The aim of this paper is explore the implications of the new and complex aid landscape for developing country governments. In 2000, development assistance was overwhelmingly provided by traditional bilateral and multilateral donors, which provided aid in specific ways and according to a particular set of norms. Today, this is being complemented by the growth of other forms of development assistance, including from non-Development Assistance Committee (DAC) donors, climate finance funds, social impact investors, philanthropists and global funds, as well as less concessional flows.
This study explores the challenges and opportunities this new landscape presents to developing country governments. It does this in three ways:
- First, it provides a provisional taxonomy of the various forms of development assistance, including the less traditional flows.
- Second, it uses this taxonomy to provide a first-cut estimate of the volume, composition and recent trends in development assistance.
- Third, it summarises the findings of three country case studies in Cambodia, Ethiopia and Zambia.
These studies seek to understand:
- The volume and composition of flows at country level;
- The priorities governments have in managing them;
- The fora in which governments seek to engage with different groups of providers; and
- The extent to which governments have been successful in meeting their objectives.
The authors finds that development assistance flows grew substantially between 2000 and 2009, and their composition has shifted heavily towards what is referred to as ‘non-traditional’ sources. The study finds that:
- According to a more conservative, or ‘lower-bound’, estimate, which excludes OOFs, total development assistance grew from $64.8 billion to $173.3 billion between 2000 and 2009. In 2000, the ‘non-traditional’ component of these flows was only $5.3 billion, or 8.1% of the total. By 2009, non-traditional flows had increased tenfold to $53.3 billion, making up 30.7% of total development assistance.
- A less conservative, or ‘upper-bound’, estimate, which includes OOFs, suggests that total development assistance grew from $77.1 billion to $213.5 billion between 2000 and 2009. In 2000, NTDA was $17.6 billion; by 2009 it had grown to $93.5 billion, a fivefold increase. NTDA by this expanded definition rose from 22.8% of total development assistance in 2000 to 43.8% in 2009.
The research draws on country case studies in Cambodia, Ethiopia and Zambia to explore the challenges and opportunities developing country governments experience in managing this new complex aid landscape. It finds that:
- All three countries are receiving increasing volumes of development assistance, with a greater share accounted for by non-traditional sources, although this varies by country. Data challenges mean our analysis is likely to underestimate the current volumes of flows, particularly from less traditional providers.
- This growth is leading to more choice and more finance, and developing country governments welcome this.
- Governments identified ownership, alignment and speed as key priorities when it comes to the ‘terms and conditions’ of development assistance. Non-DAC donors were found to score well against this set of criteria; this was less true for global funds in Cambodia and Zambia.
- Ethiopia and Cambodia were found to be taking a strategic approach to the division of labour between different groups of development assistance providers. This was less true for Zambia, possibly because the country has better access to domestic and private sources of finance and is less dependent on development assistance.
- Governments in Cambodia and Ethiopia show limited interest in including the less traditional providers in aid coordination mechanisms; the Zambian government displayed more interest.
- Philanthropic and social impact investment flows are small at country level and are not yet changing the aid landscape significantly.
- Countries’ ability to attract and manage climate finance appears to depend heavily on theirown strategies.
In conclusion, it is noted that:
- The volume of development assistance has grown dramatically since 2000, and the composition has changed significantly, with a much larger share being accounted for by non-traditional providers.
- Countries are welcoming this additional choice and see these trends as more positive than negative. The benefits of greater choice were found to outweigh the potential costs of the additional fragmentation.
- The growth in the variety of providers of development assistance, particularly the non-traditional, is helping strengthen the negotiating power of governments, and may make it more difficult for traditional donors to influence policy.
- The ability of countries to benefit from the changed landscape depends heavily on their ability and willingness to manage these flows strategically, and also on their economic and political context.
- The changed landscape will lead to different ‘ways of working’ for governments, traditional donors and the international aid effectiveness community.
