[BARCELONA] Major global development funds and institutions could struggle to secure the billions of dollars needed to support the world’s least affluent countries as they embark on new funding campaigns, according to analysts.
A report published today (Wednesday) by the Center for Global Development says that funds including The World Bank’s International Development Association, Gavi, the Vaccine Alliance, and The Global Fund to Fight AIDS, Tuberculosis and Malaria are seeking to replenish their coffers with a combined total of about US$100 billion in grants from donors over the course of 2024 and 2025.
This is creating what the report’s authors call a “replenishment traffic jam”, whereby different institutions are lining up for a share of the same limited basket of resources amid aid budget cuts in several countries.
Economic headwinds
Charities warned in September that the UK’s spending on overseas bilateral humanitarian and development could fall to a 17-year low of 0.36 per cent this year, ahead of an autumn budget announcement later this month.
“You don’t want [aid] to go up and down, because when it goes down, that can have permanent effects.”
Jean-Louis Arcand, president of the Global Development Network
The German government said in August that it would cut funding for global development cooperation by almost 1 billion euros next year, which comes on top of severe cuts to its 2024 aid budget.
According to Janeen Madan Keller, co-author of the report and deputy director of the Global Health Policy Program at the Center for Global Development, foreign aid budgets from the biggest development players are under pressure due to economic headwinds, which makes the current fundraising bids especially challenging.
Not only are top donors like the European Union, Germany and France slashing their aid budgets, but the funds that distribute aid keep relying on the same small group of donors, said Keller.
“So, what we’re seeing is the same donors being asked to contribute to these same replenishments,” she told SciDev.Net.
Another issue is that a growing number of aid funds are being created with a specific focus, such as pandemic preparedness or climate response, while the pot of money they’re competing for dwindles, said Keller.
Aid at risk
“Prospects for fully replenishing all these funds’ coffers look grim as governments continue to cut aid budgets and elections add even more uncertainty to pledges, especially where they entail transitions between political parties,” says the Center for Global Development’s report.
It remains to be seen whether development funds will actually fail to raise enough money, since the replenishment season is still underway. But if the money does fall short, aid flows could be jeopardised, with potentially dire consequences for the poorest countries in the world.
Where are we with the current replenishment traffic jam? (Adapted from: Center for Global Development)
“You don’t want [aid] to go up and down, because when it goes down, that can have permanent effects,” said Jean-Louis Arcand, president of the Global Development Network, who wasn’t involved in the report.
One typical example is when someone in a poor country loses their job as a result of cuts, they might not be able to afford to keep their children in school, Arcand told SciDev.Net.
Aid budget cuts by major donors such as the UK and Germany could have direct consequences on the stability of aid, which is essential in countries where large shares of government budgets are made up of aid money, said Arcand.
“If the Germans, the UK, cut [aid budgets], the people who are going to get hurt are the people in the least developed countries,” he said.
The World Bank, which oversees the International Development Association, or IDA, says there is a need to step up ambition for the IDA since multiple crises have set back progress on the UN Sustainable Development Goals and development. However, it declined to comment directly on the report’s findings.
A Global Fund spokesperson said the Fund hoped to launch its investment case in the first quarter of next year in a “challenging” context of development finance.
The Fund has mobilised an additional US$109.4 million since its last replenishment, or fundraising cycle, so has been able to invest more than expected in the current period, the spokesperson added.
More broadly, decreasing aid budgets and reduced domestic financing for health threaten to impact the delivery of “core and essential life-saving care … such as antiretrovirals, malaria bed nets, therapeutics and diagnostics” as well as investment in the next generation of solutions, the spokesperson said.
Gavi didn’t immediately respond to a request for comment on the report.
Bucking the trend
Elise Dufief, research lead at IDDRI, a France-based sustainable development think tank, said that the latest aid budget cuts do warrant concern, but that some countries are leading the way in increasing contributions.
Denmark has said it will increase its aid contributions by 40 per cent and good news is also expected from South Korea, said Dufief, while some African countries have pledged contributions to the African Development Fund.
“I think these countries are really showing that they can decide that they want to contribute and lead on these issues, and hopefully encourage others to join as well,” she said.
This piece was produced by SciDev.Net’s Global desk.