Development aid more crucial than ever in era of SDGs

Increasing aid and making it more effective can help poor people become more politically active in decisions that affect them, while also supporting governments to become more accountable and plot their own path to achieving the Sustainable Development Goals, according to a new Oxfam report released today, “Accountability and Ownership: The role of aid in a post-2015 world”.

The report marks the anniversary of the signing of the Sustainable Development Agenda.

Oxfam International Executive Director Winnie Byanyima said: “As our world faces multiple intersecting crises – from inequality to extreme poverty, from climate change to forced migration and displacement – the need for more effective aid could not be greater. Effective aid is crucial to dealing with current crises and putting us on a path to achieve the SDGs.”

Although there is a growing excitement around new sources of funding for development – from private sector investments to domestic resource mobilization like taxes – there is still a very important role for aid, according to Oxfam.

“Some people are ready to write off aid as a relic of the past, but aid remains an indispensable resource for the poorest countries which can neither raise sufficient revenues domestically nor attract enough private investment for development. Public financing helps these countries to lead their own development path and absorb other forms of development finance,” Byanyima said. 

In a post-2015 world, development aid can, and should, support the “citizen-state compact”, which sits at the center of a country’s relationships and its institutions that are necessary to drive development progress. Because aid is a form of public finance and concessional in nature, its potential impact goes far beyond its scale in absolute dollars because it can be targeted in a way that helps people gain more power over decision-making.

Most poor people in the next fifteen years will live in countries that lack money that they can raise domestically to invest in development. Oxfam points out that in more than 47 mostly poor and fragile countries, aid remains larger than any other development finance flow, including private investments.

Economic growth is crucial for development but Oxfam says that “trickle-down” economics does not work by default for the poorest communities. More than one in five people struggle to live on less than $1.48 a day and together capture less than one percent of the benefits of global economic growth – effectively locking them out of developmental progress.

“Private finance, when used for the right purpose and in the right way, is important to mobilize the massive resources needed to meet the sustainable development challenge – but it cannot substitute for smart and sufficient public spending,” said Byanyima. “Private finance is driven by market forces and primarily targets richer developing countries, and therefore serves a different role and purpose from aid.” 

In the report, Oxfam says that aid plays an important role in helping citizens in poor countries to organize themselves and demand that their governments invest resources wisely and accountably, to ensure that all people, including the poorest and most marginalized, achieve the SDGs.