OECD Donor countries need to reform development finance to meet 2030 pledge

OECD Finance

(OECD, 2018)

This article is brought to you in association with OECD.


External finance to poor countries is declining, despite a promise by the international community three years ago to increase development finance flows, in particular through private investment, according to a new OECD report.

The Global Outlook on Financing for Sustainable Development 2019 shows there was a 12% drop in external finance to developing countries from 2013 to 2016, a decline that casts serious doubt on the world’s ability to achieve the 2030 Sustainable Development Goals.

Of the external financing data that is available beyond 2016, foreign direct investment to developing countries fell by 30% over 2016-17 and project finance was down 30% in the first quarter of 2018, the report shows. Official Development Assistance (ODA) from advanced economies is steady but below target, while other flows such as remittances and philanthropy are increasing but comparatively small.

< Download the data >

The decline comes as the need for financing for sustainable development is growing due to population growth, conflict and environmental degradation. The international community pledged at a 2015 United Nations conference in Addis Ababa to ramp up development finance, using private investment as a lever.

“Donor countries have not followed through on their 2015 promise to expand development finance flows,” said OECD Development Co-operation Director Jorge Moreira da Silva, launching the report at the Paris Peace Forum. “Development finance is not a cost – it is an investment that will help us achieve peace and prosperity on a global level, as defined by the Global Goals.”

The report calls for more efforts to mobilise domestic resources, which are at least as important for sustainable development as external flows. For example, tax revenues are by far the biggest financial resource for poor countries. Yet tax revenues in low-income and least-developed countries average just 14% of GDP, less than half the OECD country level of 34% and below the 15% that is the recommended minimum for effective state functioning.

As another example, the transaction cost of migrants sending money home to relatives in developing countries can be as high as 14-20%. The report says that reducing transfer costs by just 1% would increase the value of total remittances (USD 466 billion in 2017) by USD 30 billion – equivalent to nearly a quarter of total ODA flows.

The report calls for an overhaul of the development finance system to improve transparency, set clear international standards and empower recipient countries to make optimal choices. It also calls for more to be done to measure the impact, rather than just the volume, of development finance, and for a more strategic interplay of suppliers, intermediaries and beneficiaries to ensure the maximum impact of each dollar spent.

On domestic resources, the international community should support trade and private sector development, identify and remove barriers to investment, build tax revenue capacities and help developing countries to prevent tax avoidance and evasion.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

Financial system risk is elevated and global standards are essential in managing cross-border infrastructure investment

Migration: Better travel safe than sorry

How the tech world could make nonprofits a more powerful force

EU and Indian flags at EU-India Summit in New Delhi last October (copyright EU 2018, Source: EC - Audiovisual Service)

India and the EU get close to revive talks on proposed Free Trade Agreement

UN General Assembly President upholds value of multilateralism in speech closing annual debate

European Youth Forum welcomes steps towards raising awareness of youth rights by EU ministers

Bigotry ‘moving at lightning speed’ Guterres warns, as UN marks the Holocaust

Nicaragua ‘crisis’ still cause for concern amid murder, torture allegations: Bachelet

Sexual abuse of elderly likely to ‘grow dramatically’, UN expert says

A Sting Exclusive: “Consumer expectations for the 2015 UN summit on climate change”, Director General of BEUC Monique Goyens outlines from Brussels

Removing deadly mines means ‘new horizons and hope’, clears a path to SDGs, says UN chief

US life expectancy is falling – here’s why

‘Vaccines are safe’ and save lives, UNICEF declares, launching new #VaccinesWork campaign

EU agricultural production no more a self-sufficiency anchor

Yemen parties underscore ‘strong desire’ for peace, UN Envoy reports

ILO: Unemployment to increase by 8.1 million in 2013-2014

Do doctors need to know their patients’ sexual orientation and gender identity?

6 ways China and the United States could jumpstart trade reforms

EU Youth Goals – we are shapers not listeners

Why are so few women buying into Bitcoin?

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

How the EU crisis hit countries saved the German and French mega-banks from bankruptcy and still pay the costs

Trade negotiations with US can start under certain conditions

EU Commission: Banking and energy conglomerates don’t threaten competition!

Digital technology helped create the skills gap. Here’s how it can help close it

Finland, Switzerland and New Zealand lead the way at teaching skills for the future

Britain offers more money for an orderly Brexit but the Irish question resurges

A Sting Exclusive: “Paris and beyond: EU action and what COP21 should deliver”, Green MEP Keith Taylor discusses from Brussels 

Climate Change : An Already Health Emergency

Creating shared value: an opportunity and challenge for entrepreneurship

Maros Sefcovic Canete European Commission Energy

Better late than never? Commission runs now to fight energy dependency on Russia with the sustainable energy security package

The Brexit factor in the US-China trade war and other conflicts

Global South cooperation ‘vital’ to climate change fight, development, Guterres tells historic Buenos Aires summit

Agreement reached on new EU measures to prevent electricity blackouts

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

The ethical dilemmas of medicine

This is where teachers are paid the most

EU Facility for Refugees in Turkey: EUR 400 million Special Measure on education adopted

EU prepares for the worst case scenario as Turkey seems to be withdrawing from the migration deal

“Who do I call if I want to call Europe?” Finally a name and a number to answer Henry Kissinger’s question

Court of Auditors: EU budget money is there to be spent not to create value

GSMA Mobile 360 Series – MENA in Dubai, in Association with The European Sting

Reintegrating former rebels into civilian life a ‘serious concern’ in Colombia: UN Mission chief

EDRi @ European Business Summit 2014: Digital Citizenship in Brussels – the case of Net Neutrality

“We need to use the momentum globally to ensure that corporations pay their fare share of taxation”, EU Commissioner Valdis Dombrovskis outlines from the World Economic Forum 2017.

What if Trump wins the November election and Renzi loses the December referendum?

Road safety: Data show improvements in 2018 but further concrete and swift actions are needed

IQ scores have been falling for decades, new study finds

Chatterbox Rome Declaration cannot save the EU; Germany has to pay more to do that

Is South Korea set to lose from its FTA with the EU?

International Day of the Midwife: 5 things you should know

European Semester Winter Package: assessing Member States’ progress on economic and social priorities

New migration pact highlights key role of business in protecting migrants, say UN experts

It’s time to end our ‘separate but unequal’ approach to mental health

How smarter machines can make us smarter humans

How to build a digital infrastructure that benefits emerging economies

Why schools should teach the curriculum of the future, not the past

The Working Methods of the von der Leyen Commission: Striving for more at home and in the world

ZTE @ MWC14: ZTE excels in all areas at this year’s Mobile World Congress

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s