Investing in development
Developing countries should adopt -- by 2006 -- poverty reduction strategies that are firmly aimed at achieving Millennium Development Goals (MDGs), and that will anchor the scaling up of public investments, capacity building, domestic resource mobilisation, and official development assistance. This is one of the main recommendations submitted to the UN Secretary-General by the Millennium Project, which form an integral part of the "In Larger Freedom" reform agenda that UN member states are being called to endorse at the Millennium Review Summit that will take place in New York in September.
Led by Professor Jeffrey Sachs with the support of over 250 experts who worked for two years in 10 thematic clusters, the final report of the Millennium Project--"Investing in Development" -- identifies the fight against extreme poverty as the top priority of the world community and the UN system in 2005. Failures in governance, poverty traps and low levels of investment (whether private or public capital, or aid) are the overarching reasons why the world is not yet on track to meet the MDGs. Optimistic, the report underlines that 2015 targets can still be reached and, most importantly, are affordable. Nonetheless, this will require a rethinking of investments in official development assistance (ODA), as today only 24 per cent of bilateral, and 54 per cent of multilateral, aid targets MDGs directly.
The report also argues that the international system is ill equipped to provide support to national strategies for achieving MDGs, putting forward recommendations for fixing the aid system, such as aligning ODA flows with national MDGs financing gaps, shifting towards predictable multi- year commitments, and improving the quality of aid delivery and technical capacities (including of the UN system) to support MDGs scale-up programmes.
High-income countries, on the other hand, are urged to support the MDGs by increasing development aid from 0.25 per cent of donor GNP in 2003 to around 0.44 per cent in 2006 and 0.54 per cent in 2015. Each donor should reach 0.7 per cent no later than 2015, to support the MDGs and other development assistance priorities. Debt relief should be more extensive and generous.
While arguing against the slogan "Trade not Aid", the report recognises that international trade can be a powerful driver of poverty reduction, and suggests that trade policy should focus on two priorities: improving market access and terms of trade for the poorest countries; and improving supply side competitiveness of low income countries' exports through increased investments in infrastructure (roads, electricity, ports, etc).
As regards governance, Professor Sach's team confirmed that better governance can lead to higher economic growth as a result of a more efficient division of labour, more productive investments, lower transaction costs and better delivery of basic social services. In recommending clear cut plans for strengthening good governance in support of the MDGs-based poverty strategies, the report differentiates between two broad sources of bad governance: bad volition and lack of capacity. In the case of largely corrupt governments, the report suggests focusing international support on humanitarian and health concerns; channelling aid mainly through NGOs, since there would be limited possibilities of achieving results using long-term strategies. As regards poorly resourced but well-intentioned governments, the report recommends specific investments and policy reforms in public administration, the rule of law, transparency and accountability, sound economic policies, human rights, and civil society.
Achieving MDGs cannot be left to governments alone. Civil society organisations should be involved in a more robust way than they are today, as they can contribute to decision-making, service delivery, monitoring and evaluation.
Stressing the critical link between good governance and achieving development objectives, the report further recommends the identification of "fast track" countries for the scaling up of external assistance, based on their needs as well as their capacity to absorb and use aid effectively.
While focussing on long-term strategic policy orientation that can have the greatest impact on the MDGs, the Millennium Project has also proposed a series of "quick win" actions to be launched immediately, so as to save millions of lives and promote economic growth. Some of the "quick wins" include: free mass distribution of malaria sleeping nets by the end of 2007; ending user fees for primary schools and essential health services no later than the end of 2006; the expansion of school meals programmes, using locally produced foods, to cover all children in hunger hotspots by no later than the end of 2006; a massive replenishment of soil nutrients for smallholder farmers on lands with nutrient-depleted soils, through free or subsidised distribution of chemical fertilisers and agro forestry by no later than the end of 2006.
In recognising the key role that the UN system can play in supporting the implementation of the millennium agenda, the report suggests that the UN should further strengthen the coordination of its agencies, funds and programs, both at a headquarters and country level. UN Country Teams should be properly trained, staffed and funded to support program countries, and should work closely with international financial institutions (the World Bank, IMF and regional development banks) to improve the quality of technical advice.
"Investing in Development" provides an overview of global progress over the MDGs, highlighting achievements and challenges at the regional level. In Africa, high transport costs, low productivity in agriculture, a very high disease burden and extremely slow diffusion of technology have contributed to keeping the continent trapped in poverty. In the Arab region, priority investments are recommended in the area of gender equality, education, rural development, science and technology. Interestingly, it was also found that MDGs progress at the national level often conceals serious geographic variation within a country, calling for policy makers to carefully tailor national targets with a view to meet MDGs in every region.
"Breaking the poverty trap of the poorest country is a matter of extreme urgency for our security," noted the Millennium Project coordinator. Indeed, when people lack access to food, medical care, safe drinking water and chances for a better future, their societies are likely to experience instability and unrest that spills over to the rest of the world. The interrelation between security and development is strongly highlighted in Kofi Annan's reform package, "In Larger Freedom".
If the world achieves the MDGs, more than 500 million people will be lifted out of poverty. A further 250 million will no longer suffer from hunger. Thirty million children and two million mothers who might otherwise have been expected to die will be saved. The world has the knowledge and the means to defeat poverty. 2005 is the "make it or break it year" for the MDGs, and the upcoming September summit represents a historic opportunity that should not be missed.
Michele Ribotta of UNDP Egypt prepared this overview for Beyond .