Financing for sustainable development critical to achieve an end to extreme poverty

Later this year, the world will agree on a new action plan for the future that will guide the development agenda for the next 15 years and replace the Millennium Development Goals. These Sustainable Development Goals will set out the path to a fairer, more prosperous world and an end to extreme poverty.

The success of these new goals will depend in part on their ability to be implemented, which in turn will depend on financing for sustainable development. In July, governments will convene for the Third International Conference on Financing for Development in Addis Ababa, Ethiopia.

According to ONE, the world needs a new global compact to finance the end of extreme poverty which is targeted at those who need it most – the poorest countries and the poorest people, particularly girls and women. ONE is a campaigning and advocacy organization of more than 6 million people taking action to end extreme poverty and preventable disease, particularly in Africa.

ONE has published a 2015 DATA Report which looks ahead to the Addis Ababa Conference, and sets out key commitments that can be game-changers, particularly for those living in the poorest nations, the least developed countries (LDCs).

ONE data report on financing for development

ONE’s analysis shows that development partners are missing their targets, and financial support for the least developed countries (LDCs) continues to fall. Although LDCs are increasingly home to those who live on less than $1.25 a day, they received less than a third of aid (30.3%) in 2014. Had that share been increased to 50%, an additional $26.5 billion would have been available to those who need it most.

ONE is calling for better targeted development assistance to be coupled with increased domestic revenues from developing countries’ own governments to fund access to basic social services for everyone by 2020. With a $152 billion funding gap to meet these basic needs worldwide, including $34.5 billion in LDCs, July’s Financing for Development (FfD) conference in Addis Ababa will be a pivotal moment in securing ambitious commitments.

Investments in agriculture and energy are essential, along with action to clamp down on corruption, curb illicit financial flows and drive up transparency so citizens can follow the money from resources to results.

Dr Sipho S. Moyo, ONE’s Africa Executive Director, said: “More than two-thirds of the least developed countries are in Africa; these countries bear a growing share of the world’s extreme poor. Decisions taken this year could be transformative for them and shape the course of history. A resolute focus on the poorest and most marginalised, especially girls and women, is needed to ensure no one is left behind beyond 2015. In Addis Ababa in July, world leaders need to agree to a mutual accountability pact that will prioritise resources from all governments on meeting basic needs and providing essential services, while also increasing investments to boost inclusive growth.”

The DATA report sets out a five point plan for the world’s poorest to be agreed at the pivotal Financing for Development conference, which must include:

  • access to basic services – minimum funding to ensure the basic needs of every person can be meet, including health and education, with a focus on girls and women;
  • increased domestic government revenues – developing countries should drive up revenue through implementing fair tax policies, curbing corruption and stemming illicit financial flows;
  • development assistance should be targeted where it is most needed, with 50% going to LDCs, and donors setting a timetable to reach the international target of spending 0.7% of GNI on development assistance;
  • sustainable inclusive growth – specific investment to drive up productivity, in particular agriculture, infrastructure, energy, trade and private finance;
  • strong accountability through a data revolution to ensure that commitments are followed through.

ONE’s analysis shows a minimum level of spending of $500 per person per year, or 10% of GDP, is needed to deliver the scale of ambition needed to meet the Global Goals. For the 27 countries that currently spend less than $150 per person, ONE recommends an interim target of $300 per person. The total cost is $152 billion for the 66 countries worldwide that are below their targets; the cost for the 37 LDCs is $34.5 billion.

The largest source of funding for development comes from countries’ own resources. To provide basic services for their citizens, governments should increase domestic revenues towards ambitious, nationally-defined revenue to GDP targets. According to ONE, this can be achieved through implementing fair tax policies, curbing corruption and stemming illicit flows. By halving the revenue gap, domestic resources could be increased by $106.9 billion across 46 developing countries; $14.4 billion in the least developed countries.

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