THE BLOG

Who Will Pay for the End of Poverty?

08/07/2015 11:46 BST | Updated 07/07/2016 10:59 BST

One of the things I love about my job is that I get to be optimistic every day. That's because I, and my colleagues working in international development, look at the problems of the world that are rooted in poverty and inequality, and refuse to accept that the world is not smart enough or rich enough to defeat them.

The evidence of history is on our side. Since the year 2000 the world has halved the number of people living in extreme poverty, the mortality rate for children under five has dropped almost 50%, millions more children live past their fifth birthday, and 90% of children now attend primary school. It's been the best 15 years our species has had in its entire existence, with 1.7 billion undernourished people in 1999 dropping to 'just' 836m today. While we have a long way to go, that's staggering progress.

That poverty still exists is a question of politics. Should we get the politics right, we can continue and accelerate those rapid gains and, truly, wipe out poverty in the next 15 years. At which point I'll be happily out of a job.

This year, the world is coming together in a series of global meetings to decide the level of political ambition we'll bring to the eradication of poverty. If we aim high, I get to head off to a beach somewhere in 2030. If we fail, the price isn't just that my retirement is delayed: it means more human suffering and unnecessary death, a drag on economic growth that hurts us all, and wastes the potential of hundreds of millions of lives.

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The first of those critical meetings is the Financing for Growth conference in Addis Ababa, happening from the 13th to 16th of July. This conference is all about the money: how are we going to pay for the end of poverty, and who will pay for what? I'd assert that money is not the most important element in ending global poverty, but it's clear that so much simply cannot and will not happen without it.

This is why it's crucial that global leaders meet and sign an ambitious Addis Ababa Accord. This Accord will spell out our collective goals for financing the future we want, and must look for innovative solutions far beyond aid to include private, domestic, and international investment, innovative financing, and more.

With more countries getting wealthier they are moving far beyond the old stereotype of dependence on aid. With the end of poverty realistically in our sights we must grapple with the question of how aid can be scaled back as domestic resources increase, when is the right time to begin that process, and how we can ensure no-one is left behind.

Domestic Resource Mobilisation (DRM), that is, a government's own spending of funds raised mainly through taxation, is one of the great hopes for development. It already generates far more resources for virtually all countries than aid does. Yet, we have many examples of where decades of robust economic growth, with a corresponding increase in the tax base and available domestic resources, have not translated into development outcomes.

The role of domestic resources, how to grow them, how to deploy them, and what the 'right' balance between traditional aid and domestic resources over the next 15 years is going to be a critical outcome of this Accord.

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This is complex stuff. To help decision makers navigate all this, RESULTS UK is launching a report called 'Who Pays for Progress?' at Addis. It is an in-depth study that looks at one country and one sector - health in Kenya - to unpick that complexity and give some guidance as to what really matters when trying to decide the right financing mix.

Kenya is of particular interest because it has very recently changed income classification from a Low-Income Country to a Middle-Income Country. With so much development assistance directed to poorer countries, and calls for this to intensify, Kenya is in a moment of transition, as their President recently proclaimed.

But is Kenya ready to move from aid to DRM?

This is where looking at the health sector becomes very important. It's the poor and marginalised who suffer the most from ill health, with ill health both a cause and consequence of poverty. Poor children are the ones who don't get vaccinated, poor parents are the ones more often contracting diseases such as tuberculosis, and it's poor kids who don't make it to school and miss out on the best chance to break that intergenerational cycle of poverty.

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The conclusions of the report are resounding: Kenya can afford to put more of its own domestic resources into health, and it should do so. But - and it's a big but - even under very optimistic scenarios for domestic resource mobilisation there will be a vital role for aid to play in Kenya for many years to come.

In other words: it's not aid or DRM, it's aid and DRM.

This is why it's essential that as well as aid commitments like the UK's recent 0.7% Act, the international development community is now talking more and more about non-aid sources of finance like DRM, financing though taxation, and innovative financing mechanisms such as UNITLIFE, a solidarity levy on oil that will fund better nutrition for millions.

But we may be about to miss this crucial opportunity. The draft text of the Addis Ababa Accord has recently been weakened. We've lost time-bound commitments for rich countries to meet their aid-giving targets. Beyond aid, promises on tax transparency, country-by-country public reporting by multinational corporations, and ambitious pledges to tackle illicit financial flows have all been weakened or removed.

If things are not turned around in Addis Ababa, if our leaders cannot make the political decisions and show the leadership necessary to ensure we have the funding needed to build a more just and equitable world, then history will judge us harshly. I, for one, want to be able to say it was this generation that finished off poverty. And I know we can.