In the face of uncertainty, donor funding offers some respite

Author: Yugen Pillay, BDO South Africa, Partner and head of public sector

Over the last few last years the world has witnessed a shift in foreign policy from various countries - both developed and developing. Whether it be immigration, climate change or even economics, this shift will be felt for years to come and with a greater impact than initially thought. 2023 has already made the history books for being the hottest year on record with the average temperature coming in at 1.5-degrees Celsius higher1, and global economic growth coming in at a concerning 1.3%2 according to the world bank. This, on the back of continued conflicts that could escalate during 2024, paints a grim picture of the global outlook.

These external challenges only compound issues that are traditionally dealt with by governments, such as education, housing and healthcare, and also create an environment of uncertainty and volatility which has a negative knock effect economically across the board. If there isn’t sufficient budget available then leaders are not able to properly educate and train their citizens, leading to an economic downturn which can affect housing, healthcare and social services, amongst others. While citizens continue to demand greater accountability from policy makers, without funding, little can be done to change the outlook. This creates a vicious cycle which is difficult to break without fiscal discipline and the right international relations, leaving countries which are classified as emerging or developing to grapple with the full economic impact of this.     

It is assuring to know that even among uncertainty, donor funding is available to steady the ship thanks to the many organizations that support countries where there is a lack of development.  Donor funding plays an integral and life changing role and can turn economies and promote self-sufficiency. Only donor funders have the unique ability to partner with governments to develop an approach that tackles the fundamentals required for economic growth and stability in a region. This rings true even if, with billions spent on framework reforms and various other initiatives, the development itself is sometimes slower than expected.

Given the current global economic outlook, donor organizations can and should play a bigger role in driving economic change and stability. The need for donors to educate more, develop more, and feed more, is immense and is especially necessary in uncertain times. These organizations also have the skills, knowledge and expertise to shift prospects for dwindling economies and find peaceful solutions in conflict zones. In addition, by partnering with advisory firms such as BDO, donor organizations can tailor their interventions to become more direct and more precise to drive efficiencies that can result in positive change much faster. If donors can dial up by leading the way, support from private capital will flow. Donor organizations hold the key to sustainable economic change which is why their funding is needed now more than ever.    

Yugen Pillay
BDO South Africa
Partner and head of public sector