When we think about industries undergoing a transformation, driverless cars, solar power or online media might come to mind. As we head into 2015, it’s not just transportation, energy and publishing that are in the crosshairs of rapid change. Foreign aid is set to shift due to a massive influx of funding — tens of billions of dollars over the next decade, according to international development executives Devex surveyed this year.
With global development readying for change in the new year, our expanded coverage for development, sustainability, health and humanitarian executives is connecting industry leaders to the information that matters most. Devex Executive Membership is the essential tool for development insiders who need the latest breaking news, in-depth analysis and extensive access to reference databases to make good on their organizations’ missions, and I encourage you to take a moment to consider it.
We explored what the inflow of new funding means for our industry in The Future of Global Development, a series for Devex Executive Members that was published this fall. This series drew from the findings of a Devex survey of nearly 1,000 development executives, 70 percent of whom said they thought the industry would fundamentally transform over the coming 10 years.
The past year saw crises like the Ebola outbreak and the rise of the Islamic State group, so it was easy to be overwhelmed by the glaring need for resources to address disease, poverty and conflict across the globe. But there is also good news. According to our research, development leaders can expect new sources of funding over the next decade that will likely move our currently $200 billion industry toward a status quo that’s more diverse, results-driven and competitive. Emerging economies, corporations like Pfizer and Coca-Cola, private foundations funded by newly minted billionaires and online crowdfunding platforms have the potential to upend what was once a slow-moving and traditional field.
This new funding isn’t just changing the scope of global development efforts. It’s transforming how the industry operates. Competition among charities and nongovernmental organizations is making the development market more responsive and data-driven, as aid executives believe their efforts will be judged more and more on their ability to show effectiveness. With this in mind, NGOs are increasingly publicizing the results of randomized controlled trials and other methods to measure the impact of development work.
In fact, trends shaping global development aren’t so different from the ones that have already shaken up other industries. The explosion of mobile phone use in even the poorest countries means donors from Bloomberg Philanthropies to a local church group can track how their funding is being used and talk directly to aid recipients. The days of glossy charity brochures are ending, replaced by hard data showing what works and what doesn’t.
Executives told Devex that the agencies that have historically dominated overseas aid will see their spending plateau from current record highs, as new funding sources emerge. Corporations are bringing their global reach and deep pockets to development, whether it’s PepsiCo growing chickpeas in Ethiopia for its hummus brands or Starbucks sourcing coffee from Rwanda. Impact investing is predicted to grow dramatically over the next decade, and crowdfunding and other lending platforms are already a source of more than $1 billion annually. And as South Korea, Turkey and India have all joined the ranks of the half-a-dozen developing countries with aid budgets north of $1 billion, formerly poor countries are becoming major players in foreign aid.
It’s true that many top development agencies, like the World Bank and the U.S. Agency for International Development, are still afflicted by a tangle of bureaucracy, which delays project implementation and hinders risk-taking. But even among official agencies, there’s movement toward increased competition that could improve results. China’s new Asian Infrastructure Investment Bank, for example, aims to respond to frustration with process and conditionality by rapidly deploying $50 billion in starting capital. Whether or not it, or the BRIC countries’ New Development Bank, is successful, they represent new alternatives in the development finance space.
We have reported that nearly 80 percent of executives are optimistic about development’s future. That this future will likely be shaped by a larger and more competitive marketplace may be wrenching, but it should also lead to a stronger focus on results. For those of us in management positions, the prospect of change is both exciting and daunting. Good intentions and conventional thinking are no longer enough, and leaders in this new era need access to crucial information and strategic insights to steer their organizations in the right direction.
That’s the value of Devex Executive Membership, the premier resource for our industry’s decision-makers. As you plan for the new year, I hope you will join Devex in its mission to help global development organizations do the most good. Given that this means working more effectively to save children’s lives, preserve the environment and forge peace, change in international development is one industry disruption that can’t come soon enough.
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