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21. Development Finance at a Turning Point: Effects and Policy Recommendations

Author:
Kathrin Berensmann, Sabine Laudage Teles, Christoph Sommer, and Yabibal M. Walle
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Development finance is at a turning point, as the macroeconomic environment has changed profoundly and the financing gap for low- and middle-income countries has widened. The events that led to this new situation are the multiple crises that the global economy is facing, such as the climate crisis, the COVID-19 crisis and the war in Ukraine. As a result, interest rates have risen sharply over the past year and are not expected to decline anytime soon. High interest rates further restrict low- and middle-income countries’ access to international financial markets by making borrowing more expensive. At the same time, debt levels in several countries are rising to levels that are almost impossible to repay. Poorer countries find themselves in a trap where financing the Sustainable Development Goals (SDGs) becomes a distant goal for them. To “get back on track” in financing the 2030 Agenda and the SDGs, a number of reform proposals have been put forward within several processes and initiatives, including the Financing for Development (FfD) process, the Bridgetown Initiative and the Macron-led Paris Summit. Despite being initiated by different actors, these proposals all highlight the importance of reforming the international financial architecture in view of the changed macroeconomic environment. The Hamburg Sustainability Conference in June 2024, the United Nation’s Summit of the Future in 2024 and the next FfD Conference in 2025 should be used to strengthen and accelerate ongoing reform processes and come up with new, innovative and bold proposals to reshape development finance in these challenging times. Against the background of the multiple crises and its effects, our key recommendations for the reform of development finance are as follows.
Topic:
Debt, Development, Reform, Finance, Sustainable Development Goals, and Multilateral Development Banks (MDBs)
Political Geography:
Germany and Global Focus

22. Green Jobs and the City: Towards a Just Transition in Developing Countries

Author:
Alexander Kleibrink, Anna Pegels, Michael Fink, and Wolfgang Scholz
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This policy brief examines actions for a just transition of local job markets in developing countries. We identify building blocks for shifting from carbon-intensive towards green jobs in this transition. Green jobs in cities are key to ensure a just transition of local employment markets, both formal and informal, and make cities function more sustainably. They are part of a wider inclusive green economy aiming at carbon-neutrality and resource efficiency with a focus on human well-being and social equity while paying special attention to local nature-based solutions. The transition will create winners and losers. Both need to be managed if the process and outcomes are to be just.
Topic:
Climate Change, Development, Economy, and Green Jobs
Political Geography:
Global Focus

23. Strengthening Social Cohesion in Conflict-Affected Societies: Potential, Patterns and Pitfalls

Author:
Fletcher D. Cox, Charlotte Fiedler, and Karina Mross
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Bilateral and multilateral donors are increasingly focusing on strengthening social cohesion in efforts to build and sustain peace in conflict-affected societies. What does promoting social cohesion mean with respect to inter­national engagement? This policy brief provides an overview of the “social cohesion” approach, explains how it applies to conflict-affected and fragile contexts, and intro­duces a typology of common interventions. It discusses the added value of taking a social cohesion approach to development and peacebuilding practice, as well as challenges policymakers and practitioners may encounter when using it. Social cohesion can be understood as positive relations among individuals and groups (the horizontal dimension) and between society and the state (the vertical dimension). While fostering, rebuilding or sustaining cohesion are challenges for any society, they are particularly difficult in conflict settings where divisions fuel violence and violence reinforces divisions. We argue that taking a social cohesion approach in divided, conflict-affected societies offers several advantages. First, it has the potential to focus intervention on less tangible aspects of conflict – drawing attention to overlooked grievances and bringing tensions between groups and the state into focus. Second, it helps integrate a peacebuilding lens in a broad variety of policy spaces. Third, it helps policymakers to integrate citizen perspectives into develop­ment strategies and to focus on the provision of quality peace for all citizens. Taking a social cohesion approach, however, also brings challenges. It may be sensitive for external actors to address social grievances, identity-based divisions and power relations. Dominant groups may feel threatened in their position of power and push back against these attempts, or tensions among historically marginalised groups may cause friction. Donors may experience backlash against programmes that directly address sensitive topics. At the same time, if the intent is to take a transformative approach to building social cohesion, it may be difficult for donors to maintain a neutral stance. Social cohesion programmes may risk increasing tension in the short term, but to restore inter-group trust and state legitimacy over the long term, it might be necessary to confront and accept tension.
Topic:
Development, Engagement, Social Cohesion, Donors, and Development Policy
Political Geography:
Global Focus

24. Refugee-led Organisations and Intersectionality: Feminist Development Policy in the Lives of Refugees

Author:
Nasim Motalebi and Charles Martin-Shields
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This policy brief outlines how feminist development policy can be locally enacted by taking an intersectional approach to the provision of assistance to refugees and displaced persons. Refugee-led organisations (RLOs) play a key role in providing collective services, particularly in contexts where the host government is unlikely or unwilling to provide access to local social services. This is especially true in non-camp settings, and as global refugee policy moves away from encampment as a response to refugees the role of RLOs in refugees’ daily lives will only increase. While RLOs are an important part of life in a refugee community, they can be especially useful in supporting the needs of women, children, LGBTIQ refugees, ethnic minorities and diverse-ability refugees across multiple refugee communities city- or region-wide. Taking an inter¬sectional approach to understanding the role of RLOs, in particular RLOs led by women, can help policy-makers identify networks of local actors who can effective¬ly meet the social needs of all members of a local refugee community, including those who face particular marginali¬sation due to gender, sexual, religious or ethnic identity. The intersectional approach to working with RLOs focuses on meeting the needs of marginalised identity groups across the entire refugee population in a city or region. For example, refugees representing multiple ethnic groups or nationalities might have their own ethnic or national RLO, but that RLO may not be able to meet the unique needs of women, children, LGBTIQ and reli¬gious minorities within the community. An inter-sectional approach means engaging all the RLOs in a city or region to meet the social, health and protection needs of margin¬alised community members, with the under¬standing that in doing so the wider needs of all community members will be met. RLOs are part of a wider ecosystem of services and organisations that support refugees, and while they play a unique role in enacting feminist development policy for refugees, they have limitations. Policy-makers should engage them alongside official authorities from the UN Refugee Agency (UNHCR), and the host country govern¬ment when possible. Given the challenges and opportuni¬ties that come with taking an intersectional approach to meeting refugees’ needs through engage¬ment with women-led RLOs, we offer the following recommendations to policy-makers: • Funding RLOs in situations where refugees have no legal status is challenging. In many cases, RLOs can provide intersectional social services, but often need funding to do so. Donors can localise their programming by funding NGOs that collaborate with RLOs, and allowing NGOs to redistribute funding to their RLO partners. • Trusting RLOs as a mediator for connecting refugees to official protection and legal services. Refugees living in situations where they may not have legal status often trust RLOs more than they do official agencies such as UNHCR. Donors can therefore support RLOs in providing protection against hostile legal environments for asylum seekers. • Mitigating risks associated with RLOs’ ethnic, national, and religious biases. RLOs come with their own limitations and problems. They are often informal institutions, and in many cases lack UNHCR’s legal status. Since they are community-based, they can also at times replicate existing biases within an ethnic or national community. Donors should be aware of this risk when working with RLOs.
Topic:
Refugees, Feminism, Organizations, and Development Policy
Political Geography:
Global Focus

25. Implementation of the WTO Investment Facilitation for Development Agreement: Identification of Reform Needs and Development Policy Measures

Author:
Axel Berger, Ann Margret Bolmer, Florian Gitt, Zoryana Olekseyuk, and Marius Metz
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
More than 110 Members of the World Trade Organization (WTO), many of them developing countries and least-developed countries (LDCs), are negotiating a plurilateral Agreement on Investment Facilitation for Development (IFD). In contract to existing bilateral investment treaties that establish sweeping rules on investment protection and liberalisation, the IFD Agreement aims at increasing the transparency, predictability and efficiency of investment frameworks as well as improving inter-governmental coordination and international cooperation on investment matters. In view of the fact that WTO Members aim at concluding the negotiations by mid-2023, discussions are under way on how the IFD Agreement can successfully be implemented in developing countries, and LDCs in particular. The IFD Agreement includes a comprehensive section on Special and Differential Treatment, which grants developing countries and LDCs longer timeframes as well as technical assistance and capacity development to support implementation. The Agreement also foresees so-called needs assessments at the country level to evaluate countries’ readiness and support needs to implement the IFD Agreement. While such needs assessments have been extensively used in the context of the WTO Trade Facilitation Agreement (TFA), we lack insights into how such needs assessments can be operationalised in the context of investment facilitation and what kind of imple¬mentation challenges are prevalent, in particular in LDCs. To assess implementation gaps, barriers to successful implementation as well as national and international support actions, we conducted pilot needs assessments covering a selected group of IFD Agreement measures with a broad range of stakeholders in three LDCs, namely Lao People’s Democratic Republic (Lao PDR), Togo and Zambia. Our pilots indicate that 13 selected provisions of the IFD Agreement have not been sufficiently implemented across the three LDCs. In particular, 64 per cent of analysed provisions have only partially been implement, while the rest have not been implemented at all. These findings underline that, in order to benefit from the IFD Agreement, LDCs need substantial implementation support from the international community. The most striking, commonly identified barriers hindering the full implementation are lack of cooperation and coordination among investment-competent agencies, poor information management for investors as well as limited digitalisation and automatisation. To overcome these barriers, nationally identified actions may focus mainly on the creation of a single information portal for foreign investors and a single-window system to improve authorisation procedures, as well as a clarification of mandates and functions of relevant ministries and institutions. Our research also underlines the importance of a whole-of-government and multi-stakeholder approach. The establishment of a National Investment Facilitation Committee may prove to be an effective instrument to ensure coordination and communication between involved stakeholders. International support should complement national actions with technical assistance and capacity development in investment-related topics, improving information and communication technology (ICT) infrastructures and digitalised processes, as well as fostering the international exchange of best practices. Our pilot needs assessments emphasise that the WTO Secretariat and the negotiating Members should strengthen outreach activities to promote knowledge about the WTO IFD Agreement among national-level stakeholders. In general, our pilots underline that needs assessments are an important instrument for identifying persistent implementation gaps and tailoring technical assistance and capacity development to the demands of Members, especially LDCs.
Topic:
Development, Reform, Investment, WTO, and Development Policy
Political Geography:
Global Focus

26. Health Financing in Times of Multiple Crises: Analysis and Recommendations

Author:
Christoph Strupat, Pooja Balasubramanian, Srinivasa Reddy Srigiri, and Anna-Katharina Hornidge
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The COVID-19 pandemic has exposed the fragility of health systems and highlights the need for renewed efforts to finance pandemic preparedness, prevention and response (PPR) mechanisms, and universal health coverage (UHC). Two lessons emerge from this global health challenge. First, it has shown that global problems need global solutions, as well as the agency of local and national actors to make them work, so it is recommended that public health be considered a global public good. This requires solidarity between rich and poor countries to attain a globally “highest attainable standard” for managing pandemics and other public health emergencies. The provision of such a global public good requires substantial public resources. Furthermore, the focus should not only be on preventing the spread of diseases but also on detecting and fighting infectious diseases at their source. The second lesson is that prevention is a good investment, as it costs less than remedial interventions at later stages. Health systems can be considered as the means by which health priorities, such as pandemic PPR and UHC, can be operationalised. Studies show that health systems that could effectively leverage both robust health security core capacities (e.g. laboratories) and fundamental UHC interventions (e.g. accessible health facilities) were often in a better position to protect their citizens against the negative impacts of the COVID-19 pandemic. Focusing on the landscape of health financing in low- and middle-income countries (LMICs), it becomes clear that during the COVID-19 pandemic there was a substantial increase in international health financing. However, continued high out-of-pocket expenditure (OOPE) in LMICs points to a structural imbalance in health financing, which is one of the major barriers for achieving SDG3. Further contribution from international development assistance and an increase in domestic government expenditure by LMICs through improved mobilisation of domestic resources is therefore impera-tive. Funding gaps to achieve PPR and UHC in LMICs are small in relation to the projected costs of a pandemic such as COVID-19. However, as global debt levels soar, fiscal spaces to close these funding gaps become smaller. The following policy options for governments and international development partners should be considered to protect and improve spending on health in times of shrinking fiscal spaces: reallocation within budgets towards health, better priority-setting of health financing, and greater use of debt-to-health swaps, health taxes and national health insurance schemes. Importantly, investment in health is critical not just for the health benefits, but also because of the positive socio-economic impacts that result, in excess of the level of investment. Improved well-being and health outcomes translate into higher productivity and income, with a benefit–cost ratio of nine for low-income countries and 20 for lower-middle income countries. Given the high rates of unemployment in many LMICs, investments that create jobs in the healthcare sector are also beneficial for other sectors. Evidence shows that for every healthcare professional job that is created, 3.4 jobs are created on average in other sectors. As a large proportion of healthcare workers is female, these new jobs can be an opportunity for young women, in particular, and can help to promote female empowerment and gender equality. Altogether, these long-term benefits affirm that investment in health can enable large spillover effects on the social and economic dimensions of sustainable development and the implementation of the 2030 Agenda for Sustainable Development.
Topic:
Health, Governance, Finance, Crisis Management, and COVID-19
Political Geography:
Global Focus

27. Climate (Im)mobility in Urban Contexts: From Recognition to Action

Author:
Susan S. Ekoh
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
There is an increased recognition of human mobility responses to climate change among policy-makers and stakeholders. At the global level, the Global Compact for Safe, Regular and Orderly Migration (GCM) highlights this intersection of climate change and migration. In addition, follow-up processes to the Paris Agreement highlight human mobility outcomes from climate impacts. This policy brief argues that while there is a recognition of climate migration at the international and national levels, implementation at the sub-national level where pertinent migration is happening, is far from adequate. At the national level, Ghana and Senegal have signed on and engaged in follow-up processes of the GCM and the Paris Agreement. Furthermore, they have in different ways highlighted climate migration as a key policy area. For Senegal, there is a mandate to include climate change and migration along with three other priority areas for all development plans in the country. On the other hand, Ghana’s national migration policy identifies climate change as a key area for policy attention. These reflect recognition of climate change and human mobility as a policy issue at the national level. However, there appear to be gaps in the implementation of these mandates and policy frameworks locally. Hence, there is a need to further investigate the patterns, weaknesses and strengths of climate (im)mobility strategy implementation at the sub-national level. This policy brief presents insights based on case studies of two West African cities, Accra and Dakar, which are relevant to urban climate (im)mobility governance because human mobility patterns are well established internally and from countries in the West African region, as are the influences of climate change on these mobility patterns. Because cities attract migrants, they offer insights into sub-national climate (im)mobility governance. It is, however, important to note the difficulty of isolating climate change as a driver of human mobility since it interacts with several other drivers (Black, Bennett, Thomas, & Beddington, 2011; Ekoh, Teron, & Ajibade, 2023). Regardless of the drivers of human mobility, city authorities have a responsibility to support their resident populations, and with increasing climate threats, they have a duty to support climate adapta-tion and resilience building within the city.
Topic:
Climate Change, Mobility, Urban, and Cities
Political Geography:
Global Focus

28. Children in Refugee Camps and Their Role in Refugee–Host Community Integration

Author:
Erick Nyambedha, Rose Jaji, and Jana Kuhnt
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The UN Convention on the Rights of the Child significantly strengthened the legal basis for recognising children as actors with agency and a voice. In contrast to this, children in displacement contexts are still commonly portrayed as victims without agency. Children are dependent on adults, but that does not mean that they have no right to participate in decisions that affect their lives. This policy brief sheds light on the active role that children in displacement situations can take in their daily lives to shape refugee–host interactions and local integration in camp settings. It discusses how the role of children in the social integration of refugees can be strengthened and supported, indicating potential areas for intervention. With 40 per cent of the displaced population worldwide being below the age of 18, children form a significant part of this group (United Nations High Commissioner for Refugees [UNHCR], 2023). However, there continues to be limited information on the perspectives and experiences of children in displacement situations, particularly those living in the Global South. Although there is some knowledge regarding interventions to support the integration of refugee children, not much has been said about their own initiatives with respect to social integration and mediating the circumstances that displacement and encampment entail. Children change the world around them and invariably impact the adult-dominated processes of migration and integration when they participate. Independently from adults, children negotiate and construct relations during their interactions in public and private spaces, such as in (pre-)schools, organised sporting events and in private meeting points. They develop friendships and share learning materials, food and language. Through their agency, children build relations that are critical for the process of integration. This can transcend adult-dominated notions about the safety and securitisation of displacement contexts, thus transforming the conflict rhetoric associated with refugee–host community relations. The role of children has become even more salient in view of efforts to facilitate integration through the Comprehensive Refugee Response Framework (CRRF), a key framework guiding refugee policy in many refugee-hosting countries in the Global South. At the same time, children’s unique growth and developmental needs have to be adequately understood and incorporated into integration policies and programmes. In this policy brief, we call for a change in policy and pro¬gramming to recognise and support children’s critical role in social integration. We make the following recommendations to host governments, international agencies and local partners active in refugee camp settings to: • Support more data collection and analysis of children’s actions in building relations that can foster integration in different displacement contexts. • Ensure that children are included as a special category in policy frameworks. Their interests and needs should be taken into account by listening to their voices and providing platforms for exchanges with adults, policy-makers and practitioners. • Create more opportunities for refugee and host community children to interact inside and outside of school environments. • Support sensitisation programmes that bring together parents of refugee and host community children to understand the role of children in the integration process and to ensure that the views of adults as parents and guardians are also listened to and addressed. • Address negative stereotypes and open conflicts between refugee and host community children that restrict free and positive interactions. This can include fostering dialogue and peaceful means to resolve conflicts as well as facilitating cooperation.
Topic:
Children, Refugees, and Integration
Political Geography:
Global Focus

29. The Future of Climate and Development Finance: Balancing Separate Accounting with Integrated Policy Responses

Author:
Svea Koch and Mariya Aleksandrova
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
With the first Global Stocktake to be presented at the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) in Dubai, the question of inadequate levels of climate finance for developing countries will again take centre stage. Ongoing efforts to reform climate finance include the negotiation of a New Collective Quantified Goal (NCQG) by the end of 2024; the structural reform of Multilateral Development Banks (MDBs) to provide more climate finance and to lower the cost of capital; and the setting-up and integration of the new funding stream for loss and damage. Yet, there are other longstanding issues in international climate finance that likewise need to be addressed as part of these ongoing efforts, which are mainly related to the disentanglement of the development and climate finance regimes. Official Development Assistance (ODA), per definition, aims to promote the economic development and welfare of developing countries, and at the same time plays an increasing role in the global climate finance landscape. However, sourcing climate finance from ODA is already leading to a “crowding out” of limited ODA resources for its original purposes. Moreover, the current system of reporting on and accounting for climate finance provided through ODA has significant pitfalls and weaknesses. This paper discusses some of the key challenges caused by the blurring of the development assistance and climate finance regimes and argues that the NCQG process and the integration of loss and damage into the climate finance system must go hand in hand with a separation of climate and development finance accounting mechanisms whilst ensuring integrated policy responses. We address these issues in two parts: first we focus on the current system of reporting and accounting for international climate finance (as ODA); and second on the role of ODA to finance mitigation, adaptation, and loss and damage. We argue that there is a political necessity for distinguishing between ODA and climate finance (for transparency and credibility), which contrasts with the operational reality where co-benefits of projects and development finance must be achieved by integrating climate and non-climate objectives. In this regard, the paper analyses the implications of on-going negotiations under the UNFCCC around the NCQG and loss and damage for a necessary ODA reform. In particular, we make the following recommendations: (1) Align the accounting and reporting system of the OECD (Organisation for Economic Co-operation and Development) with the NCQG: one should separate climate and development finance; reduce over-reporting; and establish triangulation of climate finance data reported by donors. (2) Introduce qualitative frameworks for monitoring and assessment of the impact of climate-related interventions; and define “fit-for-purpose” instru-ments and channels for the provision of climate finance. Looking ahead, we expect discussions on a potential enlargement of the contributor base of climate finance to give new impetus to climate finance reform.
Topic:
Reform, Climate Finance, Transparency, Development Policy, and Development Finance
Political Geography:
Global Focus

30. Trade and Climate Change: How to Design Better Climate-Related Provisions in Preferential Trade Agreements

Author:
Clara Brandi, Kateryna Holzer, Jean-Frédéric Morin, Harro van Asselt, and Katherina Weber
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
To bring our economies on a path to climate neutrality, investments in carbon-intensive production processes have to stop. At the same time, we need to mobilise large amounts of capital for investments conducive to a just transition. Reforming the financial sector in a way that allows this redirection of capital flows to take place is crucial. As one element of a comprehensive sustainable finance strategy, taxonomies can potentially play a pivotal role in this regard. By providing common definitions for sustainable economic activities, these taxonomies aim to increase transparency on financial markets and help market participants to align their investment decisions with sustainability considerations. This policy brief presents policy recommendations concerning the implementation of sustainable finance taxonomies based on experiences with the South African Green Finance Taxonomy (GFT). It mainly builds on data collected in semi-structured expert interviews with different stakeholders of the GFT conducted in South Africa between February and April 2023 (Hilbrich et al., 2023). The implementation phase of the GFT has revealed multiple challenges, including a need for improved regulatory embedding and enhanced capacities on the part of potential users. This has led to a low uptake by market participants.
Topic:
Climate Change, Environment, Investment, Trade, Fossil Fuels, and Preferential Trade Agreements
Political Geography:
Global Focus