COVID-19 is pushing millions of people into poverty – according to the World Bank, the pandemic will add up to 150 million extreme poor by 2021, the first time that global poverty has been on the rise in 20 years. But just as need grows on a massive scale, budgets dedicated to tackling poverty are being cut.

Even with the potential for increased development support from the new administration in the United States, global donor spending will be severely strained over the next two to three years at least as the world attempts to end the pandemic and recover. The cuts to aid spending in the United Kingdom are only the most visible manifestation of this reality – though they are certainly not the only ones.

So, what does this tension between greater need and less money mean for development in 2021?

Meaningful Advancement of Localisation

For one, this moment is an opportunity to meaningfully advance “localisation,” says Palladium Managing Partner Sinéad Magill. Some of the movement in this direction is out of the sector’s control – for instance, development practitioners are taking fewer international flights during the pandemic by necessity, albeit a money saving one at a time when budgets are very tight.

“But we are also realising that there is less of a need to travel to project locations than we’d previously thought,” Magill adds.

With fewer international experts able to reach project countries, in 2021 the current trend towards localisation will accelerate, Magill says. How development is done will be increasingly decided by local teams and communities. International support will still be necessary, but everyone will think more carefully about how to make best use of it and when. Inevitably, more control will remain in the hands of local teams – a welcome scenario.

“It’s a paradigm shift,” continues Magill. “The need to stop flying is changing our work right now, but it will definitely also impact how development is done once the pandemic subsides. In the meantime, it’s forcing the hand of those who may have been skeptical of greater localisation to loosen their grip.

“I hope it will actually convince them that this is simply the better way forward.”

But the risk of a focus on local solutions to local problems is that the concept can be taken too far and even be distorted. According to Magill, it can engender a parochial outlook, where countries only dedicate resources to their own problems, at worst brandishing a form of nationalism that exacerbates challenges beyond their borders, whether protectionist trade policies that damage neighbouring economies or water wars caused by governments’ inability to agree on collaborative solutions.

The antidote, she says, is to put as much of a focus on localisation as on global and regional cooperation.

Global Cooperation for Global Problems

COVID-19 has once again demonstrated the need for international cooperation in addressing borderless challenges. Cooperation amplifies individual countries’ efforts, allowing for greater impact with less. But it is also often simply indispensable, as with pandemics and climate-related disasters.

“This year may see a welcome shift in terms of global cooperation,” says Palladium Managing Partner Rhys Morris. “The Biden administration’s more collaborative agenda will spur other countries to follow suit, and we’ll see a global shift towards a more holistic, cooperative approach to tackling problems.”

“That includes another global emergency that is calling our attention – climate change,” he adds.

The UK is keen to be seen as a leader in the space, Morris says, not least as it establishes its position internationally post-Brexit. The incoming U.S. administration too will make a difference. Biden has pledged to tackle climate change, including bringing the U.S. back into the Paris Climate Agreement and making domestic cuts to greenhouse gas emissions.

“These actions will boost U.S. credibility and demonstrate commitment internationally, in a way that will hopefully then strengthen other countries’ climate efforts as a result,” Morris adds.

Private Capital for Development

The dearth of public funding for development makes the need for private investment in poverty reduction and other social causes all the more urgent.

“If the trend of businesses adding social ‘purpose’ to their bottom-line thinking continues,” says Magill, “some of the shortfall in public resources for addressing development needs will be met, not necessarily through corporate philanthropy or CSR, but by businesses making meaningful changes to how they operate.”

There is a risk, of course, that as profits are hit by the pandemic, only the rhetoric on purpose will remain. But COVID-19 has shown why business can no longer ignore social purpose – the link between society and their activities is too strong.

A global recession may make the intersecting challenges of poverty, climate change, and conflict seem insurmountable, but it also forces everyone to think differently about how these predicaments are tackled and by whom. If the private sector is to recover and thrive, it will need to play its part.

The roll-out of COVID vaccines means that to many, 2021 will be a year of great expectations. But the damage done by the pandemic will take much longer to undo. Hopefully, the best of localisation, global cooperation, and private investment for social good and development will stay with us well beyond 2021.