Today marks the launch of the 12th annual DATA Report – ONE’s flagship publication tracking development finance and holding leaders accountable for their commitments. “The 2017 DATA Report: Financing for the African Century” comes at a time when Africa has an increasingly narrow window of opportunity to harness a potential demographic dividend. With the continent’s population set to double by 2050, investing in the education, employment and empowerment of its youth must be prioritized.
Worryingly, Africa may miss this opportunity. This year’s DATA Report reveals that the poorest are receiving a declining share of global financial resources.
Although global ODA reached a record high of $140.1 billion in 2016, people most in need are in danger of being left behind. The proportion of aid to the least developed countries (LDCs) is in a downward spiral, falling from 32% in 2013 to 28% in 2016, while the share of aid to Africa declined from 33% in 2015 to 32% in 2016. Meanwhile, donors are spending an increasing share of aid to support refugees and asylum seekers in their own countries. Providing shelter and safety to refugees is the right thing to do but it shouldn’t come at the expense of the poorest in Africa.
At the same time, domestic revenues in African countries steadily fell from a peak of $568 billion in 2012 to $434 billion in 2015. This 24% decline (in current prices) is especially alarming since domestic resources are the largest and most sustainable source of finance in the fight against poverty. African governments are also failing to fulfill their commitments to invest in health, education, and agriculture, which are essential to seize the demographic dividend.
Private finance – domestic and international – is critical to creating decent jobs. However, foreign direct investment (FDI) flows to Africa have been volatile and remain the lowest to any region in the world. For every dollar of global FDI in 2016, just three cents went to Africa. Moreover, the vast majority of FDI does reach those most in need: Six countries, of which five are resource-rich, accounted for 75% of FDI inflows into all 42 LDCs and fragile states in Africa.
These negative trends must be immediately reversed. As a first step, ONE has called for a doubling of all forms of development finance by 2020 for the continent’s doubling population. Financing this African century requires a concerted effort and partnership between African governments, aid donors, civil society and the private sector. Now is the time for action.