Aid reporting: Creative bookkeeping is not acceptable

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Gender equality and reproductive rights are often poorly protected in developing countries, where illegal abortions kill 47,000 women every year. [DFID/Flickr]

It is disappointing that some member states have chosen to redirect toward domestic expenditure funds that would have otherwise gone to facilitate inclusive and sustainable international development, write Niels Keijzer and Adam Moe Fejerskov.

Niels Keijzer is a researcher at the German Development Institute and Adam Moe Fejerskov is a PhD candidate at the Danish Institute for International Studies.

The OECD’s Development Assistance Committee (DAC) plays a key role in defining and monitoring global standards in the field of development cooperation, including the reporting of Official Development Assistance (ODA). This Thursday and Friday (18-19 February), government ministers and other decision-makers gather in Paris for their biennial DAC High Level Meeting and will consider possible changes to the rules on what expenditure can be reported as ODA. EU member states were among those most assertively pushing for an ambitious universal and transformative agenda and are now in the process of translating the 2030 Strategy for Sustainable Development into convincing strategies and action. EU member states collectively provide over half of global ODA and are thus well-placed to lead efforts to strengthen both the relevance and resonance of ODA reporting as one of the main drivers of supporting the achievement of the Sustainable Development Goals.

In this light, it is disappointing that some EU member states have instead chosen to lead calls for widening rules on ODA-eligible expenditure, redirecting funds that would have otherwise gone to facilitate inclusive and sustainable international development towards domestic expenditure that is needed but will not contribute to furthering this goal. Suggestions to widen ODA-eligible expenditure, such as those tabled at this week’s High Level Meeting, are a long-standing issue of debate in the DAC and have gradually eroded the legitimacy of the ODA as an indicator of support to global development. Yet they are also a symptom of problematic governance arrangements of the DAC that are centered around decision-making by consensus of the Members.

While conceived during the early 1970s, the ODA concept has survived all trends and changes in international development cooperation of the past decades for offering something no other metric in the field did: the agreement to contribute 0.7% of one’s Global National Income to development cooperation allowed to share the burden and compare the efforts of countries as diverse as the USA and Luxemburg. Strong performance in terms of approaching, meeting or even surpassing the 0.7% target tends to add positively to a country’s reputation on a global level, while poor performers may even seem a bit guiltier of persisting patterns of poverty.

Modernising (in effect ‘modifying’) what expenditure can be reported as ODA therefore remains a touchy matter, since depending on the nature of a change one country may obtain an advantage over another and thus appear a more committed global actor. This is not new, as since the 1970s decisions on ODA reporting are taken at the highest level, while the technical preparation and detailing of the decisions is done by civil servants under the so-called Working-Party on Statistics. As the OECD describes, a dedicated secretariat “raises most technical and design issues, and proposals for new classifications, while members of the working party often make proposals for changes in statistical coverage.” In keeping with the general provisions of the OECD Convention, all decisions are reached by consensus. In recent years the DAC has made strong efforts to reach out and ensure that more providers of development assistance would report their development finance to the DAC, such as international organisations, high-income states from the gulf region and independents such as the Bill and Melinda Gates Foundation. They do however not enjoy the same influence over the ODA reporting system, neither formally nor informally.

While the upcoming discussions on expenditure on peace and security as well as domestic refugee expenditure both need and receive ample attention, it is equally urgent to modernise the ODA statistical reporting system itself. Transparency on technical meetings was improved in recent years, with various documents on the reform of loans and debt relief reporting published in the process of preparing rules changes in the period 2013-2014, yet such documents were not published in the run-up to this week’s meeting. As a result, stakeholders such as the European Network on Debt and Development (Eurodad) frequently issue well-informed statements, including for this week’s meeting, that however are not able to directly relate to the exact content and details of what is discussed. For this reason, they call on the DAC to open up its discussions and decision-making bodies.

Beyond underlining the importance of keeping up and strengthening the DAC’s transparency efforts, it should be stressed that as long as the OECD pipers keep calling the ODA tune, there will be natural limits to how much legitimacy the system can muster. Opening up the decision-making system on ODA to all those reporting expenditure seems a first and logical step, while more transparent and consultative preparatory processes would stand to deliver a future-proof system that caters to all various interests and demands.