MFAN Partner Sara Messer Explores Domestic Financing for Development

In a new blog post, ONE’s policy manager for aid effectiveness, Sara Messer, reviews Secretary Clinton’s speech on development last week during an OECD session on the subject. In the speech, Clinton expands on the Obama administration’s newest concept, Domestic Financing for Development (DF4D), though details on the initiative’s implementation remain vague. Read Messer’s full post below.

You can also read ONE’s interview with Assistant Secretary of State Jose Fernandez in which he discusses DF4D in further detail by clicking here.

Boosting mutual accountability through domestic financing

Sara Messer

Speaking to a room of heads of states and ministers on Thursday, US Secretary of State Hillary Clinton used her platform as chair of the OECD Ministerial Meetings to place a special spotlight on development.

In her speech, Clinton described how the OECD can foster a new partnership between donors and developing countries, which relies on mutual accountability, and focuses reforms in the areas of taxes, transparency, and corruption.

“… Since the United States has sought to elevate development within our own foreign policy, we wanted to focus on what the OECD can do to foster more effective development practices. We start by recognizing that aid, while it remains essential, is not enough to deliver sustainable growth. Countries must be the authors of their own development. And we need to make it a priority to help nations mobilize their own resources to create those greater opportunities.” -Hillary Clinton, Remarks at the Commemoration of the 50th Anniversary of the OECD

A true development partnership based on mutual accountability means that both parties have responsibilities to uphold in contributing resources, setting priorities, and delivering results. And Clinton stressed how developing countries can take ownership of their development by increasing their ability to collect taxes, fight corruption, and be transparent about their budgets and spending.

Wealthy donor countries also share the same responsibility of being transparent about the aid they deliver, and many donor countries have taken steps to improve transparency through joining the International Aid Transparency Initiative (but not the US) and through developing new online resources for publishing aid flows, like the Foreign Assistance Dashboard. The US and other donors have also supported developing countries in the fight against corruption through the Anti-Bribery Convention and the Global Forum on Transparency. And now the State Department has announced a new initiative to help developing countries increase domestic revenues, called Domestic Financing for Development (DF4D).

Domestic Financing for Development

According to Clinton (and further elaborated through a ONE interview with Assistant Secretary of State Fernandez to be posted soon), DF4D will include:

  • New policy directives for State and USAID personnel to elevate the fight against corruption,
  • An “innovation fund to create incentives and boost political support for anticorruption efforts and tax reform,” and
  • A pilot project to help countries make reforms in these areas.

We first heard of DF4D during President Obama’s visit with President Funes of El Salvador in March, as part of a broader US framework for engaging developing countries called Partnership for Growth. Since the announcement in El Salvador however, details and information about both initiatives have been sparse. Besides El Salvador, none of the other pilot countries for Df4D have been announced, although Assistant Secretary Fernandez told us that a handful of countries initially involved will likely be from West Africa. We also know that the other three pilots for Partnership for Growth will be the Philippines, Ghana, and Tanzania, so we might watch to see if DF4D will be part of those pilots as well. However, officials have not released any strategy documents or further information on how the pilots will be implemented or what they will entail.

We know that true and sustainable development requires much more than aid, and it is promising to see Secretary Clinton and the US embracing new policies and strategies for approaching development partnerships. Supporting and strengthening countries’ ability to fight corruption and raise revenues is an important step in ensuring ownership over development and contributing to lasting growth. But these efforts must not detract from donors meeting their own commitments, whether they be about aid, trade, investment, or other policies to promote development. Donors cannot call for developing countries to step up, while they themselves back down from delivering on their own promises to fight poverty and disease (as our latest DATA Report showed). Mutual accountability relies on mutual responsibility and action.

 

 

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