The use of development finance to ‘catalyze’ private finance has been a growing trend in development cooperation, with the aim of closing the gap to finance the Sustainable Development Goals (SDGs). As a consequence, public resources and institutions are used to subsidise private finance, which risks undermining the transformational potential of public finance and Official Development Assistance (ODA, or aid). These are vital and irreplaceable resources for eradicating poverty and inequalities.

Current key workstreams for development aid effectiveness are:

• Promoting an international development finance architecture that delivers for public goods in a transparent and accountable way: Changing the current paradigm is urgent and requires a strong focus on the policies and practices of those actors that are at the forefront of this debate, including key donor governments, the OECD Development Assistance Committee (DAC), and multilateral and bilateral development finance institutions. This also requires active engagement in fora that are more accommodating to critical perspectives on economic policies, such as the UN.
• Promoting the transformational potential of ODA and making it more effective: Eurodad’s priority is maintaining the development focus of ODA so that it meaningfully contributes to achieving the SDGs, eradicating poverty and inequality while also embedding development effectiveness principles, which have never been more relevant.
• Countering the promotion of blended finance by International Financial Institutions (IFIs) and other major donors as a way to deliver public services: There is a significant risk that the increased emphasis on using public resources to subsidise private investment in partner countries will blur the lines between development and commercial flows. There is therefore a clear need for CSO groups to defend the focus on poverty and inequalities in development finance.
• Facilitating part of the work of the DAC-CSOs Reference Group: The DAC-CSOs Reference Group is the only civil society platform whose express purpose is to be an interlocutor with the DAC and facilitate the exchange of information between the DAC and CSOs. Within this coalition of CSOs, Eurodad coordinates work and reflection on private finance related issues and the impacts of Covid-19 in development finance.