• Aid flows

Aid flows

This report provides guidance to members of the OECD’s Development Assistance Committee (DAC) on using ODA more effectively to mobilise private investment for development (investment-enhancing ODA). It focuses on how development agencies can help influence the conditions that lead to increased levels of private investment and on how investment can better contribute to the achievement of broader societal goals, including poverty reduction. A fundamental objective is to help staff in development agencies, both in headquarters and the field, to pursue a more strategic and co-ordinated approach when they design and deliver investment-enhancing ODA.

The report stresses that:

• investment-enhancing ODA should be based on general guidance on improving the design, delivery and effectiveness of development co-operation, including the Paris Declaration on Aid Effectiveness which stresses the mutual accountability of both donor countries and developing country partners for achieving development results
• vigorous and sustained economic growth, fuelled by investment and entrepreneurship, is needed for the private sector to create more jobs and increase incomes of the poor. In turn, this will generate the revenues that governments need to expand access to health, education and infrastructure services and so help improve productivity
• there is a need to encourage entrepreneurship and innovation by supporting education and vocational training, research and development activities and technology transfers
• donors should seek out reliable, representative and accountable domestic partners who can drive reform programmes and help catalyse change
• development agencies need to have access, individually or collectively, to an appropriate range of aid instruments
• public sector partners in developing countries can be encouraged to engage more with the private sector, such as through public-private partnerships
• development agencies should ensure that their programmes are regularly monitored and evaluated against indicators established in the design phase and that are agreed on by their reform programme partners
• the capacity of staff in development agencies may need to be strengthened, to help them better determine, based on differences in a country’s investment climate and stage of development, appropriate approaches and aid instruments to use and how best to sequence reforms

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