Photo Copyright Trevor Samson World Bank
Photo Copyright Trevor Samson World Bank

 

For some fifteen years now, the development landscape has been much more complex and multifaceted than when the Millennium Development Goals (MDGs) were officially adopted in 2000. Official Development Assistance is far from being the only resource for development. A whole host of actors and various forms of financing are emerging within the development assistance ecosystem. Private investments, migrant remittances and individual philanthropy have contributed to a significant increase in resource flows. The establishment of a partnership between all actors must be a core component of the new development program.

 

Strengthen leverage effect of aid

Overall, financial flows to developing countries stood at some USD 680bn in 2011: USD 138bn for ODA, USD 59bn for philanthropic donations (which have risen by 128% since 2000), and USD 410bn for private investments (foreign direct investments, export credits, etc.), which remain the major source of financing for developing countries[1].

The remittances from migrant populations also play an increasingly important role in the economies of a number of countries. They contribute to economic growth and to the livelihoods of the less prosperous populations, but without, however, really reaching the poorest. According to World Bank estimates, financial flows from migrants, although they are sensitive to economic conditions in developed countries, are generally 3 times the volume of ODA. In 2014, USD 436bn are expected.
Today, the interactions between development assistance, private investments, trade and new development actors provide new opportunities for aid to leverage private financial resources. The stakes are clear: a real cooperation between development actors would allow additional resources from all sources to be used, with the aim of achieving maximum effectiveness. This is precisely what the 2002 Monterrey Consensus advocated for, the principles of which were reaffirmed during the Doha Conference in 2008, and by the High-Level Panel on the Post-2015 Development Agenda.

 

Establish partnership between all actors

The conclusions of these fora converge towards the idea that the fight against poverty and inequalities can no longer be exclusively based on governments, and that the establishment of a partnership between all actors must be a core component of the new development program[2].

The role played by the MDGs in the remarkable social progress achieved since 2000 is recognized: in 13 years, the number of people living below the global poverty line has fallen by 500 million. However, while a number of developing countries have experienced significant economic growth, the MDGs will be far from all being achieved by 2015. Furthermore, certain major global developments give cause for concern: inequalities are increasing between and within most countries in the world, and even societies in high-income countries have been weakened. There is a risk that population growth will exacerbate these tensions: the world’s population is going to increase from 7 billion today to 8 billion by 2030, including 5 billion urban dwellers.

It is now essential for development, growth and environmental protection agendas to converge in order to achieve more equitable, stable and sustainable development, and without poverty. This is the main challenge to which the report of the High-Level Panel on Post-2015 responds, by calling for the promotion of sustainable development and the establishment of a global partnership between public and private actors and civil society.

ODA obviously remains a vital source of financing for least developed countries, particularly the poorest Sub-Saharan African countries, which are experiencing a fall in aid flows and do not attract FDI. However, as the 2015 deadline for the Millennium Development Goals (MDGs) approaches, and on the eve of the adoption of the Sustainable Development Goals (SDGs), ODA needs to re-examine its role in order to be a real catalyst for the construction of an institutional, social and political environment that is conducive to the arrival of other types of capital.

The challenge lies in adopting economic policies that allow the poor and vulnerable groups, especially women, to benefit from economic growth and development. This “inclusive” economy approach is precisely the one put forward by Emmanuel Faber and Jai Naidoo in their 2014 report: “10 Proposals for a New Approach to Development Assistance”[3]. They advocate for “rethinking development assistance in order to better coordinate it with the richness and complexity of the new inclusive economy approaches, and establishing coalitions of stakeholders for concrete projects, where companies, NGOs, and public authorities work together on the basis of co-creation”.

Companies are already involved by implementing marketing strategies to reach new Bottom of the Pyramid markets, which target the 4 billion people who live with less than 2 dollars a day. Thanks to social business initiatives, which are economically profitable activities but with a social objective, they also demonstrate their ability to leverage the social innovation that was initially led by NGOs and associations.

 

Continue efforts for ever more robust and inclusive finance

The establishment of a strong and solidarity-based financial sector is central to the mobilization of national resources and should be an important component of national development strategies. Indeed, in order to achieve equitable development and promote a dynamic economy, it is essential to have diversified, well-regulated and inclusive financial systems that promote savings and direct them towards viable, growth-generating projects. Financial infrastructure must be able to give specific access to women, rural communities and the poor, but also to offer a viable range of products and services to micro, small and medium-sized enterprises, which have a decisive impact in terms of employment and the fight against poverty and precariousness.

Microfinance, including microcredit, has proved to be effective in creating productive independent employment with a potential to contribute to the achievement of internationally agreed development targets. Today, it is necessary to support the efforts made by developing countries in an appropriate and coordinated manner, in particular to build the capacities of their microfinance institutions, including for microcredit.

The Convergences World Forum, which invites private, public and solidarity-based actors to build the post-2015 agenda together, is the very essence of a unifying event that can bring down the barriers between the development assistance of States, the international solidarity action of NGOs and the investments with strong social impacts made by companies, banks and individual philanthropists. This citizens’ initiative promotes the emergence of coalitions of actors, with the aim of making a more effective contribution to winning the fight against poverty, disease and ignorance, and of co-constructing a truly inclusive economy. It is together that they will also come up with solutions to change our growth models, which do not renew natural resources, are energy-intensive, and generate considerable inequalities.

 

 

 

[1] Hudson Institute, Center for Global Prosperity: 2013 Index of Global Philanthropy and Remittances.

[2] UN (2013), “A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development”, Report of the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda.

[3] French Ministry of Foreign Affairs and International Development, Directorate-General of Global Affairs, Development and Partnerships, “Innovating by Mobilising Stakeholders: 10 Proposals for a New approach to Development Assistance”, Options Report, 2014.

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