Mobilising wider resources, emphasising domestic actors, and using aid as a catalyst

The world needs an ambitious post-2015 agenda: one that sets challenging goals to achieve justice and dignity for all and leaves no one behind. To achieve it we need to mobilise enough resources to make that ambition a reality. Put in other words: every vision needs a plan, and every plan needs a budget.

This week the Intergovernmental Expert Committee on Sustainable Development Financing is holding its second meeting in New York. The committee is in the early stages of developing a framework for discussions on how to finance the post-2015 agreement. This round of meetings is focusing on mapping-out a common understanding of the resource landscape as well as discussing the instruments and policy levers that can be used to mobilise wider resources.

We’ve used insights from our Investments to End Poverty programme to recommend to the committee that:

1. The post-2015 financing framework should aim to mobilise the contributions of wider resources, but must start with a realistic understanding of the resource landscape

Large increases in the scale and diversity of flows to developing countries means there is great opportunity to increase the resources that could be targeted towards realising the post-2015 goals. But to achieve this we need a clear and detailed understanding of the changing landscape, and particularly how resources are distributed at national and sub-national levels. For example, many developing countries have seen large increases in international resources largely driven by growth in foreign direct investment (FDI) and remittances. The post-2015 financing framework should design mechanisms to mobilise these resources towards development in a way that maintains transparency and accountability principles.

2. The framework should place primary emphasis on domestic institutions and resources, while balancing this with a clear understanding of resource and capacity constraints

Domestic resources are growing in many contexts – government spending across all developing countries almost tripled between 2000 and 2011 – but levels are still low in many countries. 380 million people live in countries where the government spends less than PPP$500 per person each year – barely enough to provide basic services. Looking towards 2030, domestic resources are likely to continue growing in some countries but will remain low in many others. The post-2015 framework should recognise the significant domestic resource constraints faced by many countries, and the challenge of rapidly scaling up basic services even within the context of growing expenditure.

3. Aid remains a vital tool that should be used to catalyse other resources

While mobilising development finance after 2015 must move from the traditional focus on official development assistance (ODA), ODA is still very important for countries with the lowest levels of domestic resources. For most of these countries it is the largest flow they receive. There is also great potential to use aid to mobilise and catalyse the contributions of wider actors  towards development in a way that other resources cannot. Examples are through partnerships with private and commercial actors, through supporting domestic growth and by mobilising domestic resources.

Read our full recommendations on the challenges and opportunities that the financing framework should address – in context of the resource landscape facing developing countries – in our briefing to the expert committee.

Investments to End Poverty – including its flagship 2013 report – draws together data on resources flowing in and out of developing countries, and looks at how different flows are distributed against levels of domestic resources and extreme poverty.