazil (World
Bank 2021). Throughout the 90s and noughties, the increasing financial weight of SCC was not
reflected in texts on international development. The United Nations Framework Convention on
Climate Change (UNFCCC) and Kyoto Protocol were perceived as strongly inspired by the North’s
liberal framing of environmental cooperation and, in the view of many southern countries, they
insufficiently considered developed countries’ “historic responsibility” in climate change (Jernnäs
and Linnér 2019). While placing most of the burden on developing countries, the MDGs also
largely ignored the Global South’s approach to IDC. SSC and Triangular cooperation have since
been included in the G-20 Multi-Year Action Plan and, crucially, the 2015 texts recognised
SSC as an “important element of international cooperation for development” (AAAA, para. 56) and
mentioned it alongside North-South cooperation (2030 Agenda, target 17.6 and 17.9). SSC
now finds itself having to reckon with the paradigm shift initiated in 2015, which corroborated
its aspiration to a horizontal approach to development challenges, but also questions some
of its approaches.
The Global South, in particular MICs such as Colombia, Guatemala, Mexico, Pakistan or
Peru, but also the African Union through its 2063 Agenda, were strongly involved in the texts
adopted in 2015. This is apparent from the texts’ appeal to both developing and developed countries
to contribute to the broadening of international development finance beyond ODA. This has
facilitated the integration of the 2030 Agenda in southern institutions’ strategies, in particular
among institutions in charge of domestic policies and mobilising resources such as national
cooperation agencies and development banks (Orliange 2020). This process of incorporation is
further achieved through SSC’s “distinct attributes and strengths that can be leveraged to contribute
towards the 2030 Agenda and Paris Agreement” (ECOSOC Brief 2017) by “facilitat[ing] a horizontal
relationship in which cooperation is built as a partnership between equals” that “face comparable
challenges” (UNSG SSC report 2018).
Yet, SSC’s principles appear to be debased when for instance, China’s IDC is conflated with
commercial activities in African countries (Dreher et al. 2018) or the 2030 Agenda is amalgamated
with its Belt and Road Initiative (People’s Republic of China 2021). The Global South is increasingly
characterised by highly unequal relationships (Tujan et al. 2010) rather than mutual benefit and
equality. As such, the SSC narrative is at risk of being manipulated by emerging super-powers to
avoid the responsibilities inherent to their increasing weight in development finance and carbon
emissions (Chaturvedi 2012) and, as such, hinder the achievement of the objectives set out in 2015.
These objectives are further stalled by the weakness of their reporting mechanisms. By their
own admission (United Nations 2019, para. 29), many SSC actors’ IDC show varying degrees
of inadequate monitoring and evaluation mechanisms as well as a general lack of transparency,
ranging from strategic decisions to specific aid volumes. Initiatives led by southern countries such
as the Group of Friends of the Voluntary National Reviews, which advocates rigorous reporting
on the SDGs, show the way towards bridging the aid effectiveness gap. However, this takes place
on SSC’s terms, as the group, created in 2019, made a point of “steer[ing] away from the idea of
peer reviews” (Friends of VNRs Concept Paper 2019).
This lack of transparency is partially due to the fact that emerging donors’ institutional
setups have not significantly changed since 2015 and often harbour the institutional fragmentation
and ulterior motives traditionally reproached to Western donors. Indeed, most have adopted a
two-headed approach that comes under models 2 and 3 of the OECD typology described earlier.
Thus, an agency, secretariat or ministerial department is in charge of international cooperation
per se, particularly technical cooperation, and is either fully integrated or under the MFA’s close
tutelage. It works alongside development banks (of which often an “Export-Import” bank) which
are supervised by the Finance and/or Trade Ministry. These financial institutions’ core activity is
domestic but some have expanded abroad to support export finance as well as investment and project
finance. National development banks are key to both leveraging public finance and as “last-mile
institutions” with practical experience in implementing national development programs. As such,
they seem best suited to reconcile the divide between the MFAs’ focus on technical assistance
and domestic development finance, with its additional international component. By doing so,
they can foster the “whole-of-Government”3 approach advocated by the UN Secretary General
to deliver the SDGs, and promote practices aligned with the principles of the 2015 texts, which
many of them already refer to.
In 1987, in line with SSC’s strong focus on technical cooperation among developing countries, Brazil
was among the first countries in the Global South to create an institution dedicated to implementing
its international technical cooperation programmes, the Agência Brasileira de Cooperação (ABC). A
year later, Brazil’s Constitution entrenched “cooperation between peoples” as one of the “principles
of [its] international relations” (art. 4). From then onwards, its foreign policy and IDC mutated
from their characteristic pragmatism (Leite et. al 2014), to “continued international extroversion
and state activism” (Trajber 2020). Under Lula’s presidency, Brazil’s international cooperation was
an instrument at the service of the national project and interests, including positioning Brazil as a
global player, an “environmental power” and an advocate for the Global South (Santander 2020).
This mirrored its ambitious and multi-dimensional IDC, which was wide in its geographical
reach, sectoral coverage and tools, although fragmented in its implementation. Indeed, the ABC
is one among a hundred federal bodies implementing Brazil’s IDC policy. In a series of reports
published since 2010, the ABC and the Institute for Applied Economic Research (IPEA) have aimed
3 “Conceptually, the ambition of the SDGs calls for a “whole-of-Government” approach. […] the scaling up of south-south cooperation is beginning
to suggest bold, innovative means to strengthen cooperation to deliver the SDGs.” (SGNU 2017)
Figure. Annual spending by organs of the Brazilian Executive power of the federal public
administration in international activities (2005–2018)
8.000.000 2.500.000
7.000.000
2.000.000
6.000.000
(US$ thousand)
(R$ thousand)
5.000.000 1.500.000
4.000.000
3.000.000 1.000.000
2.000.000
500.000
1.000.000
0 0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
When Brazil joined the Paris Club in 2016, former Finance Minister Henrique Meirelles claimed
that the country had shifted from being a borrower to an international lender (Empresa Brasileira
de Comunicação 2016). The following year, Brazil initiated the petition for OECD membership.
The current administration has deepened this shift away from SSC as a pillar of its international
4In 2019, the government cut from 40% to 14% the proportion of the FAT (Fundo de Amparo ao Trabalhador) dedicated to BNDES, it
being its main source to finance export credits, with plans to totally extinguish said source.
role on the global stage, being able to mobilise a strong crosscutting development cooperation
body has become crucial to participating in global governance.
Since 2015, development banks have gained recognition and visibility. In this section, we consider
whether the newcomers –AIIB and NDB- have been “game changers” and how the newfound role
of development banks can help implement the 2030 Agenda.
Along with the adoption of the 2015 compact, various “southern” countries coalesced around “new
institutions regional and global banks and funds” (United Nations 2019), with the NDB and AAIB
respectively created in 2014 and 2015. This raised questions on how disruptive these new actors
would be in relation to the recently adopted texts. Would they “forge a new and more inclusive
paradigm that secures faster and more sustainable development for all citizens”? (R. Roy in Stuenkel
2020). Given southern countries’ repeated calls for structural changes within existing institutions,
would these new banks steer away from “traditional” lending practices?
Continuation
Mostly US dollar (market raised) with
Currency bonds emitted in Chinese RMB, Russian Mostly US dollar (market raised).
ruble and South African ZAR.
Operates largely through co-financing
Less co-financing than AIIB but
with the World Bank and the Asia
greater use of development banks of its
Development Bank, demonstrating a degree
shareholders (e.g. BNDES) and regional
Co-financing & of compatibility between their rules and
banks (e.g. CAF). Uses national rules
Coordination procedures. Decreasing share of co-financing
and procedures for tendering, social and
(74% in 2016, 33% in 2019), due to the
environmental safeguards (common
AIIB’s increasing capacity to generate its
practice in international public finance).
own operations.
Its 2019 annual report states that it “is
paying due regard to the alignment of its The “Agenda 2030” strategy adopted in
2015 compact operations with the SDGs as well as the 2020 makes numerous references to the Paris
goals of the Paris Agreement […] in line Agreement.
with its general strategy 2017-2021”.
Source: authors’ elaboration based on both institutions’ reports
Based on these elements, the creation of the AIIB and the NDB has not fundamentally altered
the patterns of international public finance. The still relatively small amounts of annual lending
are explained by the fact that both banks are still building their portfolio. Because of its current
membership, the NDB has no equivalent, while the AIIB is similar to the Asian Development
Bank (AsDB) in its geographical focus.
Table 2. Comparison of AIIB and AsDB’s disbursement volumes in 2016, 2018 and 2020
The overall increase of the AIIB’s activities has not prevented the AsDB from increasing its
own activities. Yet, the comparison is of limited value since the AIIB restricts itself to infrastructure
and its financial instruments are limited to loans while the AsDB’s “toolbox” includes soft loans
and grants.
Their financial toolbox is dominated by US dollar-denominated sovereign lending, as is the
case of all multilateral development banks (MDBs) which resort to US dollar or euro as they bear
less risk. Lending in local currency has remained limited so far. Non-sovereign lending is low
when it could be attractive for public companies and local governments to have access to both
banks’ long term lending.
Finally, the AIIB’s membership offers a potentially diversified group of clients while the
NDB has to deal with a structurally limited demand. Despite “seek[ing] to mobilize resources for
BRICS and other emerging market economies and developing countries“, it has so far approved loans
solely in the five shareholder countries. Furthermore, none of the BRICS are highly dependent
on sovereign lending by MDBs. Brazil and South Africa have a potentially high demand for
non-sovereign lending which the bank is averse to. The NDB could work more with the national
banks of its member States. Broadening the scope of its clients should be a priority, particularly
given its high loan-to-capital ratio. Dissenting views among the five founders have so far hampered
this much-needed development.
The AIIB and the NDB have introduced an unprecedented degree of competition in the
“game” of international public finance. They could do more by exploring avenues overlooked
by others, such as non-sovereign lending. Their commitment to the 2030 Agenda and the Paris
Agreement could also encourage innovations. One of these should be reconciling the climate and
inequalities agendas.
From a bit part to a starring role: the newfound role of public development banks
A first step towards the consolidation of PDBs, particularly from the Global South, as key
agents of the implementation of the 2030 Agenda and climate finance was the creation of
the International Development Finance Club (IDFC) in 2011. With members from Latin
America (8), Europe (7), Asia (6) and Africa (4), the South represents a large majority within
IDFC. Its founding members, KfW (Credit Institute for Reconstruction), BNDES and Andean
Development Corporation, were driven by their perceived lack of recognition of national and
regional development banks in the global conversation on development policy. Yet, MDBs
had long occupied a strategic position on the IDC scene, channelling larger loan volumes
than many MDBs and providing international summits with technical and financial support.
Scattered geographical networks of development banks existed, however, IDFC was the first
to bring together like-minded worldwide practitioners. Beyond its identified “community of
practices”, IDFC found an additional raison d’être in the run-up to COP 21 by contributing
decisively to the recognition of the importance of climate finance and its measurement, for
the Agreement’s success (International Development Finance Club 2019). The set of principles
produced by IFDC in March 2015 would eventually be picked-up by the MDBs themselves.
It is telling how an initiative launched by a select group of regional and national institutions,
whose legitimacy on the climate finance issue is built on the fact that it’s part and parcel of
their mission (be it domestic or international finance), is eventually endorsed by MDBs who
are naturally perceived as key players of global governance.
The success and recognition earned by development banks was further enhanced by the
numerous references made to their role in the AAAA: “We acknowledge that national and regional
development banks also play a valuable countercyclical role, especially during financial crises when
private sector entities become risk-averse. We call on [them] to expand their contributions in these
areas, and further urge relevant international public and private actors to support such banks in
developing countries”.
Based on a census of all PDBs in the world conducted by a Chinese university, the CEO
of the French Development Agency, and current IDFC President, invited these institutions to
meet for the first time in Paris at the FICS. 450 of them, as well as their respective geographic
network organisations, the UN Secretary General and several Heads of State did so, albeit virtually,
in November 2020. This was followed by a second FICS in Rome in October 2021 with a third
one planned in 2022 in Abidjan. At the first summit, the PDBs affirmed “[their] determination to
collectively shift [their] strategies, investment patterns, activities and operating modalities to contribute
to the achievement of the SDGs and the objectives of the Paris Agreement while responding to the Covid
19 crisis” (FICS Statement). These commitments are noteworthy given that PDBs collectively
represent 10% of total global investment (2 trillion USD). The World Bank coined the expression
“from billions to trillions” to describe the need to scale-up commitments needed to turn the 2030
Agenda and the Paris Agreement into reality. There is no doubt that PDBs, as key mobilisers and
implementers of “public finance for development”, are crucial contributors to the “billions to
trillions” equation.
Development banks have grown in relevance and visibility since 2015. The creation of AIIB
and NDB introduced a level of “competition” among multilateral banks, but both institutions
have joined the effort in favour of the objectives established in 2015 alongside “traditional”
MDBs. PDBs have gained international recognition as IDC players, even though many of them
are primarily domestic institutions. The current pandemic is further strengthening their role.
Development banks, whatever their size and scope, have been in the forefront of the financial
response to the pandemic and its economic, social and environmental consequences, in line with
the interconnections and “revived global partnership” advocated by the SDGs.
Conclusion
Seven years after it was adopted, the 2030 Agenda is being submitted to a a series of “stress tests”.
Yet, while short-term health and socio-economic uncertainties have somehow side-lined the 2030
Agenda’s long-term goals, the overlap of crises have in fact reinforced the relevance of the 2015
compact. Domestic public policies are at the heart of the response to the crisis and national
development banks are playing a crucial role in mitigating its socio-economic consequences, albeit
insufficiently in most developing countries5.
5 Earlyestimates (May 2020) found that developed economies had committed on average almost 30% of their GDPs to fight the pandemic,
while the average size of relief packages in developing countries did not reach 5%. (UNCTAD 2020)
Having pushed for the internationalisation of BNDES during his mandate (Oliveira 2016),
former President and frontrunner in the 2022 Brazilian presidential election, Lula wishes to
transform it into a guarantor bank comparable to multilateral banks (Paraguassu 2022). At the
crux of the poverty and climate agenda, with one foot in the BRICS and the other in the door
of the OECD and potentially armed with a reinforced development cooperation body, Brazil has
an unparalleled opportunity to promote its version of IDC as a global governance policy.
This leads us to three final points.
First, is the need for transparency and reporting on the implementation of the 2030 Agenda.
The UN High Level Political Forum’s supervision of the SDG voluntary national reviews remains
subpar. It does a disservice to the 2030 Agenda by taking self-congratulatory reports at face value
instead of transparently monitoring the implementation of domestic policies in favour of the
SDGs, through a robust peer review process. This is partially due to the insufficient involvement
of practitioners as opposed to UNGA 2nd committee experts. The TOSSD, as mentioned in the
AAAA, could also be a useful tool towards greater transparency, as is the OECD’s Global outlook
for financing sustainable development.
Second, is the issue of funding these public policies, for which, as described in the AAAA,
domestic resources mobilization is crucial. This requires progressive tax reform, which the Covid
crisis and the US administration’s recent commitments have made a likelier prospect. It is particularly
critical for MICs under threat of entering or remaining in the “middle income trap”. A second
tool to increase the mobilisation of domestic resources is maximising PDBs’ combined financial
leveraging and practical technical capacities. The recent plan to create a new development bank
by a British Conservative government is the recognition of these institutions’ usefulness beyond
traditional ideological lines.
The third point is the primary raison d’être of IDC which should be to serve the 2030 Agenda
and the goals of the Paris Agreement, using the methods, actors and tools outlined in the AAA.
For IDC to “revitaliz[e] the global partnership” it must be recognised as an international public
policy rather than a mere foreign policy instrument. Considering, for example, the direction
taken by France and the UK’s respective reforms, tensions between the United States and China
or Russia and Ukraine, power politics show no sign of fading away to give way to consensual
global public policies.
However, these inherent contradictions can be mitigated if IDC continues to transition
towards a system for global governance rather than as a collection of loosely coordinated actors
and “à la carte” multilateralism i.e. “the declining share of core contributions [reflecting] the growing
tendency of donors to forsake consensus-based approaches in favour of ad hoc initiatives funded by a
limited number of donors” (Organisation for Economic Co-operation and Development 2020).
Recent replenishments of specific funds (International Development Association, Green Climate
Fund, Global Fund) have proven successful contributions to the sustainable goals. Nevertheless,
the collective norm setting required to produce effective and sustainable global governance policies
depends on multilateral institutions being protected from “bilateral blackmailing”. Indeed, the
Covid pandemic has shed a harsh light on the fragmented governance of the multilateral system
which is to blame for many of the shortcomings of the World Health Organization’s response (the
WHO’s assessed contributions and its earmarked contributions are roughly 1 to 4).
Finally, greater coordination between PDBs and the multilateral system is required. The IDFC’s
track record, as well as initiatives such as the FICS or the launch of the Alliance of Subnational
Development Banks in Latin America, prove PDB’s willingness to cooperate with bilateral and
multilaterals IDC players within the framework of practitioner-led fora. As the key financial
contributors to the global governance framework adopted in 2015, public, development banks
should be provided with the means to their ends. This implies, for example, allowing them greater
leeway to use blended finance, as is common practice among multilateral development banks. It
should also involve, as recognised by the Paris Agreement, putting greater focus on redirecting
existing financial flows, in particular export credits. The question should be less whether resources
qualify as ODA and more whether they achieve positive climate and sustainability impacts. It follows
that working towards a transparent and truly multilateral international development cooperation
system, led by a wider understanding of sustainable finance, should be the next shared objective
for those who, seven years ago, approved such an ambitious global agenda.
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