What You Need to Know About the OECD’s New Approach to Fragile States

OECD Lead Governance Advisor Sara Fyson
OECD Lead Governance Advisor Sara Fyson

By ADB Blog Team

The OECD’s new approach to fragile states assesses fragility as a universal issue that can affect all countries in different dimensions – not only those traditionally considered “fragile” or conflict-affected.

The Organization for Economic Development and Cooperation (OECD)’s new approach to fragile states assesses fragility as a universal issue that can affect all countries in different dimensions – not only those traditionally considered “fragile” or conflict-affected. This may lead to a whole new set of development interventions, according to OECD Lead Governance Advisor Sara Fyson, who sat down with us to discuss the findings of the recent report States of Fragility 2015 by the Paris-based organization's Governance for Peace and Development Team led by Jolanda Profos. Here are a few highlights from our conversation with Ms. Fyson.

How did you realize you had to change the approach to fragile states and come up with this new definition?

The OECD has been producing annual fragile states reports for about 10 years. We have done so in response to demand from senior policymakers. We’ve been looking at different aspects of fragility since the Senior-Level Forum on Development Effectiveness in Fragile States asked us in 2005 to develop a system for monitoring resource flows to countries that are trapped in cycles of poverty, insecurity, and weak governance. In 2014 we tested a new type of product – not just looking at resource flows, but also developing a policy tool. We focused on domestic resource mobilization, and there was a lot of interest from academia and practitioners alike. We decided to continue with this approach. 2015 is also the year of the Sustainable Development Goals (SDGs), and for the first time there is a goal on governance and promoting peaceful and inclusive societies for development. It was a good time for us to unpack the concept of "fragile states" and ask what a universal post-2015 framework would mean for fragility.

If the development community starts assessing fragility in a different way, how is that going to affect development work in fragile countries?

We will want to look at all countries, and their specific challenges. For us, vulnerability or fragility is no longer something that affects only developing countries. In this report we show that even middle-income and high-income countries are not exempt from these challenges. This means official development assistance (ODA) support should reflect these particular challenges and aim to allocate aid better. There is good news in that over the MDG period, per capita ODA to fragile states has almost doubled since 2000 to an average of $36 per capita compared to less than $10 per capita in all other developing countries. And political commitment to fragile states survived the 2008 financial crisis. However, in the report, we find that aid flows to countries with dimensions of fragility are no different than those to any poor country. Very little money is earmarked for the peace-building and state-building goals (security, justice and political reform). Health and education are very important, of course, but often what makes a country fragile is precisely the lack of governance – and ODA isn’t specifically targeting this important area. This really begs the question as to whether aid is responding to context.

So you want to do away with the cookie-cutter approach to ODA for fragile countries, and look at the special needs of countries previously not classified as fragile?

Up to 20% of the world’s population today lives in states that have elements of fragility, so this is an opportunity to make an impact on a large set of the population, not just on specific countries.

Your report notes that traditionally ODA to fragile states has been spread out quite unevenly. How can this definition of fragility help achieve a more equitable distribution of aid?

To highlight the visibility of the imbalances, 22% of ODA to fragile and conflict-affected states during the MDG era went to Afghanistan and Iraq, so clearly a lot of geopolitical interests were there. There is really a high degree of inequity in how ODA is distributed to fragile states, including in countries in the region such as Bangladesh and Nepal. Up to 10 out of the world’s 11 aid orphans have been fragile or conflict-affected in the recent past: Guinea, Madagascar, Nepal, Gambia, Togo, Niger, Malawi, Bangladesh, Lesotho, Chad, and Sierra Leone. One way to address this problem would be to compare aid allocations, as currently no donor takes into account decisions of other donors when allocating aid. This seems to suggest that there’s a real deficit in considering prevention in the allocation of aid funding. Making aid flows and distribution more visible like in this report helps a great deal to bring visibility to this particular challenge.

How do these imbalances in aid flows affect development work in fragile states?

Looking beyond ODA is important. We have to look at other financial flows such as remittances, foreign direct investment, and other official flows which are on the rise such as official export credits, sector equity and portfolio investment. Remittances are the largest source of funds going to fragile states, but only to those with large migrant populations, so there’s also an inequity in how those other financial flows are distributed among fragile states.

In your opinion, what has been the development community’s biggest failure in dealing with fragile states?

One thing that comes to mind is lack of interest in strengthening public institutions – one of the 5 dimensions we highlight in the report. We’ve seen the consequences of doing that in the recent Ebola crisis, which highlighted the need to support health systems strengthening in West Africa. Also, the way ODA has been distributed—sometimes bypassing country systems—has undermined development efforts in certain countries and limited their own capacity to rise out of poverty and conflict. Finally, not much ODA has gone to state-building and peace-building as was agreed on in 2011 at the 4th High-Level Forum on Aid Effectiveness in Busan to address specific fragility issues in certain countries.

How would you incorporate the lessons learned from these shortcomings for fragile countries in the post-2015 agenda?

Making this agenda a universal one is crucial. It’s not about fragile states in particular, it’s about everyone pursuing the same goals, not only focusing on low-income countries but also middle-income, and even some high-income countries. It’s also about taking a more granular approach to the fragility issue, and tackling violence, access to justice, institutions, economic foundations, and resilience. The good news is that the SDGs already highlight the need to address conflict and violence, and that’s a big step forward.

In your report, you say that post-2015 assistance must become “smarter” and financing “fit-to-purpose.” What does that exactly mean, and how can we put those recommendations into action?

There are many innovative mechanisms we can examine to try and see if we can leverage more financing. Matching funds is one way, aside from more transparent financial management and better taxation. New communications technology also allows us to facilitate direct cash transfers for social protection in many countries.