OECD Report: Multilateral Development Finance 2020

Five years on from the launch of the 2030 Agenda, the multilateral development system is under stress, perhaps as never before. The COVID-19 crisis has brought renewed attention to the crucial role multilateral organisations have to play in addressing the triple crisis looming in developing countries: health, economic and humanitarian. The global scale of the virus has highlighted the interdependence of nations and people around the world, demonstrating that the need for international co-operation and solidarity is greater than ever. Yet, the crisis has also exposed some limitations of the multilateral development system that need to be tackled to ensure multilateral organisations can best contribute to the recovery.

This report provides an overview of the multilateral system against the backdrop of the COVID-19 crisis. It presents the key trends in recent funding to the system and explores how multilateral organisations’ funding bases can affect their independence and the sustainability of their programmes. It also sheds light on the development activities financed by multilateral organisations in recent years, asks how they add value relative to other sources of development finance and assesses the effectiveness of their funding.

This report highlights three key reform areas with the potential to maximise the impact of multilateral development finance:

The scale of multilateral finance: ensuring that the multilateral system can help address development challenges of a new magnitude (e.g. extreme climate events or pandemics).
Efficiency: ensuring value for money in a context of constrained resources.
Accountability: restoring trust in the multilateral development system.

Six building blocks will help achieve progress in these areas: a) greater transparency over financing and results; b) increased systemic coherence; c) improved co-ordination, both among donors and multilateral organisations; d) increased financial capacity of multilateral organisations; e) better selectivity of multilateral operations, and f) increased capacity of multilateral organisations to adapt to evolving circumstances.

These building blocks, which span all stages of the multilateral development finance process and apply to all stakeholders, outline a possible research and policy analysis agenda for the OECD DAC to contribute to the reform of the multilateral development system.

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