By Sade Ayinde
As we look ahead to the 2030 deadline for the world’s completion of the Sustainable Development Goals, development finance has been incorporated as part of a larger effort to focus on inclusive economic growth and sustainable development. According to the Organisation for Economic Co-operation and Development official development assistance (ODA) reached a record high of $131.6 billion USD in total aid, in 2015. In the graph below, OECD recorded Sweden as having the highest percent of ODA to gross national income.
Source: OECD ODA Statistics
According to the UN Development Policy and Analysis Division, Least Developed Countries (LDCs) compromise of 48 countries in the bottom billion: 13 in Asia and the Pacific, 34 in Africa and 1 in Latin America. The “Bottom Billion” is often defined as the world’s poorest countries that suffer from cyclical poverty and limited growth. There is often overlap between the bottom billion countries and the UN’s official “Least Developed Country” list. The main criterion for LDC classification is based on low levels of gross national income (GNI) per capita, low human capital, and high vulnerability to environmental and economic shocks. LDCs hold unique demographics and specific challenges that require tailored and innovative strategies to invigorate inclusive growth for their development agendas.
Historically, LDCs have been heavily dependent on development assistance and aid. Over the decade, there has been an increase in trends in private finance and investments as opposed to the traditional aid model. But for LDCs, their capacity to attract such flows besides traditional aid has been limited.
The global share of aid has increased, but the proportion to LDCs has decreased (OECD). When compared to other developing countries, LDCs are more susceptible to economic shocks and are less likely to attract the amount of finance needed to implement the SDG 2030 agenda. Solutions to finance LDCs are vital in order to assure that inclusive economic growth, and sustainable development are achieved for the SDG agenda. If the eradication extreme poverty by the 2030 deadline is to be reached, donor countries, development banks and international finance institutions must develop a finance strategy that prioritizes the needs of LDCs and their emerging economies.