Meeting the first Sustainable Development Goal (SDG) – i.e. getting to zero extreme poverty everywhere by 2030, is not going to be easy, nor cheap. Business as usual won’t do, and doing things differently should include framing policy making for poverty eradication in terms of poverty dynamics: policies to bring the chronically poor up to the poverty line, policies to support escapes from poverty of those who have reached the poverty line, and policies to prevent impoverishment (Shepherd et al., 2014)[i], While different policy packages will be required in different contexts, three areas of interventions will be essential everywhere and for all poverty dynamics: a massive investment in pre- and post-primary education, coverage of the poor and vulnerable by social protection, and pro-poorest economic growth to ensure that the benefits of increasing national prosperity reach the very poorest people. In addition to these, universal health coverage is essential everywhere to prevent impoverishment.
From the point of view of the poverty eradication agenda, the bottom line for a good outcome of the Financing for Development (FfD) conference in Addis Ababa next July is a commitment to leverage more domestic and international, public and private resources for these three areas. In this sense, the Zero Draft of the conference’s outcome document brings some good news.
There is a commitment to build a new social compact that guarantee access to essential health care and education, and inclusion in nationally appropriate social protection systems for all, with a special focus on those furthest below the poverty line (para. 31). It is recognised that this will entail significant additional investment. Domestic public finance is acknowledged a key role, and countries commit to spend a minimum of PPP$300 p/c per year to provide these essential public services for all communities by 2025. ODA (Official Development Assistance) is called on to complement the efforts of countries unable to raise sufficient domestic resources, and donors are encouraged to target ODA to the poorest and those most in need (Para. 57). Global partnerships in health and education are indicated as key instruments to catalyse additional resources and the possibility to create a global fund for social protection is considered (para. 11), a proposal that was also welcomed at the recent ODI’s Financing the Future conference in Accra, Ghana.
The zero draft gets very close to meet the bottom line, but it misses it because it offers few guarantees that resources will be leveraged for pro-poorest growth. Recommendations mostly assume that development finance will trigger economic growth and that this will unequivocally reach the poor(est) and benefit them. No concerns are raised on the possibility that development finance may bypass, or even harm the poor, and that flows of finance originating from private actors are unlikely to provide goods and services at terms accessible to the poorest people. Development finance for pro-poorest growth would demand investment in areas that are of relevance for the poorest people: chiefly, smallholder agriculture, enterprises in the informal sector, creation of safe and decent jobs, infrastructure that include poor people (ibidem). This could appear in the document as much stronger commitments to direct international and domestic public funds to these areas, with an explicit and more systematic mention of poorest and excluded people. A bigger effort could also be made to create incentives for private flows to target these areas, for example through better integration of the informal sector in national planning, as well as public-private partnerships in projects that generate market outcomes with social returns for the poorest.
Further, the half of the poor people living in middle-income countries is, at best, neglected by the draft: international public finance to middle-income countries is supposed to help mobilise additional resources, and it is assumed that most of the flows will come at commercial, or semi-concessional terms. But none of these offer any guarantee of outreach to the poorest people.
Finally, it is worrisome that the need to strengthen safeguards in investment and trade treaties is mentioned only twice in the document. Given document’s emphasis on large infrastructure projects, a deeper concern on the social and environmental consequences of such projects could be expected – and indeed necessary (the World Bank has recently admitted that it has no idea of how many people have been forced off their land or lost their jobs due to its projects, and whether they were compensated fairly). Preventing impoverishment – for example as a consequence of infrastructure projects which displace people and undermine their livelihood sources, should be a primary concern of development finance and of the FfD conference.
It is hoped that the final draft will more strongly recognise that development finance is in itself no guarantee of economic growth that benefits very poor people, and will put more emphasis on the allocation of resources to uses that are of relevance for the poorest people.
[i] Shepherd, A., Scott, L., Mariotti, C., Kessy, F., Gaiha, R., da Corta, L., Hanifnia, K., Kaicker, N., Lenhardt, A., Lwanga-Ntale, C., Sen, B., Sijapati, B., Strawson, T., Thapa, G., Underhill, H. and Wild, L. (2014) The Chronic Poverty Report 2014-5: The road to zero extreme poverty. London: Overseas Development Institute.