This newsletter features the striking findings of our research into USAID’s measurement of localization and a chance to catch up on the launch event, a review of the growing number of ways that IATI data is being put to use, and reflections on why the transparency of development finance institutions is of increasing importance.
Metrics matter: how USAID counts “local” will have a big impact on funding for local partners
In November 2021, the US Agency for International Development (USAID) Administrator Samantha Power announced that 25% of the agency’s funding would go to local actors by 2025. Publish What You Fund, with the support of the Modernizing Foreign Assistance Network (MFAN) and its members, has undertaken detailed research to establish an independent, credible, and replicable baseline to measure and track funding for the 25% commitment; The research then compares our approach to USAID’s announced approach.
We examined USAID funding for 10 countries over three years. We found USAID’s measurement approach nearly doubles the% counted as going to local organizations: 11.1% compared to 5.7%. If the funding differences are scaled-up to all of the countries where USAID operates, USAID’s approach would under fund local partners by an estimated $1.43bn per year.
Based on these findings, we recommend USAID reconsiders its measurement approach and creates a credible, replicable process that aligns with its own definition of local funding and eliminates adverse incentives. Its approach should be transparent using publicly available data.
We have also released a dashboard, which provides visualizations of how different measurement approaches impact funding. You can choose your own local characteristics to visualize the funding outcomes.
In this blog, George Ingram, Nora O’Connell and Sally Paxton examine the findings and their implications, and explore why the choices USAID makes now on its measurement approach are so important.
Catch up on the launch
The research was launched at an event co-hosted with MFAN on 1st March 2023. We were delighted to be joined by:
- Tessie San Martin, CEO, FHI 360
- Meghan Armistead, Senior Research and Policy Advisor, Catholic Relief Services
- Alix Masson, Senior Advocacy Advisor, Network for Empowered Aid Response (NEAR)
- Denise Namburete, CEO, N’weti
- Adam Phillips, Executive Director, Local, Faith, and Transformative Partnerships Hub, Development, Democracy and Innovation Bureau, USAID
You can watch a recording of the discussion below.
Who is using IATI data and why?
Ahead of the International Aid Transparency Initiative (IATI) Members’ Assembly in Copenhagen, we wanted to reflect on the growth of IATI over the last 15 years. In this blog, Gary Forster highlights the burgeoning number of examples of stakeholders using IATI data for research, policy insights and ultimately to make development more effective.
Development finance is opaque, but transparency is improving
Reflecting on the findings of the DFI Transparency Index and the discussions which took place at its launch, George Ingram and Sally Paxton ask what we know now about how development finance institution (DFI) resources are deployed, what change has happened and what needs to happen next.
Here’s a quick roundup of other news and publications we’ve been reading over the last few weeks:
The Center for Global Development (CGD) has examined how a core group of Development Assistance Committee (DAC) donor countries are performing against a set of UN targets – to provide over either 0.15 or 0.2% of their economic output to least developed countries (LDCs). It finds an overall lack of progress towards these targets, and some evidence of regression. Whereas seven of the 29 DAC member countries met the UN’s upper target of 0.2% in 2011, by 2021 only four did. In 2011 a further three also met the lower target of 0.15%, but this was down to one in 2021. Over the last decade, Canada, France, Germany, Italy, Japan, and the United States have never provided even 0.15%. In contrast, for nine of the ten years between 2011 to 2020, the UK has exceeded the upper UN target of 0.2%. But official data now reveals that last year the UK reduced its share of gross national income (GNI) provided as official development assistance (ODA) to LDCs: from 0.21% in 2020 to 0.14% in 2021.
A working paper from the KIEL Institute for the World Economy presents the “Ukraine Support Tracker”, which lists and quantifies military, financial and humanitarian aid to Ukraine. It tracks government commitments to Ukraine made between January 2022 and January 2023 by 40 governments plus the EU institutions. It finds significant differences in the scale of support across countries, both in absolute terms and as percent of donor country GDP. In billions of Euros, by far the largest single bilateral supporter of Ukraine is the United States, followed by the EU institutions, the UK and Germany. In percent of donor GDP, Eastern European countries stand out as particularly generous particularly when considering refugee costs. However, the paper says in the context of spending during previous wars, the international support for Ukraine so far has been rather limited.
The UK’s International Development Committee has released its report on aid spending in the UK, which scrutinises the government’s decision to spend an increasing proportion of the ODA budget in the UK. In 2021 10% (almost £1 billion) of the aid budget was spent on in-country refugee costs. Save the Children estimates this could reach £4.5 billion in 2022-23 – a third of the aid budget. The IDC finds the Home Office’s approach to transparency on ODA spending to be inadequate and opaque, and recommends that the Treasury ring-fences 0.5% of GNI to be spent on development assistance outside of the UK.
This Convergence brief looks at how private sector investment is being mobilised to meet the Sustainable Development Goals (SDGs) financing gap and asks how much a dollar of concessional capital mobilises. It examined 340 transactions and found that the average leverage ratio for blended finance transactions was 4.1 (i.e., blended finance funds leveraged $4.10 of commercial capital for every dollar of concessional capital). This remained in line with 2018 figures. But less than half of the mobilised finance came from private sector sources, with the remainder coming from multilateral development banks/ DFIs and philanthropic investors.
In this blog, Development Initiatives examines 2021 OECD_DAC data on how donations of excess vaccines were counted as ODA. It finds clear discrepancies in how donors reported vaccine donations and that agreed safeguards were ignored. It argues that the practice inflates aid and to preserve the integrity of ODA, it would be simpler and more justifiable to exclude excess vaccine donations altogether.
Also from CGD this month, a new study examining the climate finance architecture finds that only 5.37% of World Bank-administered $50 billion funds for climate adaptation are going to the ten countries most vulnerable to climate change. And 13.1% of funds go to low income countries. The paper highlights the lack of shared criteria and lack of consistent results and impact reporting standards. It recommends consolidating funds in order to increase efficiency and impact.