Nearly three years after the outbreak of the COVID-19 pandemic, a succession of mutually
reinforcing crises and a challenging global context are putting the multilateral development
system under pressure. Multilateral development finance is stretched across an ever
expanding list of priorities, ranging from humanitarian crisis response to the provision
of global and regional public goods. The urgent nature of these crises requires renewed
efforts to strengthen the financial capacity of the multilateral development system
but should not divert attention from other parts of the reform agenda, such as the
need to reduce the fragmentation of the multilateral architecture.
This third edition of the Multilateral Development Finance report presents recent
trends in multilateral development finance in order to inform decisions by the members
of the OECD Development Assistance Committee (DAC) on their strategic engagement with
multilateral organisations. It presents an overview of challenges and ongoing reform
efforts, and examines the evolution of financial flows to, and from, multilateral
organisations. The report is supplemented by online statistics on DAC members’ multilateral
contributions, available in the Development Co-operation Profiles.
The multilateral development system is confronting three paradoxes:
Paradox 1: The multilateral development system has never been as solicited, and at the same time as contested
Multilateral organisations are asked to help tackle an ever-increasing number of humanitarian and development challenges.
Meanwhile, the system faces growing calls to reform.
Paradox 2: Despite the growing share of ODA channelled through the multilateral system, resources still fall short
The multilateral development system committed a record USD 230 billion in financing to developing countries in 2020.
Yet, the resources are still insufficient to meet the magnitude of the challenges faced by developing countries.
Paradox 3: While the need for reform has never been as pressing, the multilateral architecture is becoming more complex and fragmented
Recent crises have evidenced the need to adequately resource the multilateral development system.
However, the focus on crisis response could slow down progress on other key areas of the multilateral reform agenda, such as multilateral effectiveness and accountability.
Key recommendations
To balance the trade-off between short-term and long-term investments in a stronger, more resilient and effective multilateral system, the report provides recommendations along the following lines:
Develop a holistic vision for the multilateral system to ensure its fitness to meet new global development challenges
Provide sustainable and predictable funding for a more resilient system
Improve co-ordination across the system for coherent multilateral efforts
Prioritise the poor and marginalised in multilateral investments
Mainstream climate and biodiversity further in multilateral development finance
Want more detail on the ODA contributions to the multilateral system by the members of the Development Assistance Committee? The factsheets contain data on both core and earmarked funding to multilateral agencies.
DAC members’ earmarked funding to multilateral organisations
Earmarked funding represents a growing portion of Development Assistance Committee member's multilateral contributions:
Between 2015 and 2020, the share of earmarked funding in DAC members’ multilateral contributions rose from 35% to 41%
In 2020, the increase in DAC members’ earmarked contributions in response to the COVID-19 crisis was driven by a rise in earmarking at the global or regional level