Catalytic Development Assistance in Fragile States

A decreasing share of development assistance is going to the countries most in need despite of record high total foreign aid at 135 billion. The new OECD Development Cooperation Report calls for mobilizing more and better development assistance. Effective development assistance must be used catalytically in fragile states by promoting peace, supporting national leadership and mobilizing state building.

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The enormous development progress seen over the past 20 years is unprecedented in human history. Extreme poverty has been halved globally and 600 million people brought out of poverty in China alone. Child mortality has also been halved which means 17,000 more children are alive every day. But some of the least developed and fragile states are left behind. Global progress is of little consolation for people facing violence and humanitarian needs in South Sudan and the Central African Republic. A target of 50 percent of all development assistance to the least developed and other vulnerable nations has been proposed. But we also need better development assistance used catalytically by supporting peace, national leadership and state building.

There can be no development without peace and security. Building schools and hospitals is of little use if those are burned down the next day. The African Development bank has estimated that a civil war can erase 20-30 years worth of development. Effective development assistance must be a catalyst for peace and political settlements. South Sudan descended into ethnic war and destruction in December last year when the two top political leaders in the land started fighting in a power struggle. South Sudan's large oil reserves, which provided 98 percent of the government's revenues, may now be mobilized for war rather than peace and development. Humanitarian assistance recently helped avert a famine in South Sudan and many lives were saved. But development assistance can only have a lasting effect by supporting peace and political settlements. The developing partners, including China, EU and the USA, must support the regional peace initiatives led by neighboring Ethiopia and Kenya. International donors should also fund a regional peacekeeping force with a robust mandate from the UN. The international community must insist on a financial mechanism to ensure complete openness about South Sudan's oil revenues. Development assistance should support media promoting peace, bishops preaching reconciliation and civil society groups working across ethnic divides.

Countries must be in charge of their own development to be successful. Development assistance is most effective when it supports national leadership and aligns behind the government's priorities. The New Deal for Somalia generated 1.5 billion dollars in development assistance for security and judicial reform under the leadership of the government of Somalia. Aligning behind government leadership and supporting their priorities is the most effective way of providing development assistance. Somalia now seems on track to achieving more political and national stability. Somalis are feeling safer than a year ago, despite many remaining challenges. Thousands are returning from abroad to help rebuild the country as security has improved. As the former Somali finance Minister Suleiman always says -- Please use our state, otherwise the state will not grow stronger.

Development assistance can support state building and improve nation's abilities to mobilize their own domestic resources. When President Catherine Samba-Panza came to power in the Central African Republic after the brutal conflict in 2012-13, she had few tools at her disposal. Development assistance has allowed her government to start providing some services and pay salaries to teachers, doctors and public servants. But governments must be able to raise their own revenues and take charge of their own development. Domestic resources are by far the most important sources of development finance, even in very poor states. Developing countries spend around 1,200 billion dollars on education every year and only 13 of these billions come from development assistance. Even the least developed countries get more than twice as much in revenue from taxes as development assistance. Using development assistance to mobilize tax revenues helps finance human development and economic recovery, while at the same time building the state and strengthening the contract between the state and its citizens. Supporting tax administrations is a hugely effective way of mobilizing domestic resources and building a state. In the West Bank, a program allowed 60 municipalities to double their property tax collection over four years. A project assisting Kenya's tax administration returned more than thousand dollars for every one dollar invested.

More and better development assistance is needed for the least developed and fragile states. More development assistance should go to the countries most in need. Better development assistance must be used catalytically by promoting peace, supporting national leadership and mobilizing state building. The donors need to step up and use our aid much more strategically to assist peace processes and in the building of states. Leadership is the key to achieve this.