Reimagining ODA Models for a New Era of Development Cooperation

INVESTMENT - Like the impact of the pandemic itself, the global recovery over the past several years has been stilted and uneven. As a result of shifting capital and market forces, 2023 witnessed a level of global inequality on par with that of South Africa – the country with the highest inequality in the world. The drivers behind this trend are complex, but one thing is clear: official development assistance (ODA) is one of the most effective ways to even the playing field.

ODA models and financing mechanisms have evolved over the decades. Since its inception in the 1960s, ODA has taken various forms including grants, loans, private investment, and export credits. But as the world changes, so do the needs of aid recipients, as well as the challenges they face. To meet these evolving challenges, ODA donor countries continue to seek new models that can better solve intractable social and environmental issues and close the gap between the two sides of the world.

One such innovative model can be found in South Korea, the first country in history to go from receiving ODA to being a donor. In 2015, the Korea International Cooperation Agency (KOICA) launched the Creative Technology Solution (CTS) program with the idea of attracting entrepreneurs and startups to work on solving particularly difficult development challenges. By bringing innovators into the international development cooperation space, CTS has successfully harnessed creative ideas and new technologies to deliver solutions to communities in developing countries while also assisting startups in global expansion.

Creative Technology Solution – Amplifying Impact Through Innovation

CTS seeks to partner with South Korean entrepreneurs and innovators who are socially minded and who offer products or services in such areas as energy, global health, climate action, education, and agriculture. Through tailored training and support, CTS assists its participants in connecting with VCs and networks in their target country and in localizing their offerings. In this way, companies whose products or services can address social and environmental problems in less developed countries can receive the support and guidance they need to successfully launch overseas.

The program has three stages: Seed 0, Seed 1, and Seed 2. Seed 0 provides participating entrepreneurs with education and training on development cooperation. During Seed 0, participants receive one-on-one mentoring in market research, business strategy and modeling, project planning, and proposal writing. Entrepreneurs are also connected with accelerators in their target countries who can assist in localization and reaching their target market. The goal of this stage is to build capacity among prospective entrepreneurs who seek to advance into developing countries.

Applicants who successfully complete Seed 0 as well as applicants with solid business plans for how to expand into developing countries can participate in the Seed 1 stage. This stage requires companies to create proof of concept and working prototypes of their product or service. Participants must also clearly confirm that their product or service has a sufficient number of beneficiaries in their target country. The final Seed 2 stage helps participants launch a pilot, focusing on tailoring their business model and strategy to smoothly integrate into the local scene. Awards offered at each stage vary between $250,000 and $420,000.

Creative Solutions to Real Problems

The 2023 Seed 0 program was planned and run by the Korea Social Investment Foundation (KSIF), a private non-profit accelerator specializing in the ESG and impact sector. KSIF has been involved with the CTS program since the year 2021.

The specific goals of each annual CTS program are varied to ensure that the program is consistently attracting a variety of social entrepreneurs who will establish projects in different countries. The 2023 Seed 0 program called for applications from companies established no later than 7 years ago who sought to address development issues in India, Indonesia, or Vietnam. Among the total of 47 companies that participated, there were three that rose to the top as having particularly spectacular potential: Nanu, Trackfarm, and Albaam.