Investments to end poverty

Investments to end poverty

The issue:

There are an estimated 782 million people living in extreme poverty today. Poverty was halved under the Millennium Development Goals, but the very poorest people have made almost no progress at all. The income gap is growing, hunger is rising, and consumption floors for the poorest people remain functionally stagnant.

In this context, official development assistance (ODA) continues to be a critical source of financing. It can uniquely target the people and places most at risk of being left behind. Worrying trends, however, show a shift away from aid going to where it is needed most, and funding levels are stagnating. Beyond aid, we must consider the wider financing that can and should be mobilised to support sustainable development and poverty eradication. This is critical when the funding gap for delivering the Sustainable Development Goals (SDGs) is estimated to be as high as US$3.1 trillion per year until 2030. Such an amount cannot be provided through aid alone. All resources – public, private, local, national and international – can and should play a role. All actors who control such resources therefore have a responsibility.

It is a huge challenge to make sure the full resource mix is having a positive impact on poverty eradication and sustainable development. But it is one we must try and meet. A key part of that is being equipped with a strong and clear evidence base. We need to know what is available, where it is coming from, how it is currently invested, and what needs to change if we are to deliver the global goal of ending poverty.

The purpose of our work:

Our work to improve investments to end poverty provides data-driven evidence, policy research and new ideas to inform and improve the use of development finance to deliver the SDGs. We bring robust in-depth data and analysis so that a wide range of key stakeholders can make sense of the development financing landscape and the role they must play in it. The recommendations and solutions we offer as part of this work ensure that different actors understand what they need to do and how to do it so that our work can be used for tangible improvements in the use of development finance, and concessional public finance in particular.

Our impact:

Our most recent flagship Investments to End Poverty report was launched at a side event of the World Bank annual meetings in 2018. It brings comprehensive analysis on the critical issues for development finance in the SDG era. It covers the current status of global poverty and need for a new mindset to tackle it, demonstrates how we can strengthen the use of aid, unpacks how we might mobilise all resources in a way that includes everyone in economic progress, and addresses how data and transparency need to improve for us to optimise impact. The data, analysis and recommendations we have provided have been used to support key advocacy work on improving development finance. As well as 13 known citations and uses, this work has fed into the civil society organisations’ joint submission to the Inter-Agency Task Force report on financing sustainable development and Oxfam’s Davos report on public good for private wealth.

Other substantial work we have developed throughout 2018 relating to investments to end poverty include in-depth expert research and analysis on: the enabling environment for the private sector; countries being left behind; ODA for domestic revenue mobilisation; and subnational investments in human capital. This work put DI on the stage at global development finance debates and enabled various collaborations in 2018, including with: United Nations Capital Development Fund on Blended Finance in the Least Developed Countries; Dag Hammarskjöld Foundation on Financing the UN Development System 2018; and JustActions on international development assistance allocated to fighting pneumonia. We also responded to the International Data Corporation enquiry (and subsequent government response) regarding how aid is used, we contributed to the work of the Blended Finance Taskforce, and we analysed ODA updates and published a series of other factsheets on poverty and resources. Our work is used to inform the strategies and decisions of philanthropic institutions and donor governments that are seeking to ensure their investments have the best impact possible.

What’s next?

In 2019 we are pushing forward with briefings and roundtables with key stakeholders to ensure they receive and understand our findings and recommendations on investments to end poverty to inform their work. Our next significant piece of analysis will be on blended finance, which will be published ahead of the World Bank Annual meetings in 2019. This work will unpack the impact of blended finance on poverty and make recommendations about how donors can improve the poverty focus of their ODA allocations in this context.