Opinion: Donors need to pull their weight on development finance

How much are the world's donors spending on development assistance? Photo by: REUTERS / Osman Orsal

Delegates convening in New York this week to review progress towards the Sustainable Development Goals must tackle a stark truth — we are off track to achieve the Global Goals.

Global poverty reduction is slowing, and we are far from meeting funding needs. By 2030, we will be $358 billion per year short in low-income countries alone. At current trends, nearly 500 million people will still live in extreme poverty, with most in sub-Saharan Africa. Those attending the High-level Dialogue on Financing for Development must address the fact that governments are not pulling their weight in financing the goals.

Official development assistance is not the largest source of development funding and is part of a mix of domestic revenues and private finance. But, with only 3.5% of foreign direct investment currently going to Africa, and limited potential for tax increases in low-income countries, aid is a critical ingredient in the recipe to beat poverty, particularly for the world’s poorest countries. Here, ODA is a lifeline to filling gaps in basic needs provision and investing in opportunity. Yet donor countries continually fall behind on their aid commitments.

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We need them to step up to the plate and meet the global challenge before us. In support of this effort, the ONE Campaign has developed the Better Aid Scorecards to assess the world’s 20 largest aid donors, plus the European Institutions, on how much and how well they spend their development assistance. Donors are compared and ranked across aid volume, aid targeting — to reach those most in need — and aid quality.

Our assessment reveals that major donors are failing to reach the people furthest behind or to invest in core areas for poverty reduction — and are off-track against each of the criteria we examined.

Firstly, donors are punching below their weight with the amount they provide — with few countries meeting the international target to provide 0.7% of their yearly gross national income in aid. If all OECD DAC donors had met this target in 2018, there would have been an additional $196 billion available in global aid. This could have gone a long way towards filling the gap for the poorest countries. It is alarming that only 11 donors even got halfway to meeting this target.

Secondly, donor countries provide less than a third of their aid to the least developed countries in greatest need, revealing a troubling lack of prioritization. In 2017, LDCs received $43 billion, just 29% of total OECD DAC aid. Poor targeting is exacerbated because donors are failing to invest in critical pillars for development. In particular, support to education, health, and social protection in developing countries is far from sufficient.

In 2017, donors as a whole provided only 32% of their aid to these three sectors combined. Investing in these social sectors, or “human capital,” is the cornerstone of developing a healthy and thriving population that is critical to development. And money is also failing to reach the people who need it most. When it comes to women and girls, countries only target 36% of their aid to gender-responsive projects, although the evidence consistently shows that investing specifically in women and girls boosts development outcomes for everyone.

Finally, in terms of how donors are spending their aid, quality is lacking. Large sums of aid never leave donor countries. In 2017, at least $17.7 billion of ODA was spent within donors’ own borders — that is $4 billion more than the total aid invested in the world’s 10 poorest countries. Countries must do more in publishing transparent development data, and aligning their aid with developing countries’ own priorities, to foster ownership and maximise aid impact.

These numbers are shocking, and our findings reveal a worrying trend that suggests donors are not taking the SDGs seriously enough. But it’s not a foregone conclusion. There has been a long and widely held consensus that supporting those in poverty was both the right thing and the smart thing to do; while we have veered from this, it can be re-established.

Identifying the shortfalls and where donors need to improve is the first step. By front-loading financial investments in the fight against poverty, we can correct our course to achieve the SDGs on time in 2030. As delegates review financing progress in New York this week, they should ensure their actions, and their funding matches their ambitious words. Otherwise, the Global Goals will remain an ambition, not become a reality.

Activism. UHC. Climate. Read more of Devex's coverage from the 74th U.N. General Assembly.

The views in this opinion piece do not necessarily reflect Devex's editorial views.

About the author

  • Sara Harcourt

    Sara Harcourt is senior policy director for development finance at the ONE Campaign in London, where she leads a team focused on analysis of official development assistance and domestic resource mobilization. Previously she worked on aid effectiveness and U.S. foreign assistance in Washington, D.C.; and represented ONE at the Fourth High Level Forum on Development Effectiveness in South Korea in 2011. Prior to joining ONE, Sara worked for the Global Economy and Development program at The Brookings Institution in the United States, where she helped launch the Africa Growth Initiative. She holds an M.A. in international relations from the University of Florida, and a B.A. from Wake Forest University.