 Okay, good afternoon everybody. You're very welcome to the Institute of International European Affairs this lunchtime We're very honored to have a great speaker very very interesting subject looking at the very important issues for the for development and trying to take a forward look at many of the issues and external analysis that is relevant to actors in this area So very much looking forward to hearing his comments just to remind all of you that the Dr. Karras's remarks will be on the record and that the Q&A thereafter will be under the Chatham House Rule and Invite you if you wouldn't mind also to put your phones on silent. There is a tweeting hash tag and all of that kind of thing but first of all, this is part of the Irish Age Development series and They have supported us in Establishing this forum for the exchange of ideas and bringing thought leaders into our country and helping us to frame our own thoughts and Advocacy and ideas at government and agency levels. So we thank Irish Aid very sincerely for that support And I would ask ahead of Irish Aid Rory de Burca to make some opening remarks and to introduce the keynote speaker. Thank you Thanks Barry It's a real pleasure to welcome Dr. Homie Karras of the Brookings Institute here Brookings Institute is a place where People normally make pilgrimage. In fact, I think the Taoiseach is going to make a pilgrimage there next month So it's actually great to get somebody from the Brookings Institute Out of their sanctuary and into the wilds of Dublin and north side Dublin at that Seed breeding generation But Brookings Institute probably isn't very little introduction It's one of the great thought-leading institutions in the world And it's a great place for setting agenda's development agendas amongst them And it's a great place for people with great CVs to come and share their knowledge and Dr. Karras You know is currently the interim vice president and director of the global economy and development program in the Institute And I think you know anybody who looks at their recent record of publications will see the great insight learning that he's brought you know looking at Policies and trends which influence developing countries and influence us as donors in our approach to them as well and And he asked some really really pertinent questions and we'll come back to that in a second You know, but he brings he brings to that some some fantastic, you know insights from other experiences had not least in the World Bank as executive secretary of the secretariat supporting the high-level panel on on the post 2015 development agenda that's and You know and his work on Poverty reduction economic management on all of that You probably read the CV so I won't go into any more detail on I think Dr. Karras probably knows is on CV So I won't bore him by by by giving any more And But I mean, I think it's really particular the timing of this visit is particularly I think important and important for a number of reasons and Tomorrow the iraq this joint committee and foreign affairs launched their review of Irish aid Which country to what might have been set in one particular newspaper this morning is actually quite positive And I think help set an agenda or help set set set a template for a discussion Which we need to have about a new international development policy of Ireland that gets us ready for the next decade That's in the context where the government has reiterated its commitment to hit zero point seven but actually, you know, I think we have to park a target and think about what is it we want to achieve and I think we have to do whatever we do Key right and particularly with with with Focus on quality And I think the kind of research and insights that dr. Karras has will be quite helpful to us in taking forward our thinking And the thinking of the people in this room who we want to engage with in developing that policy in Trying to decide what it is we can do to get that quality engagement going forward Today the title of the address is five lenses on the future of global development When I think dr. Karras's perspectives through each of those five lenses or prisms or whatever word we want to use We'll hopefully provide, you know some interesting illumination And a few colors in the light on the development frontiers and the pathways to diverse traverse those frontiers That we have to we have to walk down those pathways in the decade ahead is most recent research on seriously off-track countries I found really interesting. I like the phrase I think there's times in the last decade when we probably thought we were one of those off-track countries But thankfully I think we're back on track a little bit anyway And I think it shows it's a guide to where the needs which we must address are and what struck me was if you look at other Other indicators some of the countries that dr. Karras identifies as needing assistance actually do well another in another studies and other indicators So it's a reminder that we you know, we need to ask the right question That was really interesting and also having asked those questions about where I think the lot of strategic questions that donors such as us Need to ask it. How do we most effectively engage? Are we engaging in the right places within countries or with the right people within those countries? How can we most effectively anticipate those countries needs in three four or five ten years time and start in Investing today to make sure that those needs are addressed you know in that decade ahead and How do we organize ourselves best to do all of that and I think these are the kind of questions Which we're going to try and ask of ourselves as we get into our new policy development process And I think we need to reflect very carefully on dr. Karras's recommendations to donors on questions such as scaling up on local ownership and on results and I thought his insight that poverty is concentrated in large growing economies But we're moving to it moving from that to an era where poverty can be Increasingly addressed in smaller economies but deep structural challenges is quite interesting because then we might have to re-engineer ourselves around that that dichotomy and The other thing that I thought is really interesting particularly If the media that we import from other island is quite skeptical about development aid at the moment for reasons Which might not always be to do with development aid and maybe to do with other politics But I think your statement that development interventions in these new contexts can be successful and Profitable just as they have been in other developing countries is really important aid works But we have to make sure it continues to work and I think we also have to acknowledge there's an Increasing humanitarian context and political complications in the Middle East and the Horn of Africa and across Sahara You know make for increasing pressures. We have conflicts. We've got famines or near famine situations and Migration and we need to come up with a more imaginative responses and you know That at a time of increasing international complexity and we can see there's sort of new power geometries are beginning to emerge And I think dr. Carass has some interesting thoughts on things like the changing world of China in the world From which we can learn, but it's not just China. There's the changing role of the Gulf States Turkey You know along that whole Swahili coast The role of Russia is changing in the world, you know, it's it's it's more assertive in some ways How do we move around that? Evolving sense in the US of its place in the world is also a factor in the developing the development context And the EU itself is changing its approaches And so as are the so-called traditional donors and where do we as Ireland a small country on Europe's periphery? Put ourselves in that changing geometry is going to be an important question for us And then there's the question of business and private sector and how it wants to engage with development And how do we best harness that energy? in ways that Hit our our development objectives and the development objectives of the countries where we want to work and Just because of the week that's in it as well. We've seen a lot of people question some of how aid agencies and people involved in development aid work particularly the integrity of individuals within that and And that has raised important questions But in some senses has missed the big point which is that agencies are doing really important and effective work as our governments in meeting real human needs But the kind of popular discussion around that does raise questions about how do we ensure moving forward? That the development interventions that we want to do retain Popular support genuine popular support that's deep rooted in our societies and how can we make sure that what we do is? Authentic to our own experience and the experiences of the countries that we want where we want to where we want to be And then there's some real questions there for us to reflect on if not today I think into the future. It's a question for this week I think very definitely and the last thing I'll mention is the sustainable development goals Which provide a frame for where we how we move forward and I think you know There's real challenges to us in the development space moving forward think about how we fill in that frame, you know How do we make sure that we we believe you know, we we don't leave anyone behind But also we deal with the furthest behind first I think dr. Carras has some interesting ideas for us which I look forward to hearing on those as we listen Are we look through his five lenses the next one? Dr. Humber Carras Thank you. Thanks very much for those kind words. Thank you so much for the invitation to come here You know, it's a It's it's such a pleasure in part because a few years ago I did some work with a colleague where we tried to rank various development agencies bilateral donors a few multilaterals as well We called it the quality of official development assistance and the idea was that by sort of benchmarking Agencies against each other Maybe we would learn some lessons about what was working and what wasn't working and of course Irish aid came out as number one And so I've always wanted to come here and know, you know, figure out. What is that secret source? and in turn I Wanted to offer some thoughts This afternoon about the kinds of things that I suspect that people will look at in Five years time when they're looking back and asking the same questions again about what has, you know, really made for an effective Development agency, I think it's going to be how they addressed some of the issues that I'm going to talk about So what I'm going to talk about is perhaps a little general but I Hope to bring it down to some specifics about how I think the big important issues for Development agencies will look like So we started a few A few years ago we I Did a paper called Horizon 2025 with a colleague Andrew Rogison from ODI where we tried to look at, you know, how the development landscape was changing and we thought we would Do an update about, you know, five years later or so last year and I have to say that one of the things that really surprised me as we were doing that paper was just How much had changed in the five years? I mean the development landscape is actually changing very very rapidly and That in and of itself poses some real challenges for for agencies It might continue to change in which case we'd be talking about some very different things again, but we talked about In the in the paper we talked about meteors, which were things that we had completely blindsided us that we really had no idea Were we're going to be such big powerful forces and those meteors were Essentially the the the the whole rise in populism That has seized politics in many of the most important donor countries. I mean five years ago that just wasn't seen as being a Major driver now. I think it's something that really has to be reckoned with we didn't have a gender 20 30 Five years ago and many people were skeptical that we would actually ever get a global consensus on a new way forward So that's a massive new development and we didn't have all of this Link between the humanitarian the migration the resettlement the this huge influx into Europe in particular, but also in the United States and you know a very different approach to Migrants and then there were some other changes which You know we call snowballs meaning We'd sort of seen them, but they had grown bigger and bigger over time and I think the the ones I want to emphasize are that Just at the time when the world started to realize that actually we'd had a massive success And bring down global poverty reduction little the speed with which Poverty reduction is happening in the world has started to go down Essentially most of the poor people in Asia have already Come out of near extreme poverty into near poverty and Then you've got a whole continent of Africa where poverty is still actually rising so the global figures are no longer moving in the same way as they were before and Whereas you know we keep with this narrative of oh, we brought you know helped a billion people Escape from extreme poverty Etc. Yes, but that's history. That's not actually where we are where we're headed Obviously climate finance and the links with you know between climate and development have become bigger and bigger over time And then I think none of us really saw the speed With which China was going to move in the international development space You know, I have to I I think you have to think that the Asian Infrastructure Investment Bank Was first mooted as an idea in 2014. It's already doing projects. That's an extraordinary pace for any new institution The you know the The scale of the Belt and Road Initiative today is Huge and aggregate terms and for specific countries. It's absolutely enormous and You know, we have to reckon with that as well so what I'm going to argue is that as We look forward there are going to be five things that will really Determine whether or not aid agencies do well and it's on how they address these five issues The first is the issue of fragility. I Actually hate the term fragility because I think it encompasses so many different types of fragility But I'm using it as a shorthand for a range of contexts in which Governments seem to be unable to deliver the basic functions of a government including Helping its populations escape from extreme poverty and achieve some modicum of prosperity and development I think we we know what some of these places are Those are the hard places Where we have to now make progress And if we're going to make any headway towards the achievement of the SDGs We cannot afford to have 30 40 50 countries Where the speed of poverty reduction is just nowhere close to what would be required to end poverty So I think we have to really think about very hard about what what we can do in order to break these cycles of repeated development Frustrations that seems to happen in these countries second We're now at a stage where the The overall poverty gap in the world the amount of money it would take to bring everybody above the poverty line It's actually shrinking. It's you know, we're no longer a And and and that I think means that specific safety net programs are going to become a really important instrument in The elimination of poverty we can no longer say, oh, we can't have universal safety net programs because it's simply unaffordable and you know So let's work on other things I Think now these programs can be affordable. They can be funded. They will be a really important tool Third there's a lot of discussion about what to do in middle-income countries and I Have to say I am slightly perplexed That in the amongst the development community There is so much emphasis that one should only work in places which have a very high proportion of extremely poor people You know, even in these other middle-income countries, we're not talking about places that are exactly rich And Have a few words to say on why I think it is so important to have an explicit middle-income country strategy And not to just walk away from some of these places. I've already said I think we need to have a very clear-eyed Response about how to engage with China and part of it is competitive and part of it is cooperative and We've got to figure out exactly, you know, where we compete and where we cooperate and then finally I'm going to say something about the way in which aid agencies need to work with the private sector So these are the sort of the five big lenses if we get all of those five right, I think we'll make tremendous strides in Development cooperation if we get them wrong. I think that We will be Judged as having failed on some really in some really important area. So fragility is the new frontier We did some work that looked at under current pathways and trajectories What is happening country by country and we looked at 145 countries and essentially used an arbitrary threshold and said how many countries by 2030 won't even have got to a 20% Rate of poverty remember the target is to get to zero. We're using 20% 31 countries those 31 countries will have 80% of the remaining poverty in the world by By 2030 which under current trajectories still looks as if it's going to be somewhere around 450 million people That means that in the next 15 years. We're only going to bring about 200 million people out of poverty not the you know Billions that we the bit one billion figure that we talked about during the MDG period This is really Primarily not not not entirely but primarily an issue of Africa and It's primarily an issue of some of the very large African countries. So Nigeria Nigeria has the distinction Probably today of having the largest number Absolute number of extremely poor people in the world More than India more than China Just think about that for a second. I mean it it has that has not been true. I I suspect in my lifetime and It's a you know, it's it's it's a remarkable tribute to what's happened in India China and other Population countries, but it's also a real condemnation of what's happening in in Nigeria So this is Nigeria, it's DRC. It's Madagascar These are large populace countries where the rate of poverty reduction really is not done is not falling And so we should really focus on these places We should be absolutely, you know Have a laser like focus on what is happening in these three countries Nigeria DRC and Madagascar They will Account for half of the world's poverty in 2030 if we don't do something about it And we hear very little actually about these countries in the development discourse Certainly in Washington, you don't you don't read about specific strategies for these places something new I Would be surprised if many people in the United States could find Madagascar on a map Actually that probably goes from Nigeria and you know DRC as well. So maybe it's not a very good example The bigger point is that funnily in my mind when you look at the way in which aid allocations have moved over time They haven't actually moved towards the changing location of poverty and So the question is why why why is there so much inertia in aid that it just keeps going to the same places and Is not saying what we're really trying to do is accelerate the rate of reduction of poverty in very specific places So if the poverty is there, that's where the money should be that's where our engagement should be and When you engage in some of these places, then I think we also probably need some you know new ways of approaching Development and I would just give a small plug here to real basics Let's have civil registration vital statistic. We don't know how many people are born. How many people die? What if they die of at what age? I mean, this is not real rocket science Development It could be digital IDs You know, if you think about it in India with the other program They now have digital IDs for 1.2 billion people that they've rolled out over three years well Africa has Just over a billion people so they can do it in India or in three years. Why can't we also do it in Africa? Why can't we have digital IDs so that we actually know something? about many of these people and have a Technological base that would permit us to then innovate in the way in which we deliver a whole range of Poverty reduction services to those people including things like like health and education Now, let's talk about the overall poverty gap so whoops, I mean We've computed the overall poverty gap the amount of money it would take to bring everybody in the world with perfect targeting up to the $1.90 a day poverty line. It's about 45 billion US dollars per year 0.1% of DAC countries GDP This idea that you know Aid is just a drop in the bucket Not so true any longer. Aid could actually do this Now we all understand that you can't have perfect targeting and there are going to be leakages and things like that So I'm not literally saying take 45 billion you solve the world's you know poverty Problems, but it's it gives you a little bit of a sense of the orders of magnitude and what I'm really driving up There this these are just the graphs that show you how it's how sharply it's come down since the year 2000 But what I think the implication of this is is that we're now in a position to start to develop Effective scalable social safety nets in many more countries including in low-income countries and You know, I am personally a big fan of cash transfers I'm actually a big fan of unconditional cash transfers I think when we impose conditions, even if they are Supposedly, you know sensible conditions what we find is that You then get some 40% of people who just opt out They may not understand they may not agree They may find it too difficult to it whenever you have conditionality it adds enormously to the paperwork that you need to do the the Procratic cost of administering these kinds of programs and there's very little research that actually says That from a development point of view conditional cash transfers work better than unconditional cash transfers Anyway, that's a personal kind of thing. I think the big picture is cash transfers Cash transfers seem to work much better than many other Delivery mechanisms that we have especially in humanitarian Situations and so, you know, I think that having a big push on the development of safety nets is likely to be something which is which will prove to be a really important tool in In the arsenal of all aid agencies Let's talk a bit about middle-income countries. I Want to be more specific and talk about upper middle-income countries because that's where the red lines seem to be emerging There are several donors today that in international discussions have essentially said you know, if a Multilateral institution is going to still engage in upper middle-income countries, they will be defunded by those donors I find that Slightly Slightly bizarre and It's bizarre because these upper middle-income countries are now really important parts of the neighborhood of All of the countries around them we we We live in such a connected world that the idea that you can just simply say You know, there are no spillovers between a large regional economy and its whole neighborhood I Think is it's it's daft and so many of the solutions Sometimes they're direct and immediate the case of you know, Jordan and Lebanon with Syrian refugees is an obvious example But sometimes it's much more Much more indirect. It's happening through trade flows. It's happening through a range of other things. Sometimes it's happening actually directly through Development cooperation from these regional Powers I should say The point I'm really making is that excluding them From the if you want to bring them into the discussion of how to develop the rest of the neighborhood You also have to bring them in have a discussion and engagement with them about their own domestic problems and issues Which they have The other part is that these are also the places where many of the innovations that we're now trying out Are actually happening if you're not engaged Directly you're not gonna learn and you're not gonna spread as rapidly as one could These kinds of Innovations and I'll talk later because many of them are specifically about the ways in which the private sector can be brought into the Development enterprise so I'll talk a little bit later about some of those We have This is a phrase that Francisco Sagasti Actually coined so I don't want to take Credit but the the core idea Is that one should think about upper middle-income countries really as Gradation rather than graduation meaning that there are going to be some sectors and some institutions Which are more advanced where they can graduate and others way which are less advanced and where they still need some help and So rather than just thinking about a country as a monolithic sort of you know Thing where once its income level crosses a certain threshold you say okay now you can deal with your own problems you think of it as Actually a multi-tiered with you know a whole range of different institutions and with a strong likelihood that Not all of those institutions are going to be progressing at the same rate And some are going to be much further behind than others and that I think is much closer to the the real world Than the idea of instant graduation So our view is don't don't talk about Graduating countries if you have to talk about graduation talk about graduating country sectors or country themes or something like that But there will always be places where There can be really productive conversations and engagements with external With external donors and we would encourage the donor community to engage in those areas where There is some regional influence and impact I mean you know think about education and think about the ways in which some of these places are Encouraging flows of people to come to their institutes of higher learning how they're spreading their own educate curricular when you benchmark on You know education achievements and learning metrics Most developing countries are not that keen to be benchmarked against OECD countries with you know PISA They'd much rather you know look at regional comparators, etc These are the kinds of things that a large emerging Economy an upper middle-income country could could really do And then as I said Really be there where the Potential for innovation and learning is quite substantial China Let's talk about China So I mentioned the Belt and Road initiative I'll give you an example I'm up born in Karachi The Belt and Road initiative in Pakistan Has a number of projects that will probably amount to something between 45 to 50 billion US dollars Total aid to Pakistan may be One billion something like that net disbursements so order of magnitude difference in the Belt and Road initiative they're talking about Road projects rail projects. There's a new port. There are six power plants You know it goes on and on. There's capacity building institutional strengthening. It's a large package Signed at the highest level of government and then drill down into a Whole range of specific projects Think of the way which a donor agency usually works They do a lot of technical work in building up a specific project and Then try to get political agreement that that's meeting the priorities of the government It's just it's it's it's different and it's on a completely different scale China Development Bank and China Rexim Bank Probably have something like 680 700 billion US dollars in assets in Developing countries now That's as much as all of the multilateral development banks put together China some of these you know the AIB for example is Operating very differently Different motivations for aid. Sorry that what motivates should be what motivates aid. It's not really aid It's development cooperation You know the Chinese always have this mutual benefit kind of kind of approach The if you look at the efficiency in terms of the speed with which an AIB project is approved or some of these other projects are approved and implemented They are quite rapid There was a one of the projects in Pakistan was a solar power plant six months for implementation hundred megawatts in the Punjab Effectiveness still a question mark. I think it's very early. We've got there are lots of anecdotes about You know the infrastructure projects not being maintained The Chinese usually think that their responsibility ends when they've Constructed an asset they hand it over to the country and then it's up to the country to do something With it. Well, that doesn't always work so well. So I think there are still some issues on that that said It's quite different and I think there does need to be some kind of a strategy and engagement with with China I think it's inevitable that there are going to be geopolitical rivalries and I think it's inevitable that the The bilateral aid programs will reflect those kinds of rivalries the big question is actually in multilateral institutions and whether China has drawn into multilateral institutions and encouraged to view multilateral institutions as a bedrock of rules-based Cooperation in the world or whether the multilateral institutions in turn are going to become places where the geopolitical rivalries are played out Which in my view would seriously weaken those agencies and institutions But which I believe is actually what is happening right now and has been happening for some time and The decision by the United States not to join AIB was one of those shots across the The bow, but it goes back much earlier. It goes back to the Asian Monetary Fund idea and many other kinds of ideas and the continued gridlock on the the Governance of the IMF the governance of the World Bank the shift in shares and chairs, etc finally private sector So I think we all know that the you know the the big question with the private sector is how one actually starts to unlock the large amounts of capital and To some extent technology that exists in the private sector and use that for development purposes a couple of Just statistics Right now When you see when you ask how much private money has been mobilized into development projects by Guarantees first-loss instruments this that and the other the OECD survey said I think 27 billion US dollars in the latest year Set that against the hundred and 30 odd of net ODA 160 of gross ODA It's very very small Usually when people talk about how do we bring the private sector in they're talking about multiples So you want the private sector to be Leveraging official resources by five to one or something like that We're far from that If you look at the private provision of infrastructure without official engagement You'll get a number that has been hovering around a hundred and twenty billion dollars per year It's mostly energy and telecoms Last year it fell to about 7075 and It fell because of idiosyncratic reasons in Turkey Brazil and the Philippines Which are the three largest countries for a private provision of infrastructure But it also fell because we've got new regulations of Basel 3 on the way in which banks Have to set aside capital when they invest in let's say let's say you want to invest in infrastructure in a developing country Infrastructure set aside capital developing countries set aside more capital long-term investment set aside more capital. It's very expensive So project financing from European banks in particular has really crashed Same as true with solvency to and the regulations on insurance companies and other institutional investors So we've actually got a real battle that just at the time when we're hoping to get Institutional private money into development projects the regulators are actually saying this is really risky stuff please don't do it and the question is can aid agencies actually do something to unlock that and The answer I think is probably yes But they've got to be very smart about the way in which they do it and obviously they have to avoid Situations where they're essentially giving corporations more of a handout and Corruption I Think that there's quite a lot of scope. There's a very interesting grouping of Development agencies Called source. It's a nonprofit established in Switzerland What it's trying to do is to harmonize bidding documents on other documents on Infrastructure projects as well as having discussions about the way in which one can put together Essentially blended finance packages where you have a combination of some truly concessional money to take care of Institutional reforms capacity building project identification and preparation some of the costs that are difficult to to cover under purely commercial terms and first loss and Then very simply one thing that we should do is actually, you know set targets and track So-called mobilized private finance Right now the development community isn't even saying this is going to be our objective We have to hit pick a number a hundred billion dollars by you know in two or three years There are no systems For actually looking at how much of this private money is coming in so right now. It's it's literally all talk The whole blended finance thing I mean there's paper after paper and establishing principles and this and that but it is still all talk and One or two anecdotal examples, which everyone trots out about how it could be done But no systematic efforts to really talk about how to scale that up So I've tried to say big changes in the development landscape. So aid agencies should change as well and Basically, I think that when we look back People will say What did you do in fragile states and were you effective or not? What did you do in trying to help countries develop these new instruments for domestic Social safety nets at scale How effective were you in engaging with middle-income countries and bringing them into the conversations about development in their neighborhood What was your China strategy and How did you do with mobilizing private finance and using aid to unlock private finance both by de-risking as well as by Financing and subsidizing some of the fixed costs and regulatory reforms that need to go along with That kind of private sector development. Thank you very much