Alternatives

PROPOSALS FOR EFFECTIVE AID AND INTERNATIONAL SOLIDARITY

Alternatives to blended finance for development include a number proposals (not necessarily in order of importance and political feasibility):

  1. Commit to and revitalize the Aid Effectiveness Agenda, particularly to increase the level of Canadian ODA – currently approximately 0.31% of GNI – to meet the UN donor commitment target of 0.7% of GNI.
  2. The new International Assistance Act should be rewritten to: promote accountability, transparency, and oversight; reverse the financialization of ODA; prevent public funds from being used to underwrite loans to the private sector; and promote greater reliance on grants. 
  3. Advocate for the global community to focus on improving the mobilization of domestic resources in the South and commit to substantive global tax reform independently led outside the OECD.
  4. Adopt a public-public partnership approach to financing for development by pooling money in multilateral funds that prioritize universal access to affordable and quality, public services (e.g. the Global Partnership for Education).
  5. Promote public-public partnerships in basic infrastructure and service delivery, building on examples from the water and sanitation sector (e.g. the UN Habitat – Global Water Operators Partnership Alliance).
  6. Revise the mandate of FinDev Canada to create a public development bank whose focus is to build public sector capacity and basic infrastructure in developing countries.

The strength of these various approaches is that Canadians strongly support the public provision of services, particularly in health, which are urgently needed to address COVID-19. In addition, there are precedents for public financing initiatives in Europe (e.g. German KfW, and the Dutch Nederlandse Waterschapsbank N.V.) and in the United States (e.g. North Dakota has a successful state-owned bank).

Unfortunately, the weakness is that there is currently a lack of political will to consider public sector alternatives. But  increasing public demands for greater income equality and health and climate justice may change that. Instead of promoting blended finance initiatives, Canada could divert existing ODA to pooled investment funds to help build public sector capacity to provide universal essential services in the global South.