BYSAM CAVENETT|DEC 14, 2023|BLOG
2023 has been a challenging year for the aid and development community. However, amid the bad news, there have been glimmers of hope and stories that inspire.
At Publish What You Fund we’ve remained focused on encouraging aid and development agencies to be more transparent about their planning, spending and results. At a time when resources are limited and needs are growing, we believe transparency is still critical for understanding what aid and development finance is having the greatest impact, for knowing if we are on track to meet commitments such as climate finance goals, and for assessing what is needed to achieve change – such as greater locally led development.
Encouraging DFI transparency
We were pleased to see new transparency commitments from the UK government in its recent white paper on international development. After a turbulent few years for UK aid, the government set out its aim for British International Investment – the UK’s development finance institution (DFI) – to become the most transparent bilateral DFI, as measured by our DFI Transparency Index. Prior to this, Paul James, who manages our DFI research, gave evidence on BII’s transparency to the UK’s International Development Committee hearing on the UK’s strategy towards DFIs. During the launch of their annual review, BII CEO Nick O’Donohoe spoke about how the DFI Transparency Index provided an incentive to improve their transparency. The US International Development Finance Corporation (DFC), the top bilateral in the 2023 DFI Transparency Index, also publicly reaffirmed that the DFI Transparency Tool is its guide for the information it continues to disclose.
It was back in January this year when we launched the very first DFI Transparency Index, which revealed that overall, DFIs are not transparent enough, and are not providing evidence of impact, data regarding mobilisation, or proof of accountability to communities. As well as measuring and comparing transparency levels, one of the key aims of the Index is to encourage and guide improvements. So, it’s very encouraging to see BII, DFC and others both use the Index as a benchmark and a stimulus for better transparency. Since publishing the Index, we’ve liaised with the DFC on its transparency policy, engaged with 15 DFIs on specific steps to enhance their transparency, and also produced an in-depth Disclosure Example Book – to help DFIs see what is possible in terms of transparency and overcome perceived barriers. Two DFIs that were assessed in the Index: CAF – Development Bank of Latin America and the Caribbean and the Islamic Development Bank, have since become members of the International Aid Transparency Initiative (IATI).
Advancing gender equality investments
In September, we also published new research examining 2X investments to assess what DFIs are disclosing. We found a lack of standardised disaggregated information, which makes it almost impossible to get the granular insights that are needed to measure the value, impact, and progress of gender lens investing. Working with 2X Global, we are advocating for the adoption of our recommendations through its new certification scheme. In November, we responded to the World bank’s consultation on its draft gender strategy, urging it to address gaps in disclosure of project and financial information related to its gender investments.
This builds on our work to develop a new, holistic approach to tracking funding for women’s economic empowerment (WEE), which wrapped up in January. Over the previous two years we worked collaboratively with 55 global partners, advisors, researchers and advocates to pilot the approach in Kenya, Nigeria and Bangladesh, and to track national funding in an additional three countries. We published tools so that the approach could be replicated by researchers, policy makers and advocates, and presented our evidence and its implications in a range of reports – which have been downloaded over 15,000 times. In January, we called on funders to match their political support for WEE with increased transparency to ensure investments are effective and catalytic in advancing gender equality.
Setting a baseline for locally led development
In March, with the support of the Modernizing Foreign Assistance Network and its members, we published detailed research to establish an independent, credible, and replicable baseline to measure and track funding for local actors, using US Agency for International Development (USAID) IATI data. Following USAID’s commitment to funnel 25% of its funding to local organisations by 2025, we assessed funding for ten countries over three years and found that only 5.7% of USAID’s funding went to local organisations. This figure nearly doubles (to 11.1%) under USAID’s measurement approach, in part because of a broader definition of local and a smaller definition of what constitutes total funding. If the funding differences are scaled-up to all countries where USAID operates, USAID’s approach would underfund local partners by an estimated $1.43bn per year. Our research helped to put a spotlight on the importance of selecting the right metrics to measure local funding. It was cited by Bill Steiger, former chief of Staff at USAID, in his written testimony before the Senate Foreign Relations Committee on localization, while arguing for a more precise definition of ‘local’. Additionally, Oxfam America used our methodology to replicate the research in a further eight countries.
Driving greater aid transparency
In August we announced which 50 organisations would be assessed for the 2024 Aid Transparency Index. This followed a consultation on the methodology in the spring. Data collection got underway in November, and our engagement with the assessed organisations has already resulted in several agencies re-starting to publish IATI data after significant pauses. The UK’s Foreign, Commonwealth and Development Office recently committed to achieving ‘very good’ in the Aid Transparency Index. It’s rewarding to see that the Index continues to incentivise improved transparency. We’ll see how this is reflected in the results next summer.
Bringing clarity to private sector mobilisation
A topic that seemed to be on the agenda at every conference this year was the need to scale up multilateral development bank (MDB) finance in pursuit of development and climate goals, and in particular the role of private finance in achieving this. But if MDBs are to attract and encourage greater private investment for emerging and developing economies, we first need a better understanding of what funds are currently being mobilised and what is working most effectively. So in April we initiated work to increase understanding around what works to mobilise private investment through improving how mobilisation is measured and disclosed by leading MDBs and DFIs. We’ve discussed the opportunities and barriers with MDBs, their shareholders, the private sector and CSOs, and will publish our proposals in spring next year.
Focusing on private sector contractors
As part of our strategy to make all aid and development finance spending transparent with data that is timely and usable, in September we turned our attention to the transparency of private aid contractors. Despite handling billions of dollars of aid money, the largest players are almost completely un-transparent. The lack of transparency limits our ability to hold private contractors to account, and to understand and analyse international aid flows. We’re advocating for private aid contractors to meet international standards for aid transparency.
We want to thank everyone who has contributed to and supported our work over this year. Together we’re making a difference to the quality and quantity of aid and development data that’s being used. We’ve set out why this continues to matter so much.