Aid to fight new wars: reflections for development agencies in the time of Covid-19

Covid-19 food distribution programme in Manila, Philippines. Photo: Asian Development Bank, April 2020, CC BY-NC-ND 2.0

The blogosphere is abuzz with suggestions of what the world after Covid-19 might look like. Yet the less glamorous reality is dawning that there is going to be a lengthy period where we will have to manage multiple risks and stresses, without either lasting solutions or solid predictions in hand.

Great uncertainties in particular surround the trajectory, exposure, impact and exit from the crisis in low-income countries – as well as high-income ones – especially as infections in the former mostly started later and are far less well reported.  

We sympathise therefore for the leaders of international development agencies, who are facing a Rubik’s Cube of budget and staff allocation decisions across diverse topics and continents under a dense fog of uncertainty.

Below are three inter-linked centring thoughts to help these leaders make their tough short-term judgment calls.

1. Comparative advantage and the classic “build or buy” choice

Do you design and implement all your own programmes, or do you outsource some of them? If so, which ones and why? Dealing with the virus and its aftershocks calls for simultaneous proficiency in at least three areas.

Humanitarian and health emergency aid

Bilateral development agencies are already stepping up urgent humanitarian and health interventions to help suppress the virus and reduce associated mortality, and are doing so while simultaneously rebuilding health systems. This is the aid equivalent of re-wiring a car while driving it at speed.

Broader economic support across multiple sectors

They will also have to address the collateral damage to livelihoods in the absence of robust social protection mechanisms whilst preserving fiscal stability and debt sustainability. Some will rightly argue that green-growth infrastructure solutions are also needed right away, to rebuild later on.

Production of global public goods such as vaccines, drugs and tracing technologies

Lastly, bilateral development agencies will inevitably be asked to contribute their share to the vastly ramped-up global hunt for vaccines, drugs and diagnostics for this pandemic and others. This includes the enormous production and packaging efforts (the challenges of “fill/finish” in the vaccine development trade).

There will be inevitable pressures to find finance for such production. There is a risk that this could crowd out traditional aid budgets. Such financing would preferably be based on an exceptional “surge” budget, over and above the 0.7% ODA target of (currently falling) national income – say, rising to 1% for a few years.

Agencies may be tempted to work on all three fronts in multiple contexts simultaneously, potentially outstripping both their financial budgets and their limited (and partly locked-down) country presence and expertise footprints.

This simply cannot be done effectively at scale without outsourcing and collaborative efforts, in partnership with other parts of their own government, other bilaterals, and indeed multilaterals.

Stopping all work not directly related to helping developing countries fight the virus is an obvious but dangerous temptation, particularly if the damage to livelihoods proves to be the ultimate disruptor in many developing contexts.

There needs to be a rapid re-jigging of bilateral agencies’ external division of labour with other bilaterals and multilateral agencies, principally the international financial institutions, the health and humanitarian spearheads of the UN system, and the special thematic partnerships like Gavi, the Vaccine Alliance and the Coalition for Epidemic Preparedness Innovations (CEPI).

In the first category, there should be substantial mileage in clubbing together with bilaterals with a complementary geographic and thematic footprint. Partnering with those who have demonstrated a clear competence in suppressing the first wave of the virus, such as South Korea, China, Germany, and New Zealand – especially where the agencies may lack some of the expertise to share their capabilities more widely – should also take precedence over re-inventing strategies in-house.

On the multilateral front, similar build-or-buy choices apply. Who is best placed to provide guarantees to underpin advance-market commitments (AMC) for coronavirus vaccine and drug development? Should there be bonds, collateralised by clubs of donors, inspired by the International Financing Facility for Immunisation (IFFIm), or other innovative financing tools? And who should lead and engage with such initiatives?

2. Preparing now for a potentially even riskier world

We are “all in it together” now, as most nations rightly fear reinfection, both from within and from abroad. So, we can fall back on the truism that an outbreak anywhere ultimately threatens us all, and what some economists term the “weakest link” argument (PDF) for global public goods. But we could soon see a collapse of this core incentive to collaborate globally, driven by unequal national access to effective remedies. How can one pre-empt that risk?

We have perhaps a year, maybe longer, before significant technological breakthroughs become available in the prevention and treatment of Covid-19. After that point, a number of nations will be able to shield their populations effectively from the disease. When that happens, reinfection from abroad will cease to be a powerful driver for self-interested altruism in suppressing the virus.

Worse, it could well be that this intellectual property is owned or controlled by just one or two countries, and worse still, they could decide to use this control to advance their sovereign commercial and political interests. This would be a further blow to the prospects of multilateralism. It would also put massive strain on relationships, both among bilaterals and between partner countries, and encourage destabilising competitive tactics. Collective discipline, in terms of agreements to pool knowledge and financial resources, could start to break down.

There is no perfect riposte to this eminently political threat, but development agencies could use the breathing space still available to do at least two other things.

First, they must try to draw in leaders in the technology space into partnership agreements committing to pooled action and open-source knowledge sharing. This could perhaps take shape in a binding new intellectual property rights (IPR) regime underwritten by as many of the world’s major pharmaceutical nations as possible. Development agencies will have to defer to one or more major leading “clubs” such as CEPI to carry this agenda forward, but countries must also sign up actively. They should help seal these agreements with trust-building goodwill gestures and more tangible, up-front financing commitments.

Second, development agencies must quickly scan and stress-test the specialised multilateral health agencies, including the World Health Organisation – despite or precisely because of – its mixed political appeal. They should also isolate crucial global public goods functions like disease surveillance and try to protect these functions with robust and appropriately sized multi-year funding replenishments.

3. Redeploying financial and human resources to fight ‘new wars’

War analogies abound these days. The term “aid” itself is historically rooted in English (sic) parliamentary convention for raising exceptional grants for kings and queens, often to help wage their foreign wars (with thanks to Homi Kharas for pointing out this connection). Aid needs to be redeployed to fight the war posed by the exceptional challenges of Covid-19.

In order to clear space for an expected avalanche of hospitalisations, the UK public health system (and those of other countries) removed many years’ worth of inherited administrative and sometimes physical internal barriers in a matter of weeks. Aid agencies should think in similarly ambitious terms and be prepared to break down internal silos. Moreover, internal organisational walls should be made redundant, such as between humanitarian and “development” programmes, or multilateral and bilateral ones.

If this all sounds a little complicated, uncertain and imprecise, that goes with the territory. Doing nothing, or continuously fighting the last war, is also a choice, but a very bad one. More positively, building on specialised talents internally and externally and warning against the temptations of nation-first behaviour are three useful centring thoughts to help guide the hard choices ahead.

Authors

Senior Research Associate
Andrew is a Senior Research Associate with the Development and Public Finance team at ODI, an [...]
Senior Research Fellow
Annalisa Prizzon is a Senior Research Fellow in the Development and Public Finance programme at the [...]