With the international community due to agree on a new set of sustainable development goals, next year will be a milestone in the world’s fight against poverty.
This new agenda will aim to eradicate extreme poverty and achieve ambitious global progress on key development indicators. Such objectives are aspirational yet realistic if the world takes proper action in the coming year.
A key ingredient to the recipe for success will be the mobilisation of all sources of development finance – domestic and international, public and private – to help all countries meet these goals.
This week, just after the launch of ONE’s 2014 DATA Report, the OECD DAC launched its Development Co-operation Report (DCR) providing an overview of all financial resources available to developing countries.
The report highlights that the diversity of resources available to poor countries has significantly grown. The OECD finds that developing countries received $474 billion from donor countries in 2012, with ‘official development assistance (ODA)’ – or aid – representing only 28% of that.
Remittances, the money foreign workers send to individuals in their home country- represent one of the largest, and fastest growing source of external finance for many developing countries. But most importantly the tax revenues collected by governments in developing countries totally surpass external flows to these countries. In 2012, government revenues in Africa represented ten times the volume of aid provided to the continent that same year.
Enough money is out there to wipe extreme poverty from our memories. But what is at task is their appropriate mobilisation. For this, the OECD makes a number of recommendations, including crucial policy reform in the areas of tax, finance, investment and trade as well as to curtail illicit financial flows out of poor countries.
Like ONE, the DCR highlights that, although it now forms a relatively small part of the broader financing picture, ODA still matters, in particular for the poorest and most vulnerable countries that have least access to other financial resources.
In least developed countries ODA makes up 70% of external financial flows and is equivalent to half of domestic tax revenues. It is therefore vital to focus aid on these countries. But ODA growth in least developed countries has been slowing down over the past three years and projections show that this is likely to continue. This trend is worrying and must be reversed.
Last July, in Cotonou, least developed countries urged donors to channel 50% of their total aid to them. Gyan Chandra Acharya, the UN Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, makes the same call in the DCR.
Donor countries must listen to this call and ensure that the post-2015 financing strategy delivers for the poorest.