ETTG paper - Financing Human Development

Financing human development and the ending of extreme poverty in Africa

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The reduction and eradication of poverty has long been the primary goal of EU development cooperation. As the new European Consensus on development stated in 2017, “eradicating poverty, tackling discriminations and inequalities and leaving no-one behind are at the heart of EU development cooperation policy.”This briefing note draws on previous ODI research to examine how the EU could play a more effective role in ending extreme poverty in sub-Saharan Africa (SSA) by better targeting support for human development in the poorest countries.

Key messages

  • If past growth and inequality trends continue, growth alone is expected to halve poverty rates in sub-Saharan Africa (SSA) by 2030. But this still means that 340 million people will be left behind in extreme poverty. As many of them live in countries that are vulnerable to conflict and climate change, this may understate the future extent of extreme poverty.
  • Interlocking investments in the three key human development sectors, i.e. education, health and social protection, could end extreme poverty in SSA by 2030. But many SSA countries cannot yet afford to invest on the scale required, even if they maximise tax revenues. If all the OECD Development Assistance Committee (DAC) donors met the UN target for Official Development Assistance (ODA), i.e. 0.7% of gross national income (GNI), and provided half of this to least developed countries (LDCs), there would be sufficient funds to end extreme poverty in SSA.
  • The EU as a whole has reduced its aid as a percentage of GNI over the last two years and there has been no significant change in the proportion provided to LDCs over the last four years. This is despite clear commitments in the new European Consensus on Development to increase both ratios. Aid delivered through EU institutions is particularly poorly targeted, with an OECD DAC peer review in 2018 noting that only 27% went to LDCs.
  • Moreover, the EU as a whole is not doing enough to target its aid on human development, which accounts for only 14% of its total ODA. The share of aid delivered by EU institutions is particularly low, at only 10%. This is despite the 20% target for human development set in the current Multi- annual Financing Framework (MFF) and which has also been proposed for the next MFF. And even the 20% target is way below the 50% share that ODI estimates is needed to end extreme poverty.
  • A clearer focus in the next MFF on ending extreme poverty in SSA by targeting aid better at LDCs and human development would not only transform the lives of millions, it could also help reconnect EU citizens with EU aid.

Read the full paper here.

Authors: Marcus Manuel (ODI) and Stephanie Manea (ODI).


Photo courtesy of The Department for International Development (DFID) via Flickr.


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