In this episode of Devpolicy Talks, Robin Davies interviews Sir Masood Ahmed, former President of the US-based Center for Global Development and veteran of the World Bank and IMF. They discuss the future of development cooperation, reform of multilateral development banks, climate finance, and the changing nature of official development assistance in an increasingly complex global landscape.
Robin Davies speaks with Sir Masood Ahmed, the distinguished international economist whose career spans over 35 years at the forefront of international development.
Up to July 2024, Ahmed served as President of the US-based Center for Global Development for seven years, following influential roles at the International Monetary Fund, the World Bank and the UK's Department for International Development. Born in Pakistan and educated at the London School of Economics, Masood has been instrumental in shaping global economic policies, particularly in the areas of debt relief, aid effectiveness, and poverty reduction.
In this wide-ranging interview, Masood discusses the evolving landscape of development cooperation and the challenges facing the multilateral system. He addresses the pressing need to reform multilateral development banks, the complexities of climate finance, and the changing nature of official development assistance. Masood particularly emphasises the importance of rethinking how we approach international development funding, arguing for a clearer distinction between solidarity-based aid and spending on global public goods. He also explores the challenges of maintaining traditional development objectives in an era increasingly dominated by geopolitical considerations and competing priorities.
Masood delivered the Mitchell Oration at the 2024 Australasian AID Conference. Watch the full speech.
Devpolicy Talks is the podcast of the Australian National University’s Development Policy Centre. Our producers are Robin Davies, Amita Monterola and Jackie Hanafie. You can read and subscribe to our daily blogs on aid, international development and the Pacific at devpolicy.org, and you can follow us on Facebook, LinkedIn, Instagram and Twitter.
You can send us feedback, and ideas for episodes too, to devpolicy@anu.edu.au.
MASOOD AHMED [00:07]: "I think we need to have a frank first principles conversation about why countries should spend any money from their public budget outside their borders. And I think we will find that there is still a lot of solidarity in our rich countries, but I think we need to very clearly say that there is an amount we spend for solidarity and an amount we spend for other purposes. And when we do that, I think we just need to be able to explain and report in a more transparent way what we're doing."
Acknowledgment
OPENING: [00:40]: We wish to acknowledge the indigenous people of Australia, the wider Asia Pacific region and other parts of the world, and express our respect for their traditional knowledge and practices which stem from a deep connection to the lands and waters they have inhabited for millennia.
Introduction
ROBIN DAVIES [00:59]: Welcome to DevPolicy Talks, the podcast of the Development Policy Centre. We're part of the Crawford School of Public Policy at the Australian National University on Ngunnawal and Ngambri country in Canberra. I'm Robin Davies. This year we relaunched our podcast after a more than two-year hiatus. In this season, we've brought you a mix of interviews, event recordings and in-depth documentary features relating to the topics we research at the centre, namely, Australia's overseas aid development in Papua New Guinea and the Pacific and regional and global development issues.
This is our 16th and final episode in 2024 in which I interview Sir Masood Ahmed, the distinguished economist whose career spans over 35 years at the forefront of International Development. Up to July 2024, he served as president of the Center for Global Development for seven years, following influential roles at the International Monetary Fund, the World Bank and the UK's Department for International Development.
Born in Pakistan and educated at the London School of Economics, Masood has been instrumental in shaping global economic policies, particularly in the areas of debt relief, aid effectiveness and poverty reduction. As Vice President at the World Bank, he oversaw the development of the Heavily Indebted Poor Countries Initiative and the Poverty Reduction Strategy papers. His eight-year tenure as IMF director for the Middle East and Central Asia department saw him managing relationships across 32 countries. In recognition of his contribution to international development, he was appointed Knight Commander of the Order of St Michael and St George in 2023.
In this wide-ranging interview, Masood discusses the evolving landscape of development cooperation and the challenges facing the multilateral system. He addresses the pressing need to reform multilateral development banks, the complexities of climate finance and the changing nature of official development assistance. Masood particularly emphasizes the importance of rethinking how we approach international development financing, arguing for a clearer distinction between solidarity-based aid and spending on global public goods. He also explores the challenges of maintaining traditional development objectives in an era increasingly dominated by geopolitical considerations and competing priorities.
Masood was visiting Canberra for the Development Policy Centre's annual Australasian Aid and International Development (AID) Conference. You can hear him talking more about many of these themes in his Mitchell Oration, the keynote address that he delivered in the course of the conference. You can find that on our YouTube channel.
Interview
MASOOD AHMED [03:43]: Hi. I'm Masood Ahmed, and I've recently stepped down from heading the Center for Global Development, which is a think tank in Washington DC and in London that looks at international development issues. And before that, I spent many decades working for the World Bank, for the IMF, and for a few years at the UK Department For International Development.
ROBIN DAVIES: So let me start then with a question about the Mitchell Oration. Could you summarize the main themes of your talk to the conference this year?
MASOOD AHMED: Well, Robin, I'm really looking forward to it, and I think it will be an opportunity to lay out some ideas, but hopefully also to get a lot of feedback and interaction with people. The basic point that I want to use that Mitchell Oration to make is that I do believe that development cooperation, as we have practised it, is now being contested in many ways, and we have to recognise and adapt to these various challenges.
Some of these ways quickly come to mind. You might think about geopolitics as being one area where the rivalry between, say, the US and its allies and China is going to shape the way in which they think about developing countries, interacting with developing countries and development cooperation. And my point is that that's really only one of the ways.
There is a set of other forces, among them the importance of global challenges such as climate change, pandemics, biodiversity conflicts, which have become centre stage in the way in which policymakers think about what used to be developing countries and interacting with them primarily in terms of poverty reduction and human development. So they said, how do we integrate these big global challenges into our work?
There's issues relating to the politics within developing countries, which has partly sort of anti-globalisation, degree of populism and populist policies, and an inward orientation thinking about developing countries, sometimes more as competitors than as a win-win proposition in terms of cooperation. I think that's also going to have to be taken into account in the way we think about development.
And finally, I also feel that in all of this, the practice of development cooperation, the way we have done things, the way we measure progress, the way in which we think about even reporting numbers on development assistance, because we have stretched these different metrics to accommodate spending on programs that really weren't designed to be development in the traditional sense, we've lost a bit of credibility about what numbers we're talking about, what benefits we talk about, what we see as successes.
So I feel there's a need for us to really go back and have a serious effort at rebuilding credibility within our own communities in rich countries, to redefine why it is that we want to spend money beyond our borders if you're a rich country. And I think there's very good reasons to do that, but I feel we need to make that case, and perhaps in ways that have more traction than simply assuming that the priors that drove development cooperation for 25-30 years since the Millennium Development Goals are just going to still hold, because I don't believe that many people accept those priors anymore as reflecting the reality in which they live today.
Multilateral Development Banks and Reform
ROBIN DAVIES: I'd like to break down those themes a little bit and investigate each of them separately. If we can begin by talking about the multilateral system - you have spent most of your working life in it, at the World Bank and the IMF in particular, and that system is now facing a great deal of pressure to deliver more: to deliver more finance, by stretching its instruments, by leveraging its balance sheets more fully, and by contributing to the production of global public goods in ways that are quite difficult given the operating model, particularly of the MDBs, the multilateral development banks. Now I know you're involved in a high-level process around the reform of the MDB system. What do you think are the biggest priorities, both in terms of mobilising more finance and increasing the ability of those organisations to deliver global public goods?
MASOOD AHMED: As you said, I have spent a lot of my professional life working within the multilateral system, both in the multilateral development banks, the World Bank in particular, but also in the IMF, which is an important partner for ensuring that the macro framework that developing countries have and that they're supported in having is one that is consistent with their objectives.
I feel the multilateral system has been one of the greatest inventions of the post-Second World War system that was put in place because it does allow countries to come together. And if you think about the multilateral development banks, for example, it allows countries to mobilise financing on terms that they themselves would not be able to mobilise because of the power of pooling lots of countries into a single institution, and because its fundamental balance sheet is strengthened by the guarantee of the rich countries.
Although that guarantee has never been called, in my view, never going to be called, but it does provide a strong basis on which these banks can offer financing for long-term investment at affordable rates. But it's also a system that provides an opportunity to share knowledge and experience about development across the world in ways that otherwise individual countries have difficulty mobilising.
Now the multilateral development banks in particular, and the IMF also have a history of adapting to changing global circumstances. When the Soviet Union fell and Berlin Wall came down, there was a need to bring in a whole bunch of countries that were previously centrally planned into a global market system and becoming market-based economies. China's introduction and integration into the world trading system, into the world economic system, facilitated by the World Bank in many ways.
But they're large organisations, and over the years, all large organisations get a little bit set in their ways. So while there's an intellectual acceptance of the need now to adapt to using their balance sheets - I wouldn't say less conservatively, but I think it's more intelligently - to really free up the capacity that that balance sheet has to be able to leverage financing, which is more, maybe 20, 30, 40, 50% more than they're able to do at the moment.
Similarly, we want them to take on board climate change, pandemics, much more centrally as part of the work they do. And these programs necessarily force you to look across countries, because they are global issues, they're almost by definition, and to tackle them effectively. At the end, every project is a project that is done in some legal territory that is part of a country, but the design and prioritisation and selection has to be based on global criteria, and that's a very different way of working than the model that they have used, which is essentially to work country by country and then add it up. If you like, their programs are essentially Country Programs.
So they recognise the need to make those changes, and they're attempting to do them. I think the main thing now is to stay the course and to keep pushing with a level of ambition and urgency. It's all about scale. It's all about urgency.
When we did this piece of work last year, part of independent experts groups commissioned by the Indian presidency of the G20, that came up with the notion that by 2030 the multilateral development banks needed to be about three times larger in terms of the financing they provided, to be much more focused on climate change and on other global challenges, and to be much better than they currently are at mobilising private finance by helping to prepare pipelines of projects and sometimes by providing support for those private investors through risk mitigation and guarantees.
I think that's a realistic and doable objective, but it is not an objective which is going to be delivered on the current trajectory on which these institutions are operating. It requires a lifting up of their current trajectory and a level of ambition. And there we run into a very simple problem, which is that we all want these institutions to use their own balance sheets better. We want them to take more risks.
But to do all this, we need, as the rich countries, as the shareholders of these institutions, to also demonstrate that they are standing fully behind, that they are willing, when they have used up the capacity on their own balance sheet, to expand their lending, which would probably if they do all the things that people talk about, they might be able to double what they do, but they're ready to come in and provide the then the extra that would get them being three times larger.
And so far, shareholders of those institutions have been a little slower with the action than they have with the ambition setting. And I do feel that the big challenge for the multilateral system is to continue to convince its shareholders, large and small, but particularly the ones that provide financing, that these institutions are indeed the best way that we still have to mobilise large amounts of financing for issues that matter to all of us in ways that will cost less in budgetary terms on the national budgets for the rich countries than trying to do it any other way.
Climate Finance and Global Public Goods
ROBIN DAVIES: I guess I want to take up your implied point there that a lot of donor countries implicitly expect the banks to deal with these issues alone. We say you must expand lending by being more creative about how you use your balance sheet, you must make your lending decisions in ways that contribute to the production of global public goods. But in the end, I mean, as you said at the beginning, the fundamental operating model of the MDBs is that they lend on more or less concessional terms, money that belongs to the borrower governments, who, for the most part, eventually pay that back, so they don't have huge incentives to pay for all of those externalities that we need.
So ultimately, somewhere in this picture, the donors also need to come to the party, not just with a willingness to agree to general capital increases or selective capital increases, but also with a willingness to provide grant funding. And if you look at what's happened in recent years with the level of contribution to the Pandemic Fund or the various climate-related vehicles that provide grant resources, and the banks are usually trustees for these things, the results have obviously been very disappointing. So it's almost like there's a paradox there that people say that the banks have this almost magical pudding operating model, and we expect them to do something about our problem with global public bads, but the additional grant money isn't being put on the table that would create incentives for borrowers to actually borrow for these things. How do we deal with that?
MASOOD AHMED: I think you put your finger on it, and I would just say two things in mitigation and one that reinforces what you say. First thing I would say in mitigation is that, yes, it is the case if you're a middle-income country and you're going to have to pay back a World Bank or Asian Development Bank loan, maybe 25 years, and whatever the rate is at which they're currently making those loans, which is a lot less than most middle-income countries can borrow for themselves. And you're investing in climate mitigation project, you need an incentive to do so, because the benefits are global.
But first thing is that actually today, the most extraordinary thing that's happened over the last 10 years is that the cost of the energy transition to renewable energies has come down much faster and much further than anybody predicted. So if you just look at the actual curve of what it costs to do solar energy, and you compare it with the projections made on what that trajectory was going to be every year over the last 10 years, you see that, basically the actuals have come down dramatically. So today it is the cheapest thing for countries to do, and they're happy to do it.
But if you think about the energy transition, that's really, in a way, the biggest part of this financing on climate change mitigation that many developing countries are thinking about. Essentially, it is about substituting a technology for producing energy, where you make an investment up front, and then you pay over the years as you produce the energy by buying fuel. And you're substituting that technology, whether you're buying coal or oil or gas, with a technology where you make a ton of investment up front, and then there's no running costs, roughly, right? I mean, there's some maintenance but the whole essence is that you substitute a stream of payments over 30 years with an upfront payment, and the energy is still cheaper over 30 years, but you've got to mobilise all that capital upfront.
So a solar project in Germany, because the cost of capital in Germany is so much lower, it can be done at seven and a half percent rate of return. The same project in a middle-income country, you're looking at 20% rates of return. You're looking at a low-income country, you're looking at even higher rates of return. So the key to getting this transition done is to be able to provide capital, long-term capital, at affordable rates, and that's what the MDBs do.
So in some ways, it makes the choices for the Philippines or for any country in the middle-income category the same in terms of being able to take advantage of the green transition as Germany or France or Australia. So I think that that important part is worth bearing in mind that that is not quite as much of a trade-off as it used to be.
But then I come to your other point, which I do agree with, which is that at the end of the day, you can get a lot of stuff financed just by having the long-term finance available without a grant. But for some things, whether it's for low-income countries, the poorest countries who can't afford even those terms, or whether it is for adaptation financing, you will need some degree of grant finance. And the rich countries have not been forthcoming with the grant financing that would accompany the kinds of programs that would enable these institutions to scale up.
Frankly, I also think that they've not been forthcoming with signals about the capital increase that would be needed, because it's a little bit extraordinary, because if you think about the leveraging of how much money you can mobilise with $1 of budgetary allocation to add to the capital, even if you're the largest shareholder, let's say the US in the World Bank - 16% of the shares of the World Bank belong to the US, roughly. So you say, well, if you take $1 and you put it in, you get $6 because others come in with that. So your $1 of budgetary capital becomes six because you get other countries to put in their share, and then the six gets multiplied by the leveraging power of the balance sheets of the institutions by a factor of seven.
So really talking about $1 of budgetary transfer from the US, invested in the Capital of the World Bank, generating $40 of long-term development finance. There is no other model that we have that does this kind of leveraging.
So we've still not even been able to make a convincing case, convincing in the sense that it delivers results, for the shareholders to demonstrate to follow through and say, yes, absolutely. I mean, this is really a very good way for us to mobilise financing that is then going to deliver the global public good that we all need, which is a green growth transition that doesn't just get limited to the rich countries that can afford to borrow or invest without the support of these institutions. So I think that's still a big challenge.
It's going to get a little bit harder, because the multilateral institutions are also a place where shareholders include countries that have strained relations - United States and China, for example. The way I think about it is that, if you think of it in the old Wild West analogy, they have to be the saloons, where you might have a feud going on outside, but you leave your weapons at the door because you come in, because you've got to solve a common problem here. And I think we have to make the case for multilateral institutions as being the safe space in which, even in a world of tensions and rivalry, we solve these common problems.
Development Financing Mechanisms
ROBIN DAVIES: I wanted to ask about one particular mechanism for mobilising grant financing for global public goods, and it's something that CGD has been quite involved in over the years - the International Finance Facility for Immunisation. Because CGD, for a long time, was advocating for an advanced market commitment mechanism which ultimately was for pneumococcal vaccines, and that was linked to IFFIm. And it's always puzzled me that either IFFIm itself, or the IFFIm model is not used more widely, for example, for pandemic preparedness. There was no thought of using that kind of model when the pandemic fund was capitalised, even though the same logic could apply that if donors put money on the table now, which enables the issuance of bonds, raises a lot of money up front, they are diverting future costs. Have you reflected on the broader use of that kind of mechanism?
MASOOD AHMED: So I think there's two kinds of mechanisms here. One is a sort of advanced market commitment kind of mechanism, which is a way of encouraging innovation and research and faster development of scientific and other discoveries on which people are working by giving them an assurance of a market.
The other is the kind of mechanism of the IFFIm variety, where you front-load basically. You say, look, we're going to be allowing you to spend more because we'll make a commitment to provide longer-term financing from our ongoing aid budgets, and this, in turn, will allow you to go and borrow money from markets, and then you can pay that money back, because you've got this guarantee from us, the donors, to be able to do that.
I think the appetite to make long-term commitments of that nature doesn't seem to be there. And as you said, even in the pandemic fund, we set up a pandemic fund - CGD worked a lot on the pandemic fund idea. The basic notion was it'd be about 10 billion a year of throughput, because that's what was estimated as being the amount of money needed to fill the gap on things that weren't being covered by other sorts of programs and institutions.
And you can make the case very easily that the returns on those ten billion, even with conservative assumptions about what that might do to either postponing or mitigating the impact of the next pandemic - and it's just a question of when the next pandemic will happen, rather than whether - the returns are really so high that it's an investment well worth making. Ten billion also, if you think about it in terms of what we spend on cyber security or we spend on other forms of security, it's quite a doable number.
But the actual number throughput, I don't know the latest number, but it's still short of 2 billion, if I recall, and that's total. That's a total since it's supposed to be 10 billion a year. Here we are, three years later, and we've got 2 billion in and we don't really see any near-term prospects for scaling this up to get anywhere near the original number.
Some people have said to me, yes, all right, but you know, it's a machine that sits there, and then, if we do have a pandemic, we can use it to scale up very quickly. It'll be a way of being a pandemic Response Fund. Well, that may be, but that's a different purpose than what it was set up for. I mean, it's not a pandemic Response Fund - that's making the best of something that exists.
But I do feel that this actually raises a bigger issue for me, which is that over the last decade, I feel that we - the international system as dominated by the rich countries - has been quicker to set up new institutions in response to political pressure to provide money for something which they weren't ready to do but didn't want to say no to.
So it's easier to look at the other example – the Loss and Damage Fund. The Loss and Damage Fund was created and set up after a lot of fanfare, because there was a lot of pressure from developing countries to say, we need compensation for loss and damage. And I think at the end, it was easy to set up a fund, but again, do we see anything like the kind of financial commitments that are going to go into that to make it a meaningful fund?
And you end up with a situation where we now have some 90 climate finance funds. I'm sure there was a logic to each one of them, and they were created. But collectively, you have to ask yourself, is this really an effective and efficient framework? Within which we actually don't provide anywhere near the kind of financing if you were to do a comparison of the actual financial throughput through those institutions with the initial assumptions on which those institutions were created, we're going to have a large gap between the objectives and all the aspirations and the reality.
And I think we have to really - particularly have a period over the next decade where I believe that aid budgets are going to be significantly smaller in real terms than they were. I mean, they'll be smaller in part because they're actually being cut back. I mean, Germany, France, the UK is already - was quick to cut back a few years ago. Australia is now stabilised after a period of cutting back. So it's a little bit of an improvement here, but you see Sweden, Netherlands - a big cutback in many countries, and what there is is being used for purposes that weren't traditionally supposed to be development, including financing of the cost of hosting asylum seekers and refugees for a limited period in their host - in their own countries.
I think with these lower costs, lower budgets, and with the fact that the needs are so stark and urgent out there, I think we really have to look hard at whether we're using the resources effectively, and that means looking at the delivery machines that we have, because the delivery machine is part of the cost of the aid budget, and if we create 90 climate funds, they add up to a financial cost. Do we need all that overhead for lower finance?
Multilateral Architecture
ROBIN DAVIES: You've actually anticipated my last multilateral question. I mean, you've spoken about the fragmentation of multilateral institutions and funds, and fragmentation itself is an issue, and there are overhead costs, but there are also rigidities, challenges. Priorities change over time. It's difficult to move money between these mechanisms. What's the solution here? How do we stop all of these funds appearing and competing with each other, and establishing replenishment processes and all of that which we all know to be a problem, and yet it seems to be an incredibly difficult collective action problem to solve.
MASOOD AHMED: It is a good, difficult collective action problem, because it is, as you say, a collective action problem, and I think at the end of the day, it will get solved only if there is a shock to the system of some kind. And I think, as shareholders, the funders largely have to make decisions. I mean, there you look at the - one of my colleagues, or two of my colleagues at CGD have done a piece on - I think it's a train wreck of replenishment decisions that are going to be coming to hit the same traditional funders over the next two years.
And some they're making decisions on now. Some they've just made - recent IDA, Global Fund. There's Gavi, there's a whole range of them that are going to be coming up. There's GEF [Global Education Fund] just happened. But I think with all of them, the decision-making process is quite fragmented. Now we'll wait and see what happens as a result of the US election in terms of the US approach to a number of these institutions, administration's approach to a number of these situations. That could be the shock to the system, and that may be a moment when people are forced to look at some of these questions.
I really think that while everybody agrees with the principle that a more rational system of allocation and a more rational and streamlined infrastructure for aid coordination and delivery in sectors - education and you can take any sector and the architecture looks like a mess in some ways, right? So I think you can make a case that you could rationalise and improve on them, but it's very hard to do without a compelling reason.
And I hope we can do it from within, because I think if the reform process is not led from within, the risk is that it's done by people who don't have the understanding of the system, the institutions of what they have done well, what needs to be preserved, and also don't necessarily have the same sympathy and objectives in mind for the outcomes. So I think we have to really see if there are ways in which you can mobilise the momentum and the level of political will to tackle these issues before they get tackled for us.
Bilateral Aid and ODA
ROBIN DAVIES: Now I want to move to a couple of questions about, I guess, the world of bilateral aid. And you touched on this at the beginning, that the simplicities of 10 or 20 years ago are gone. There used to be a list of developing countries and a list of donor countries. Now the list of developing countries is kind of crumbling at the edges - there's no longer a black and white distinction.
There used to be a fairly clear definition of official development assistance with pretty clear guidelines about what counted and progressively that too has crumbled at the edges, particularly in relation to refugee and asylum seeker costs in donor countries, as you mentioned. So and you know, you can just see most bilateral aid programs being increasingly dominated by geo-strategic considerations, even if parts of the bureaucracy in those countries are still clinging to the traditional objectives of aid. I think we're seeing this play out a little bit in the UK at the moment.
So what do you think is the most feasible strategy here, if one does want to maintain some of those traditional aims and objectives? Is it to try to buttress the concept of ODA and increase support for that, or is it to pivot, let it go and instead argue for the pragmatic benefits of ODA, like assistance to developing countries?
MASOOD AHMED: That's a big debate going on right now, and I think that's a debate that will go on for a couple of years, because we're in between two systems right now. If you think about it, you know, we increasingly - the way we think about ODA, the way we market ODA, the way we try to explain that everything that we use ODA for is actually development when a lot of it has other objectives, whether it's climate mitigation or refugees or whether it's trying to deter migration or was geo-strategic - it just destroys the credibility of the concept.
And I feel more and more that we're losing the core base of support for ODA in an effort to preserve it. And the reason we do it is because we're afraid to open up this Pandora's box. And my view has been, I think we need to have a frank first principles conversation about why countries should spend any money from their public budgets outside their borders. Why do we want to spend money abroad?
And I think we will find that there is still a lot of solidarity in our rich countries. People do want to help countries and people who live in less fortunate circumstances. I think there is a strong support for certain causes that affect people, groups of people who are marginalised. Girls' education in Afghanistan is something that we support because we believe it is important, regardless of whether the Afghan authorities today, the Taliban think it's bad or good - we think it's good, and therefore we have a lot of people who want to support that. So there is a solidarity argument.
I think there's a self-interest argument, which is to say, look, we need to do this, because unless we contribute to spending for climate mitigation outside our borders, that's going to be the same amount of carbon outside in the air, and it's going to affect us in the atmosphere. So it's a global problem. We need a global solution. Similarly, with pandemics, you can make the same point.
So I think there is a set of arguments we can make, but we have to make them, and we have to convince people of their merits without relying on the notion - assumption, rather - that there is some agreed framework that everybody has bought into, and therefore we don't need to explain this, because it's obvious and somehow we made a commitment. I don't think that has traction anymore.
So I'm in favour of having that kind of conversation. I think it will be a difficult conversation. It will take some years, but in the end, we will come out in a healthier place. But I understand why people are reluctant to open it up, because they feel if you open it up, we might lose even what we have. So let's just kind of hunker down and, you know, we give a little here and we give a little there, but at least we preserve the core of what we do, because we worry that there's no support for that core, and therefore that might go if we open it up.
But look at what that has brought us. What it has brought us is that in every country, every year, we lose a bit more and a bit more and bit more of that core because for other reasons, they get chipped away, and if we don't stand up and make a case, I think we run the risk that we lose more and more of what we want to spend it on, but we also lose the support from the people who are in favour of that.
Because when they look at them, what happens when the ODA numbers come out every year? The ODA number comes out and they say, oh, it's gone up to $210 billion, or $221 billion, the latest number is. And what does the development activist say? First thing they say is, this is not a real number, because it includes spending for refugees, which shouldn't be there. It includes this, includes that, and 100% true. So the people who are supporters of development don't really believe and stand up and argue for ODA, and of course, those who have been skeptical of it anyway aren't getting a response they support.
So I think we have no alternative in my mind but to engage in a process of rethinking. And in my view, we need to end up with a commitment for solidarity as sort of what you call ODA - but which is really designated as the sort of solidarity thing. And then we need to have a separate category of funding that we spend beyond our borders, because it's in our interest to do so. So this is more the global public investment concept, which you know, Robert Johnson, Jonathan Glennie, Christoph Bem, a number of people have advocated for.
So yes, I mean, I think that's one way to get it. I mean, in some ways, how one structures it - but I think we need to very clearly say that there is an amount we spend for solidarity and an amount we spend for other purposes. And when we do that, I think we just need to be able to explain and report in a more transparent way what we're doing.
And of course, the coalition of people who spend money for either of these purposes is going to be different. In some ways, you would want people, no matter what their level of income, to be able to contribute towards global challenges in ways that reflect their ability to contribute and their extent of, in some ways, their responsibility for those problems. And the solidarity thing will vary from country to country.
ROBIN DAVIES: So I wonder if this is another case where, I guess almost an external shock is required to bring about a change. Because of the current situation, all of the traditional donors are still theoretically wedded to the concept of ODA, and most of them have a fairly stable ODA envelope. It goes up, it goes down, sometimes dramatically. But in theory this - the concept is still important and is understood within finance ministries as well as foreign ministries, and no one has been brave enough to dump it. On the other hand, the US has never had it but has been always providing 20 or 25% of global ODA in practice. If the Trump administration contracts its ODA-like funding so that it's really just focusing on those things that you mentioned, that the public really cares about - humanitarian assistance, or girls' education in certain places, or avoidable blindness, whatever it might be - that could contract down to 10% of ODA really, which would then potentially cause a stampede among other countries. So do you see that as a realistic scenario?
MASOOD AHMED: Yeah, in this case, I think it may not be quite such a global shock that is needed, because the principal-agent problem isn't quite as pronounced as it is in reforming aid architecture. With aid architecture, you've got the donors, you've got the other members of the institutions, you've got the management. So there's lots of people who need to be kind of aligned.
In this case, I think, look, I mean, who cares about ODA? It's really DAC countries, right? I mean, so OECD countries. I don't think the UAE or China are particularly bothered about what the ODA number is. They have a program of assistance, and that's part of the problem, that there's a lot of new providers of development finance, some of it on concessional terms, who don't think about ODA as being a particularly relevant concept for their own activities, and I don't know that they're bothered about how you count these things right, except in UN conferences and the like, when it becomes a big issue.
But it's really the OECD countries and within them, as you said, the US has never been so engaged or wedded to the concept of ODA. So it's certainly Europeans, plus a few others, Australia, others who are being active and worried about what is the ODA number. I feel that here, just if a few countries, the big providers start reporting differently because they find that there's less and less credibility for their numbers - and France already does so in some ways - I mean, I can see this as an area where half a dozen countries just need to move in that direction.
And I think what'll happen is that, my view is you'll still have some ODA numbers being reported on, but the number that will become more and more relevant is what do people talk about when they report. And if they start saying, look, this is what we do - maybe next year's Financing for Development Conference will help to accelerate that conversation a bit, because I think the current situation is not sustainable.
Experience at CGD
ROBIN DAVIES: I wanted to end with a couple of questions about your experience at the Center for Global Development, which you led for seven years up until this July. And of course, I can think of lots of like - they're almost campaigns that CGD has run over the years - for example, in relation to the advanced market commitment for pneumococcal vaccines that we talked about, in relation to development impact bonds, cash on delivery aid, all sorts of things. And when you look back over that experience - I know some of those things were under Nancy Birdsall - but do you feel like CGD has been able to achieve the level of traction that it's set out to and the level of policy influence that it set out to? I mean, that's a question that we keep trying to answer for our funders also.
MASOOD AHMED: I would say first thing is that, you know, CGD has just been quite a remarkable experience for me personally. It was a hugely enriching, sort of satisfying opportunity to work with all these people, and it really was. CGD is primarily a collection of very bright people who advance these ideas, and part of our model has been to really capture the imagination, initiative of the individual researchers. It's very much a collection of researchers' model of think tank.
There are other think tanks which are more structured around, sort of having a few institutional objectives that they push. And in our case, the institution is the collection of the individuals and that drives us. A bit over the last few years, one of the things that we've tried to do is really recognise that there's a need to improve the functioning of the multilateral institutions, primarily the MDBs and the IMF, and that's part of the reason why we've been quite involved in the work that was done, as I mentioned, on this independent experts group for MDBs. It's also the reason why we got quite involved in the work on pandemic preparedness.
And so I see our policy traction and our convening role has been quite - to me, a source of satisfaction in those areas. One of the challenges that CGD faces, and every other development institution will face also, is that a lot of the big questions about development cooperation now are going to involve not just development thinkers, but security foreign policy people who think about climate as a particular global agenda. And how CGD engages with these communities in ways that help us to find better solutions, that bring in the expertise from all of these different backgrounds, is going to be a challenge going forward, because my personal view is that that is where a lot of the big questions will need to be - or that is how a lot of the big questions will need to be addressed going forward.
ROBIN DAVIES: My final question is probably a bit of a cheeky one. So you still hold the title of President Emeritus at CGD, and presumably had a thorough handover with Rachel Glennerster, your successor. To the extent that you're happy to share it, what was your brief? What did you recommend that CGD really focus on under her presidency?
MASOOD AHMED: I think one of my basic learnings in life is that Rachel is such a terrific person in terms of and given the experience that she has, the professional network that she brings, her own research. I can see so many ways in which, under her leadership, CGD will be able to do things that are going to be relevant and impactful.
And my basic model has been to focus on a few areas of work that are of interest to me. I personally think this whole issue of future development cooperation is important. I'm also quite focused on the international financial institutions and where they go. And then finally, I think this whole question of how we think about growth and prosperity and the drivers of growth, and how you make growth and climate compatible is going to be an interesting set of issues. So I'm very happy to have the opportunity to continue to work on these, but I am confident and entirely supportive of the direction which Rachel is going to drive CGD.
ROBIN DAVIES: Very diplomatic response!
MASOOD AHMED: But also one I genuinely believe!
MASOOD AHMED: Well, thank you. Thank you very much.
CLOSING: [51:06]: DevPolicy Talks is the podcast of the Australian National University's Development Policy Centre. Show notes are posted to Simplecast. Our producers are Robin Davies, Amita Monterola, Jackie Hanafie and Finn Clark. You can read and subscribe to our daily blogs on aid, international development and the Pacific at devpolicy.org, and you can follow us on Facebook, LinkedIn, Instagram and Twitter. You can send us feedback and ideas for episodes to devpolicy@anu.edu.au.