The world’s poorest people are owed $5.7 trillion, says Oxfam

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Chema Vera, Interim Executive Director, Oxfam International


• Last year, OECD members only gave 0.3% of their GNI to aid – less than the 0.7% promised.

• 0.7% would help the world’s poorest countries meet the SDGs for a decade.

• Stable aid flows are needed more than ever during and after the COVID-19 pandemic.

On 24 October 1970, the world’s richest countries made a promise that would better the lives of people around the world. They committed to give a small percentage of their income – just 0.7% – in international aid to help low- and middle-income countries tackle the scourge of extreme poverty. They pledged, through a landmark UN resolution, to reach this target in just five years.

In the 50 years since then, international aid has become a lifeline for millions of people around the world. It is the only rich-country policy dedicated to supporting people living in poverty beyond their borders. It is one crucial form of global redistribution from the rich world to the poor. This is not largesse. It is not charity. It is a duty and an obligation and goes, if only in a small way, towards making up for the colonial exploitation of the developing world by wealthy nations.

We should be marking a “golden jubilee” of success, optimism and celebration of our shared humanity since that commitment. We are not.

Too many rich nations continue to fail to meet the target they set. Last year, members of the OECD club of rich nations contributed on average just 0.3% of their gross national income (GNI) to aid. In 2019, over a third of that amount ($55 billion) was in fact paid back to wealthy nations in debt repayments by countries in sub-Saharan Africa alone – a harsh reminder of a global economic system rigged in favour of the richest nations and richest people.

More alarming is the shocking missed opportunity: New Oxfam analysis shows that donor countries would have paid an extra $5.7 trillion to help low- and middle-income countries fight poverty and inequality had they reached 0.7% from the start.

To put it in perspective, that is enough money to help the world’s poorest 59 countries meet the Sustainable Development Goals for the next decade. That’s every girl and boy having a school to go to free of charge, and universal healthcare systems with millions of doctors and nurses on the front line. And more.

Redistribution of wealth between the world's richest and poorest is a duty
Image: OECD

$5.7 trillion is, in truth, a scandalous debt owed to the poorest people. And yet some countries have proven that the 0.7% target is realistic, sensible policy. Five countries − Luxembourg, Norway, Sweden, Denmark and the United Kingdom – are all meeting or exceeding their target. In doing so, they have responded to the calls of millions of citizens around the world. I recall vividly in 1994 protesting with others outside Spain’s ministry of finance for weeks to fight for 0.7%, as many brilliant civic leaders went on long hunger strikes.

The messages were heard in many rich capitals. Aid has continued to prove to be a winning strategy. Fifty years on, aid has helped to eradicate polio in Africa and save 38 million lives through the Global Fund to Fight AIDS, Tuberculosis and Malaria. Millions of children have gone to school, especially girls. Aid has helped countries around the world to strengthen their governance – from raising taxes more progressively to ensuring citizens hold them to account. It is helping poor countries to adapt to climate change.

Today, aid is needed more than ever, not least in the wake of a pandemic that is wreaking havoc on the poorest and an inequality crisis that is driving our world apart. The pandemic risks pushing as many as 200 to 500 million people into poverty. Aid can mean the difference between life and death for millions of people in the years to come.

We certainly need more aid, but we also need to do it better: aid that writes itself out of a job – not the colonial kind that fuels dependency. We need a kind of aid that respects the leadership of local communities, not the whims of rich men in rich capitals. And we need aid to be truly effective, long-term and predictable – instead of the wasteful public-private partnerships, for example on health and education, that do an injustice to people in poor countries, as well as to taxpayers in rich countries in squandering their contributions.

Financing Sustainable Development

The world’s economies are already absorbing the costs of climate change and a “business as usual” approach that is obsolete. Both scientific evidence and the dislocation of people are highlighting the urgent need to create a sustainable, inclusive and climate-resilient future.

This will require no less than a transformation of our current economic model into one that generates long-term value by balancing natural, social, human and financial conditions. Cooperation between different stakeholders will be vital to developing the innovative strategies, partnerships and markets that will drive this transformation and allow us to raise the trillions of dollars in investments that are needed.

To tackle these challenges, Financing Sustainable Development is one of the four focus areas at the World Economic Forum’s 2019 Sustainable Development Impact summit. A range of sessions will spotlight the innovative financial models, pioneering solutions and scalable best practices that can mobilize capital for the the world’s sustainable development goals. It will focus on the conditions that both public and private institutions should create to enable large-scale financing of sustainable development. It will also explore the role that governments, corporations, investors, philanthropists and consumers could play to deliver new ways of financing sustainable development.

It is high-time for a 0.7% in solidarity with communities around the world. Rich countries can afford it – it’s a drop in the ocean compared to the trillions they have invested to protect their own economies. They can, moreover, boost aid budgets through innovative financing mechanisms, such as financial-transaction taxes and other solidarity taxes.

Fifty years is too long to fulfil a promise. We need a renewed commitment to aid that makes amends for historic injustices and helps us exit this painful crisis, in solidarity with others towards a fairer world.

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Comments

  1. Hello there, I would like to react to your report.
    To begin with, Promised or not, aid is not a debt. Plus, why should a low-income, factory worker in Europe work an extra hour to cater to a sense of entitlement held by Africans, South Americans,…? The factory worker did not, in any way whatsoever, contribute to colonizing Africa or squandering its resources. Second, Throughout history, wherever they were humans, the strongest have always found their way by preying on the weakest. I mean, should Egypt perpetually pay a portion of their income to Israel because of all the Jews that were enslaved thousands of years ago? If a country was to help another today, Israel should be the one helping Egypt. And, what portion of their national income, do you think the British have reserved to the U.S in retribution? None (didn’t happen after the wrongdoings, isn’t happening now, probably won’t even happen?). If your logic was to apply, everyone would owe something to everyone, since, once again, civilization was a result of a lot of injustices. If your logic was to apply, the Greeks and Italians would be paying retribution funds to most European countries and Middle-Easterners. Africa is no different. It just happened relatively recently, and the horrors were documented through media. If only Africa was left alone to deal with the injustices committed on its people, it would probably have strived like Israel and the USA. But, sadly, we will never know what the outcome could have been since what followed was an endless extension of colonial economics called “Aid” which, by the way, has been the single most efficient creator of corrupt dictators that wreaked more havoc on the continent than any, or all the colonizers combined. All to say, if we were given more room to respond to our needs by seeking partnerships instead of dictates(like the Asians did), we wouldn’t be the great beneficiaries that we are today. The truth is, exploitation never ended, the difference is that our sense of entitlement is now the exploited element. I mean, why would you deny a few tons of gold to the one funding your whole next year’s educational budget?
    Besides, According to a 2019 report, Africa receives about $133.7 billion each year from official aid, grants, loans to the private sector, remittances, etc. But at the same time, some $191.9 billion is extracted from the continent in the form of debt repayments, multinational company profits, illicit financial flows, brain drain, illegal logging, and fishing, etc. And more recent figures put the outflow much higher – at over $218 billion. In other words, Africa suffers a net loss of more than $85 billion every year. Such a net outflow suggests that far from the West aiding Africa, it is Africa that is aiding the West.

    So let’s get the question right: Should Africa stop giving aid to the West? The answer to that is an unequivocal yes. Perhaps, remember that next time you protest. Only now, ask for something different.
    I do not totally discredit your report. However, I feel it’s driven by an emotional need for fairness and equity. As much as that is admirable, there’s no such thing as fairness and equity on this side of the graveyard. No matter the amounts poured in, it won’t prevent years of stagnation. Only self-reliance, freed minds, domestic problem solving, and hard-work will cut it.

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