Investments to End Poverty 2018 – meeting the financing challenge to leave no one behind
October 12, 2018
Development Initiatives (DI) has published a new data-led report that explores how development finance is responding to the demands set by the Sustainable Development Goals and what changes and action are needed to ensure their aspirations become reality for all.
Investments to End Poverty 2018 can be read at http://devinit.org/post/investments-to-end-poverty-2018/
DI is an international development organisation that focuses on the role of data in driving poverty eradication and sustainable development. DI has offices in Kenya, Uganda, the UK and the US.
Key findings relating to Africa
- Hundreds of millions of people still live in extreme poverty and while the share and numbers of the population in poverty has decreased across most regions, the number of people living in poverty has risen in sub-Saharan Africa. The available data shows that in this region, 380 million people were living in extreme poverty in 1999; by 2013 this number had increased to 401 million people. Faster progress will be needed to ensure that no one is left behind.
- New projections on extreme poverty levels show a best case scenario of 200 million people and worst of 400 million people living below the poverty line. More than 80% of people in extreme poverty are projected to be in sub-Saharan Africa, compared with about 50% today. Even in a best case scenario, in sub-Saharan Africa, only half of those in extreme poverty today will be lifted above the poverty line.
- The difference in projected progress between South Asia and sub-Saharan Africa on numbers of people living below the poverty line is mainly because of the depth of poverty – poor people in sub- Saharan Africa are living much further below the international poverty line than poor people in Asia are.
- Pulling together human development, political and economic insecurity indicators alongside poverty projections, a select group of 30 countries – mostly in sub-Saharan Africa – emerge as being most at risk of being left behind.
- While the largest proportion of ODA allocated to countries goes to sub-Saharan Africa (37% in 2016), few of the countries in this region receive the largest amounts of ODA overall and only Ethiopia is one of the largest eight recipients of aid (US$4.2bn).
- In Africa significant volumes of concessional loans went to countries at high risk of debt distress in 2016, including Ethiopia (US$1.5bn) Ghana (US$656m) and Cameroon (US$391m). Mozambique, a country rated as actually being in debt distress, received loans totalling US$417 million in 2016.
- In many sub-Saharan African countries, the role of aid in ensuring that governments can provide social safety nets is key. In countries such as the Central African Republic, the Democratic Republic of the Congo (DRC), Republic of Congo, Ethiopia, Malawi and South Sudan, these social protection programmes are funded entirely by external aid donors. In Liberia, Uganda and Sierra Leone, aid funds over 80% of social safety nets. In Benin and Zimbabwe the figure is over 60%. Even in middle income countries such as Kenya and Ghana, donors fund respectively around a third and a fifth of social safety nets.
- Absolute volumes of domestic public resources are lowest where poverty is highest. In sub-Saharan African countries, where over a fifth of the population lives in extreme poverty, levels of per capita government revenue are below – and in many cases, far below – the average of $2,285 per capita in developing countries as a whole
- In many sub-Saharan African countries there is potential to grow the tax base, but also a need to increase tax potential (see chart below
International flows (non-aid)
- A more-than six-fold growth in non-concessional official financing to sub-Saharan and North African countries between 2000 and 2016 is a key regional trend over the last one-and-a-half decades – particularly when compared with a more modest doubling of concessional ODA in sub-Saharan Africa and the 25% growth in aid to North Africa over the same period.
- While North Africa saw substantial growth across all non-concessional flows, in sub-Saharan Africa the trend is mainly attributable to a nearly thirteen-fold increase in non-concessional lending by official creditors that is not reported as other official flows. Given the potential contribution of this type of financing to development outcomes, such growth need not, necessarily, be concerning. However, the rising outflows that this type of financing creates, through interest and capital repayments, is a concern to be monitored, particularly given growth is currently faster in the countries identified as being at risk of being left behind, including countries already identified as being at risk of debt distress (e.g. DRC) or already in debt distress (e.g. Mozambique).
- Countries being left behind are among the smallest recipients of other official flows, Foreign Direct Investment, private finance mobilised via blending and remittances. (see chart below).
Current state of the data needed for effective decision making
- Of the 47 countries classed as providing scant or minimal public budget information, 30 are in Africa.
- Of the 31 countries with recorded poverty populations of over 5 million people, 18 publish scant or minimal budget information. These include countries with both large populations of people in poverty and high poverty rates such as Nigeria, Tanzania and Madagascar get information
- Statistical capacity also differs widely across developing countries. 14 of the 30 countries with the lowest levels of statistical capacity as measured by the World Bank are in Africa.
Nkemnji Global Tech
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