Re: Development: Rethinking Foreign Aid and Climate Change Loss and Damage

By TechnoServe

In our latest "Re:Development" episode, the head of the U.N.'s loss and damage fund, Ibrahima Cheikh Diong, shares an inside look at climate change financing and how he thinks foreign aid should improve.

International development has entered a new era. The United States Agency for International Development (USAID) has been shut down, and many countries are cutting foreign aid budgets. And yet global poverty remains one of humanity’s most urgent challenges.

At this moment of crossroads, TechnoServe is exploring what the future of international development should look like—and how we get there.

In TechnoServe’s series, “Re:Development | Conversations for Change,” we interview leading thinkers and doers with bold perspectives on how to build a world where everyone has an equal chance to succeed.

Read previous episodes of the series. 

Exploring the Future of Foreign Aid and the Climate Change Loss and Damage Fund

Ibrahima Cheikh Diong is the first-ever executive director of the United Nations’ Fund for responding to Loss and Damage (FRLD), which supports recovery from climate change impacts in low-income countries. Before his appointment in 2024, Mr. Diong served in a variety of private and public sector roles. At the U.N., he served as assistant secretary general and director general of the African Union specialized agency and leader of the African Risk Capacity (ARC) Group. 

His private sector roles have included serving as founder and chair of the ACT Afrique Group; a senior Africa banker at BNP Paribas; and an Africa director at Booz Allen Hamilton. Mr. Diong also served in senior positions in the Government of Senegal, including minister and special adviser to Senegal’s president; director general of international cooperation of Senegal; and permanent secretary of energy.

Mr. Diong has a unique perspective on the future of foreign aid. Not only has he served in multilateral aid agencies, but he has also been a member of a recipient country government, experiencing firsthand how development negotiations work best. His private sector leadership also provided insight into the role of business in sustainable development. Will Warshauer spoke with Mr. Diong for our latest episode of “Re:Development,” focusing on climate change, the FLRD, and concrete ways to improve the impact of international development.

Note: The views and opinions shared in the interview are solely those of the Executive Director of the FRLD, and should not be construed as representing the views of the Fund for responding to Loss and Damage.

What is the U.N.’s Loss and Damage Fund?

Will Warshauer: Hi, I’m Will Warshauer, the president and CEO of TechnoServe, and it is my pleasure to be here again for another episode of “Re:Development,” where we talk with leading thinkers and doers about the future of development. It is my distinct pleasure to welcome Ibrahima Cheikh Diong to the show. Ibrahima is the first-ever executive director of the Fund for responding to Loss and Damage. We will at times call that the FRLD.

It exists to direct financial support to developing countries to manage the harm from climate change. A new idea, a long time coming.

Ibrahima, we have not had a chance to catch up since you were at COP30. I know that COP30 marked the first big action for the Fund for responding to Loss and Damage. And I’m just curious if you can tell me and all our listeners a little bit about how FRLD came into being and how it got to where it is today.

Ibrahima Cheikh Diong: FRLD, as I referred to it, quite frankly, it’s a great example of what we can do together in the name of global solidarity.

For 30 years, developing countries, particularly the most vulnerable countries, have been calling for this fund and the important sense of urgency. And within three years, starting with COP27 in Sharm El-Sheikh, the idea of setting up a fund dedicated to loss and damage was agreed upon. It was a major breakthrough at COP27. But within three years, in fact, at COP28, we started taking pledges coming from different parts of the world.

At COP29, we got a bit more momentum. And then in the meantime, so much progress has been made just in terms of the fundamentals of the fund, the governance. The fact that it’s a board of 26 members, 12 for developed countries, a very democratically elected board, where decisions are made on the basis of consensus. That’s really a good example of how we can come together as well. 

And then pledges were made. As of today, we stand at $800 million. And last but not least, the election of the executive director, putting a huge responsibility on my shoulders to deliver on all of that, made it really possible for us to believe that global solidarity does have a name, and that’s what FRLD is all about. 

So today we are actually focused on serving the countries, our mandate, which is to support the most vulnerable countries. And that’s why I’m super excited about this opportunity, just to be part of the solution.

How to Convince Donors to Support the Loss and Damage Fund—Especially with the Recent U.S. Withdrawal?

Will Warshauer: Well, the Fund, I tell you, it made sense to me right away in the sense that if you think about the minuscule contribution to the climate change problem that people in these countries have made, it’s largely been driven by the folks in wealthier countries. And yet disproportionately, the suffering of the effects of it is borne in these countries that didn’t cause the problem in the first place. And so, for me, it was blindingly obvious that the fund was addressing a major structural imbalance. And so I’m delighted to hear of its progress. 

You talked about getting pledges. And as I know from leading an NGO, while I’m there for the mission, a lot of what I have to occupy myself with is making sure there are enough resources for us to deliver on the mission. I know you’re charged with the same thing.

I’d be curious–tell us a little bit about how you convinced donors to contribute to the Fund. And also, I know that the United States was initially going to be a contributor and pulled out, and that’s got to be problematic. How do you deal with something like that?

Ibrahima Cheikh Diong: I think it’s important to underscore the way this fund is actually being positioned. It’s not about reparation. It’s really about global solidarity. It’s basically the international community recognizing there is a problem. So we need to come together to find a solution. 

It’s not just about pledging funding, but it’s also about making sure that the pledges are converted into actual funding. Because without that, we can’t actually provide the support that’s required. 

Now, a couple of arguments we put on the table. Number one, while we are looking at the governance and the Fund, unfortunately, extreme weather conditions are not getting better, it’s getting worse. And there is a human aspect to climate change, and that’s the most vulnerable communities, whose lives and livelihoods are affected. And that’s why the motivation behind the Fund is a sense of urgency, rapid response so we can at least support the countries that need the support the most. 

I think argument number two is to say, this is the fund that, unfortunately, as you said earlier, those who contribute less to greenhouse gases are affected by the floods, the tropical cyclone, the drought in most developing countries. And in order for those countries basically to find a balance between addressing those concerns and pursuing their development agenda, support is actually needed to make sure at least it doesn’t undermine their agenda. 

And that’s why this fund–on one hand, you’re dealing with losses and damages, where you’re actually providing the support to the countries so that at least they can pursue their development agenda while they’re really fixing the problem they’re faced with.

Now we come to the funding. What I often say is that if you look at COP 28, the pledges were at $766 million. So today we stand at $800 million. We call them voluntary contributions. So out of that $800 million, half of the money has actually been converted into actual cash. 

And I think what’s important here is to keep the momentum whereby more voluntary contributions will come forward, and while we’re looking at a longer-term resource mobilization, which is going to be in the billions hopefully in the years down the road. So I think the momentum is good. The question is just to make sure that with all the competing funding needs around the world, our funding is not left behind. 

Regarding the U.S., we get this question quite often. I think what most people don’t actually realize: the Fund has 28 contributors, including the U.S. So one has left, and 27 have stayed. Now, obviously, we regret that the U.S. has left, but we’re focusing on those who will stay and making sure we make it work. So unless they see the investment into the Fund actually having some return, in this case, return of supporting the most vulnerable.

So the Fund is not against a country, it’s for the countries we’re trying to support, in this case, the most vulnerable countries. And that’s where we focus our energy and our efforts going forward.

How Does the FRLD Balance Climate Change Repair with Long-Term Development?

Will Warshauer: I just want to ask you to go a little bit deeper into something that you said earlier in response to this question, because I remember we discussed it a while back, which is when you listen to the name of the fund, the Fund for Responding to Loss and Damage, you may come away thinking it’s just a fund to respond to climate disasters. And in fact, I believe that you have a view that that’s not enough, and it’s also got to be a fund that can promote long-term development.

And I’m really eager to hear a little more about how you’re thinking about that. I know it’s early days still in the Fund, but tell me a little bit more about that because it’s intriguing.

Ibrahima Cheikh Diong: Yeah, if you look at climate change and the particular areas where we’re trying to make a difference, quite frankly, it is two aspects of the problem. 

So one would be called the economic losses. In other words, you have a particular climate disaster. One has to rebuild the infrastructure, rebuild whatever was destroyed. And that’s more economic losses which affect a lot of countries, Africa included, but also other vulnerable countries.

There are the non-economic losses whereby people’s lives are affected, and that’s where it’s lives and livelihoods, the human aspect of climate change. So what we’re trying to address in the Fund is both aspects of losses and damages whereby you reconstruct, rehabilitate, and recover in some cases. While you’re doing that, also address the concerns of the most vulnerable countries. 

Now, within those two parameters are two areas in particular that we are looking at. And that’s extreme weather conditions. And I mentioned earlier, unfortunately, it’s not getting better, it’s getting worse.

But there’s also the slow onset. You know, the sea rise happening in many countries. It’s such that I visited recently in Senegal, where the population was telling me where the cemeteries and schools used to be are no more, simply because the sea is kind of moving forward to the city, making it impossible for them to keep up with the culture, the heritage, and so on, so forth. 

So all that combined is really what we’re trying to address. Now recognizing it’s not one-size-fits-all. Each country has its own type of losses and damages. What’s important is that what we’re addressing is really relevant to the needs of the countries, and that’s what the Fund is all about.

Improving Foreign Aid: A Government’s National Vision

Will Warshauer: Super interesting, super interesting, thank you. I wanna sort of take you back a little bit to some of the prior roles you played because you sat in a series of very unique chairs. You were a secretary of energy of Senegal, you were an ambassador at large, and a special advisor to the president. So you were very close to the workings of the government of Senegal at the most senior levels. 

And so there you were, I’m sure in some instances across the table from people or with the president, talking about foreign aid. And I’m just curious if you think back to what the most meaningful, impactful partnerships looked like with donor countries. And perhaps in those areas also, instances where it came up short. What insights do you have in terms of how foreign aid worked well and how it may have worked less well that we can sort of draw on to think about how we reimagine foreign aid to make it better in the future?

Ibrahima Cheikh Diong: What I find extremely important–with or without foreign aid–is the clarity of the vision and the direction the country is heading. That’s not going to be done by the aid agencies, it’s not going to be done by the external partners; it has to be done as a country, as a sovereign nation. 

And I spent a lot of time when I moved back home, just trying to understand from the president what are some of the key pillars, key projects that you want to move forward in transforming the country. 

I find that extremely compelling because by doing so, when you go raise money, at least you’ve got a story to tell. And that story is a story of a country that’s actually ambitious and wants to go somewhere. And that’s extremely important as a country. And whatever time it takes to do that, it’s an important exercise. It sets the tone for the rest of the government. 

How to Finance Development Priorities

Ibrahima Cheikh Diong: I think second, what I find extremely helpful, if you look at all the stuff African countries want to do, not all of them would be actually funded with public money. In other words, if you’re building a road and that road can be toll because the market and the traffic justify it, the role of the government is not necessarily to build the road in the limited resources that they have, it’s to create the conditions for that toll road concession to take place. So you play a role of facilitator as a government. 

Now, if you’re building some infrastructure that is not profitable because simply you have to build some schools, that’s your job as a government, you may find a way to finance that school as opposed to trying to go to the private sector, it’s not going to be attractive to them. 

I think the second thing that I found is just your ability to look at what you want to build as a country, whether it’s infrastructure, a school or a hospital, and find how you can actually finance those different initiatives or infrastructures before you actually go and talk to the market. 

I think last, but equally important, is the ability to have the capacity within government to structure a transaction, to negotiate with the partners, to provide credibility and visibility in terms of what you want to do. In my experience, it really allows the other party, whether it is the donors or the private sector, to take you seriously because you have in front of you a serious government that knows what they want, knows where they’re going, and knows what they would like to get funding for. And the conversation is not about what the donors want, it’s about what you want as a country. And I find that extremely important. 

And if you look in Senegal, most of the big infrastructure that we managed to build, the new airport, the new airline, the toll road, which I was involved in, all of them have gone through the same process: clarity in leadership, good structuring, but more importantly, a government that’s acting serious and wants to be taken seriously.

Are Recent Foreign Aid Cuts an Opportunity for Better Development?

Will Warshauer: I really like your last point, and it resonates for me as someone who goes around and deals with a variety of governments around the world. And some of them are so clearly in charge of their own development, and they’re telling me their vision, and they’re telling me where they think TechnoServe fits into their vision. And then there are others where they just want to listen to my ideas. 

And there’s a wide range of situations out there, but it goes a bit to the next question I wanted to ask you, because there is not an inconsiderable number of people who are saying…well, let me say what they’re saying in a positive way first. I’m not sure I agree with it, but I want to see if you do. 

The sharp reduction in foreign aid, they say, will ultimately be really a beneficial thing, because what it’s going to do is force the hand of governments and civil societies to take greater ownership of their own development agendas, and that it was too easy to sit back and let the United States provide all the AIDS medicines, or whatever it was, forever, and it resulted in less engagement than there probably should be from some governments. Do you put much credence in that argument? Is this potentially a positive thing because recipient governments and civil societies will step up and assume more leadership?

Ibrahima Cheikh Diong: After 60 years or 70 years in some cases, it’s a legitimate question to say, can we put back on the table the business model of development aid, whether or not it’s working or not. And that is, to me, the starting point of the conversation. It’s not negative or positive. It’s not against aid or not. It’s just saying: some of these countries, they’ve been trying to uplift themselves away from poverty. After 60 years, are we being successful or not? 

And that question could lead to a couple of good answers. One is to say, should we revisit our business model where a big part of the funding of our development is actually based on aid coming overseas? Or should we actually focus on looking at the potential of the countries and encourage more private sector involvement, more philanthropy, more other sources of funding so that we can at least support our development in a much more sustainable way?

I think that is to me a question that each country will have to ask itself. It’s not one-size-fits-all. But the way development is actually financed, it’s a good question then to have. 

I think second, it is also important to ask the questions, are we actually investing the money that we’re mobilizing into areas that are actually transformative? In other words, the education system, the infrastructure, the healthcare sector, and so on.

It’s not just the money that we mobilize, but what the money is actually going to and what impact it’s having in the countries. If you are injecting a lot of money into your education system for decades and it’s not actually improving, there’s something wrong there. So you don’t have a money problem. You really have either a policy problem or capacity issues. And it’s a good question to ask as a government as well. 

And also, I think it’s also important to understand if you get a government that’s basically pro-business, pro-private sector, what you need is not more money. What you need is–are you having the right policies in place to make sure you’re growing a level playing field so that the private sector can rise up with its own skills and initiative, and so on, so forth. 

I think to me, the big question is what is happening today–which is unfortunate that aid is not working with some of these countries at a very critical time when help is needed–how do we turn that into an opportunity to have the right conversation so that the governments, particularly in Africa, began to own their own development agenda and their stories. So that it’s no longer about pulling in and pulling out. Because you cannot run a country whereby every time somebody pulls in and pulls out, you’re trying to just deal with the consequences of what you’re dealing with. So let’s ask ourselves the right question, have the right conversation, and make sure we actually own our own development.

How to Improve Development Through a Better Business Environment

Will Warshauer: I like it, man, I like it a lot. It really resonates for me what you said. And I like what you said at the end because it can’t rest too heavily, I think, on any one organization or one pillar, as a lot of it did, I think, in some places with the U.S. government. I still wonder if there are any big picture themes when you think about development which is inclusive and sustainable, if there are any key themes, as those people who are thinking about how to remake foreign aid would do. Because I mean, part of our own view about this, and I think we’re not alone, is that people are likely to look more to the private sector in the future.

And there’s a lot of good that can be done with the private sector, and there’s a lot of places where the private sector isn’t reaching or may not be the optimal way to reach people. If you’re willing to step out and say if there’s any place that will apply at least to most markets in terms of doing something that will lead to more inclusive and more sustainable development.

Ibrahima Cheikh Diong: Yeah, I mean, look, at the end of the day, you need to break it down into what is the responsibility of the country—the part where you get good political governance, the stability of the country, the fact that you get a democratic system in place, the fact you get more predictable kinds of laws and codes and policies and so on. The fact that you actually have clarity in terms of where you want to be as a government–I don’t think any partners should do that for any country. It’s really your responsibility. And the more clarity you have around that set of directions, it provides a comfort zone to all of us. You at least recognize the importance of your role as a leader of the country. 

I think the other part that I see as the themes is just the way we finance development in our countries–the diversification of funding sources, whereby you depend less on aid and more on fostering entrepreneurship, the private sector, and all the other sources of funding. It’s as important as, for example, getting funding from, let’s say, development agencies. 

And then there, I think, the role of government, what I see and live from my experience: how do you create the right ecosystem so that talent and initiative will actually emerge. So your role is a facilitator. One friend of mine from Malaysia said a very famous statement, saying, you know, government should not be in the business of doing business, it should be in the business of facilitating business. So, therefore, at the end of the day, the role of the government is how do you create an ecosystem whereby this talent and initiative will emerge. 

And when they do, that’s how you impact your growth, your GDP. That’s how you impact your economy as a country. And that’s basically where you create jobs, and that’s where you improve the lives of people. And that’s the responsibility of the government–not necessarily to go and run a business, but more to facilitate a business setting.

And when I look at the number of African entrepreneurs who are creative, some great ideas across the continent, my goodness–just if they create the ecosystem of access to finance, access to market, you can imagine what could come out of that. And that’s the role of the government in my view.

What Sets Apart Countries that Successfully Develop the Private Sector

Will Warshauer: Well, ours as well, I think, I mean, obviously, we at TechnoServe are very, very bought into the idea of business solutions to a lot of development programs and have been for 60 years. And I think that business, in our view, above all else, just wants a predictable, stable policy environment. You don’t have to get all the policies exactly right, but changing them every quarter from fertilizers free to fertilizers subsidized to fertilizers not, it really makes it difficult for the private sector to thrive and play the role that it needs to.

Ibrahima Cheikh Diong: Let me ask you a question, I mean, because now I’m going to turn it around—to ask you a question. 

Will Warshauer: I was going to say, wait a minute. Yeah, go ahead. 

Ibrahima Cheikh Diong: If you go to countries, for example, where you’re trying to help some of these entrepreneurs, I mean, there’s a sense of ownership that you have from the entrepreneurs. How do you build it? How do you measure that ownership level?

Will Warshauer: Well, measuring their success in their business is largely around the revenue they’re earning from the business and looking back over time and seeing changes in the shape of that. But it’s funny because I was talking earlier today with someone, and I said that when I go visit our countries of operation now, I always ask my team to introduce me to folks who we worked with five or 10 years ago, who we no longer work with. 

And in those countries that are most clearly setting the agenda for their own development, I see the largest numbers of people who, five and 10 years on, their businesses are continuing to grow, continuing to employ more people, and do more things. And I think that again, you talked about it–predictability, rule of law–if you live in a country where you can transport your goods, they’re not going to be stolen at some strange phony checkpoint, where laws are enforced, where if someone’s trying to mess with you, you have a court system that functions, and where it’s predictable–disproportionately then, a lot of the stories I tell of those people I’ve met who are still using what they learned 10 years ago from us are in those kinds of environments. And the other thing you said earlier, which I think is spot on as well, about this is just the government investment in those high return sort of sectors, education in particular. 

So, I mean, you were in, you worked in the private sector, you did management consulting. Do you buy the sort of predictability thing that that’s what the private sector craves, a stable policy environment in which to operate?

Three Ways to Encourage Better Private Sector Development

Ibrahima Cheikh Diong: I had the privilege of running the SME [small- and medium-sized enterprises] business at IFC many years ago. And one of the things I learned from the process, pretty much to your point, to your question, is that if you look at, for example, the job creation on the continent, 80% of the jobs are created by the private sector. So any government who is serious about creating jobs and not actually supporting your private sector is a bit inconsistent in the way you say you’re committed to creating jobs. 

And if you look at the private sector, particularly the SMEs, in my experience, then they’re actually dealing with three major challenges. Very quickly: one is access to capital. They’re not necessarily looking for debt, commercial loans for which they certainly don’t have the collateral. But they’re looking at funds that can actually take risks on their business. In other words, risk capital or maybe some equity you can provide, that helps them to grow as a company. And unfortunately, most of the countries, they don’t have those platforms or the instruments that allow them to basically support the growth of these companies. 

The second challenge that I see mostly is access to markets. If there’s no market, there’s no business. And I think the ability to really help them to have a domestic market and also externally export, it is something certainly I think is extremely important as well. 

And last point, which is to your point, is the business environment. I mean, if it takes, for example, forever to file your taxes as a small business, most likely you’re not going to file your taxes. So, how you actually streamline that in a way that makes it easier for them to comply with the tax rules of the country is important. If it takes forever just to register your business, you’re not going to create a business and so on. So I think there’s a whole set of incentives that you can provide as a government in making sure that the SMEs will thrive because they get the support that they need.

Now, when it comes to larger businesses, that’s what I said earlier, if you look at most of the major government projects in Africa, Senegal included, which I know, not all of them will be actually funded through public sector money. I mean, for example, building a road that has huge traffic that you can have a concession road. If I were a government, I would not go and look for money just to put my concession money going to build the road. I can certainly look at the possibility of providing incentive for the private sector to do that road. So you can address a public sector problem with private sector money and then be impactful. 

So I think it’s just that detail of looking into what part of my development agenda will be funded through the private sector. And I, as a government, what incentive can I provide to make sure I can be competitive, I can have the right ecosystem for the private sector to thrive. But create a plain level field, no matter how close you are to the government in place, it doesn’t matter, as long as you get what it takes in the private sector. 

And I think that’s when I used to be in the business advising government and making sure they create an environment that’s highly conducive to doing business, because any benefit you get from that will help you to move your government agenda. And that’s the way I see it.

Signs of Hope in a Difficult Moment for Climate Change

Will Warshauer: I like that a lot. And you’re quite right, I think there’s a lot that can and should be funded by private investment. And happily, private investment, of course, dwarfs foreign aid flows to virtually every developing country. 

Time flies when you’re having fun. I wanted to kind of go back to where we started and talk a little bit about the environment and climate. And I think, you know, for the general person–just everywhere you turn, you see these impacts from climate change getting worse. And it can be very discouraging. And I’m wondering, what gives you genuine hope right now? What do you see as the most promising signs of progress? 

Ibrahima Cheikh Diong: I often say that the support is not just funding. It’s also, we have to show that we care, compassion. I had the opportunity of visiting some communities back in Senegal that were actually victims of the slow onset of some of the seas and listening to people tell me about how they affect their lives.

It broke my heart, but it also just reminds me of the human aspect of what we do. It’s not about just providing funding and hope for the best. So that ability to just listen and build confidence with the communities–that it’s not just when the cameras are on that we pay attention, but when we come in, and the camera is off, that’s when we start to redouble our efforts to make sure we can support them. And that’s what drives this Fund as well.

I feel what makes me also hopeful is–just look at the Fund, the Fund for responding to Loss and Damage. When we went to COP30 and presented our call for funding, a lot of people were actually quite impressed by the speed at which, within three years, we were to move from inception to basically being a fund that’s providing support to the countries. 

So to me, what it demonstrates is when we come together globally as a global solidarity, this is what we can achieve. And I think that also makes me very hopeful, that if you put all the resources on the table and the commitment, we can basically provide the support that’s needed. 

I think it’s also, finally–the countries are not waiting for us. Our board, for example, strongly believes the only way we can be successful and be sustainable, it has to be led by the country, the country has to own it. So when I visit the countries–I’m about to go to Jamaica on Wednesday just to visit the disaster that came out of the Hurricane Melissa. I’ve done a similar exercise in the Philippines and looking at what’s happening on the ground. 

So I think that compassion has to be in a way that when we go to those countries, it’s not to lecture them, it’s really to listen to their concerns and see where we can add value, along with what the government is trying to do. And that’s basically where the hope comes from. 

I also come from the fact that I am running a secretariat with a team that comes from different parts of the world. People who are dedicated, they’re committed, they believe in this. It’s not just a job, it’s a mission. And that mission is that we have an obligation to make sure no one is left behind. And that’s what makes me hopeful every day. 

I know the challenges. I have no hair because of all that work we’re doing over here. But it’s worth losing the hair because this work is incredibly rewarding. It’s the lives of people we’re talking about. So whatever we can do to make a difference, I am all for it.

Will Warshauer: Ibrahima Cheikh Diong, the first ever executive director for the Fund for responding to Loss and Damage. Thank you so much for taking the time with me today. Really appreciate it. Really enjoyed the conversation.

Ibrahima Cheikh Diong: Well, it’s been delightful. I enjoyed every moment of this conversation. Thank you.