A new report by the research organisation Development Initiatives has found that most international financing bypasses the poorest people and places in the world, and aid is not going where it is needed most. The incomes and therefore livelihoods of the poorest 20 per cent have virtually stagnated over the last two decades despite all forms of finance – international and domestic – showing considerable growth overall.
Investments to End Poverty 2018 finds that despite poverty rates halving under the MDGs, millions of people are not sharing in progress – the income gap is worsening as the rest of the world continues on a positive trajectory. The income of the poorest 20% of the population was $0.94 in 1990 and is only $1.90 today, while the rest of the population’s income grew from an average $12.85 to $18.63 over the same period. This inequality is projected to worsen – with an income gap of $18.79 by 2030 – almost double what it was in 1990. The research shows that while the resources that underpin growth are not targeted or mobilised to ensure the poorest people are not left behind, these poverty trends will continue.
Harpinder Collacott, Executive Director at Development Initiatives, said “While it is common knowledge that global poverty is not reducing fast enough, a crucial point often overlooked is that a particular set of people and countries are not progressing while the rest of the world’s population are seeing their incomes steadily improve. The poorest 20 per cent of our world’s population, particularly in Sub-Saharan Africa, are facing a bleak future under business as usual. While money will not solve poverty alone, we are seeing aid being diverted away from the poorest and most vulnerable people. And while increasing amounts of other finance such as private, commercial and domestic public resources give us reason for optimism, they are simply not currently enough to enable rates of progress to really improve for the very poorest in the world.”
The report finds that despite global commitments to zero poverty, actors are not putting their money where their mouth is. Aid donors promised in 1970 to give 0.7% of their GNI to fighting poverty, and yet the average spend today is 0.31% – lower than it was then (0.33%). The research also found that if actors met their commitments, an extra US$1.5tn would be available between now and 2030 to help lift the very poorest in the world out of poverty. There is also a lot more to improve on in terms of where aid is spent – proportionately more aid per person goes to developing countries with the lowest levels of poverty. The good news is this means that despite being off track to eradicate poverty, there is a lot of scope and opportunity to change this trajectory.
While development actors are rightly looking at ways to mobilise all types of finance to fund the global poverty agenda, the data contained in the report makes it clear that it is domestic public financing and international aid that are so fundamental to reaching those being left behind. Agenda 2030 puts the responsibility on all actors to deliver the SDGs – sustainable development must be a core element across all forms of finance and will require resources and expertise of all sectors to achieve success. The mobilisation of new and additional financing can release aid to be focused on those furthest behind.
Anna Hope, Head of Communications at Development Initiatives
T: +44 (0) 1179 272 505 / +44 (0) 7545668378
About Investments to End Poverty
DI’s Investments to End Poverty programme delivers data-driven evidence, policy research and new ideas to shape international development finance for delivering the 2030 Agenda.