As the third Conference on Financing for Development in Addis Ababa, Ethiopia, draws near, the financial needs of developing countries, particularly the least-developed countries, to end extreme poverty by 2030 are increasingly taking center stage.
In a recently released report, the ONE Campaign laid out what it calls the “five key elements of an Addis mutual accountability”: a nationally owned minimum per capita spending level to deliver basic services to all, particularly for the poorest countries; revenue-to-gross domestic product targets for greater domestic resource mobilization; a revival of the 0.7 percent target and a commitment to allocate at least 50 percent of aid to LDCs; inclusive growth; and strong accountability through a data revolution.
These goals highlight the importance of both domestic and external funding in LDCs. But as FHI 360 CEO Patrick Fine pointed out in a recent op-ed, “without external finance, LDCs can’t afford the modern institutions and infrastructure necessary to increase productive capacity and attract private capital.”
And yet despite LDCs’ need for donor support, aid to LDCs has actually been declining. Official development assistance steadily increased from 2005 to 2010, when it peaked at $48.3 billion. But since then, aid to the world’s poorest countries has gradually declined. Last year, the amount of aid for LDCs even fell short of the level of assistance for the same group of countries in 2008.