June 2010 DANIDA Development Days Trends in International Development

Brief introduction to Dalberg 1 Source: Dalberg is a boutique consulting firm, that promotes global development... by helping leaders of the world’s most influential non-profit, for-profit and multilateral institutions to develop the right strategies, to innovate and enhance performance Global Presence Founded in 2001 Opened at least 1 new office every year Worked in over 75 countries People Staff from more than 30 countries Distinguished advisory board Support team, fellows and interns Areas of Expertise: Agriculture and Food Security Strategy and Performance Energy and Environment Global Health Access to Finance Corporate Engagement Economic Policy Conflict and Humanitarian Aid

Agenda The new emerging markets donors in Africa Expectations for the next 15 years Implications for traditional European donors 2

China is the main emerging donor in Africa with significant relative weight to be able to define development assistance trends New emerging donors in Africa include principally China and India, with a strong focus on commercial approaches and resource-rich countries China is particularly responsive to Africa’s current demand for infrastructure development The strong focus on commercial approaches, as well as local content and ownership, is fostering the creation of new engagement modalities in Africa such as impact investing and intermediaries Traditional donors (mainly Europe and North America) are showing some timid initiatives towards new modalities (e.g. Millennium Challenge Account in the United States), but the “traditional” ones are still the norm (e.g. use of development contractors) 3

Agenda The new emerging markets donors in Africa Expectations for the next 15 years Implications for traditional European donors 4

China is by far the driver of new donor assistance overall. China and India are the two more Africa-focused emerging donors, and provide mostly bi-lateral assistance 5 4 Source: Various sources and based on data available for various years (2004 – 2007)

Traditional donors continue to be the most important players with regards to net overseas development assistance 6 4 Source: ACET, OECD, AidData, One The Data Report 2010 ChinaBased on reported technical and cooperation assistance ( ) of US$ 25,551 million DenmarkTotal overseas development assistance for 2008 GermanyTotal overseas development assistance for 2008

China’s development assistance is heavily focused on concessional loans, with grants a minority 7 4 Source: ACET Concessional loans USD millions 22,379.0 Grants 1,851.0 Debt cancellation 1,300.0 In-kind aid 21.0

Modalities 8 4 Trade Investment Development Assistance Loans Related to development assistance for: - China - India Related to development assistance for: - China - India Mostly driven by projects and humanitarian aid Technical assistance and scholarships (India and Brazil) Leveraging of recent development experience of new emerging donors Strong focus for China

Agenda The new emerging market donors in Africa Expectations for the next 15 years Implications for traditional European donors 9

China, coupled with growing private engagement, will have a strong impact on the profile of development assistance in the next few years Sectors: Health, Education, Other social sectors Focus: Regional Impact: “Feel good” (e.g. number of trainees) Beneficiary: Passive by choice or by design Implementation mechanisms: Direct Sectors: Agriculture, Infrastructure, Environment Focus: Country / Sector Impact: ROI (matrix) Beneficiary: Active in decision-making and investments / partners Implementation mechanisms: Private sector, Intermediaries Development Assistance Today Development Assistance Tomorrow

A new development assistance profile will require new rules of engagement 11 Sectors: Agriculture, Infrastructure, Environment Focus: Country / Sector Impact: ROI (matrix) Beneficiary: Active in decision-making and investments / partners Implementation mechanisms: Private sector, Intermediaries Development Assistance Tomorrow 1 Amounts will increase 2 Players will change Mobilize quickly Flexibility in spending 3 Modalities will change Impact investing Social entrepreneurship Intermediaries

A changing development assistance profile: the example of agribusiness financing in Africa 12 Source: Dalberg analysis Area of interestPotential partners Value chain financing Warehouse receipting Instrument Approach Industry knowledge development Guarantee schemes Donors and FoundationsFinancial institutions Normative agencies / research institutions

Agenda The new emerging market donors in Africa Expectations for the next 15 years Implications for traditional European donors 13

Traditional European and North American donors at a crossroads Back to the drawing board: –Principles or pragmatism? –Aid is part of a partnership with African countries, which includes trade, country specific strategies and approaches, etc. »Are the principles outdated? »Redefine economic development? New rules of engagement: –Support to the private sector (e.g. guarantee mechanisms)? –Traditional donors as investors? New and strengthened skills: –Investment analysis? –The role of a shareholder? –Public-Private Partnerships? 14 4

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APPENDICES 16

17 No.Donor country Estimated amounts (in USD millions)BilateralAfrica 1China 5,830.0MostlyHigh 2Saudi Arabia 1,691.0N/ALow-Medium 3Korea %Low 4Turkey 601.0N/ALow 5Taiwan 483.0N/AMedium 6Kuwait 386.0N/ALow-Medium 7Poland %Low 8India 200.0MostlyHigh 9UAE 181.0N/ALow 10Czech Republic %Low Hungary %Low Israel %Medium Slovak Republic %Low Slovenia %Low Iceland %Medium Mexico 19.0N/ALow South Africa 18.0N/AHigh Malta 9.72%Low Lithuania 9.19%Low Latvia 8.39%Low Cyprus 6.577%Low Estonia 4.912%Low