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See Inside August 2008

Africa Needs More Funds to Deliver U.N.'s Goals by 2015 Deadline

Overdue investments from rich nations could still transform Africa by 2015



Matt Collins

In September 2000 the world’s leaders, assembled at the United Nations, adopted the Millennium Development Goals (MDGs) as shared commitments to fighting extreme poverty, hunger and disease through 2015. Halfway to the target date, there are heartening examples of dramatic progress, such as the 91 percent reduction in measles deaths in Africa and new inroads against malaria. Overall, the gains remain too slow, especially in Africa. Yet specific and accelerated investments in the poor countries can still deliver the MDGs on schedule.

Overcoming extreme poverty, hunger and disease requires not only the standard prescriptions for economic growth—rule of law, security, corruption held in check and open trade—but also targeted public investments in four areas: agriculture, health, education and infrastructure. They are needed to provide the basis for productive private-sector activity. For example, public investments in roads, power and port facilities could vividly increase the profitability of agricultural exports in sub-Saharan Africa.

Many analysts have overlooked or underestimated the importance of these public investments for meeting the MDGs. In middle-income countries, economic growth may depend more on public policies than on public investments, since the key public investments—in roads, power, clinics, and schools—have already been made. In the poorest countries, however, even the basic, most public investments are often incomplete. The vast majority of Africa’s villages lack all-weather roads, electricity and even access to fertilizers and high-yield seeds for the impoverished smallholder farmers.

For the poorest countries, therefore, meeting the MDGs is a matter of carrying out high-priority public investments, and these investments are preconditions for profitable private-sector investments. In technical jargon, the public investments are complements of private investments rather than substitutes for them. Public policy reforms in the poor countries are therefore not enough. Public investments are also needed.  

The MDG Africa Steering Group headed by U.N. Secretary-General Ban Ki-moon recently led a critical review and identified a series of specific, high-priority public investments to be undertaken between now and 2015. The report provides important information as well on levels of necessary external financing, the key international agencies that can assist the poor countries and expected outcomes of the investments. The Steering Group’s conclusions are highly practical and provide an important road map between now and 2015.

For each investment area of needed public investment, practical strategies are available for immediate implementation (such as ways for controlling malaria and tuberculosis or for replenishing soil nutrients for smallholder farmers). Often powerful demonstration projects already exist at the sub-national level and could be taken quickly to scale, as in the case of the Millennium Villages program that demonstrates the benefits of MDG investments in rural villages. What has been missing is neither the technology, the will, the plans, the methods of implementation, nor even the ways to control corruption in aid delivery but rather the needed financial help from the donor countries.

The basic problem, of course, is that the poor countries cannot afford the public investments on their own. This is why foreign assistance is so vital to the success of the MDGs. The external assistance enables the poorest countries to scale up their public investments in the critical sectors. The secretary-general’s report identifies the overall need for an additional $72 billion a year of donor financing required to get the job done. This sum is sizable to be sure, though fully compatible with the donor countries’ past pledges to Africa.

Here’s the basic donor arithmetic: The combined income of the donor countries (Europe, the U.S., Canada and Japan) is now around $37 trillion a year; the required $72 billion only amounts to around 0.2 percent of the donors' gross domestic product. Donors have long promised to increase their aid from the current level of 0.28 percent of GNP to 0.7 percent, so the additional 0.2 percent falls well within the aid levels already promised in pursuit of the MDGs.

Despite the major G8 countries' promise to double aid to Africa between 2004 and 2010, aid from the donor nations has scarcely increased. Rather than rising toward 0.7 percent of donor GNP as promised, actual aid in 2007 was $104 billion, a mere 0.28 percent of donor income. Among the donor countries, the U.S. actually had the lowest ratio of aid to GNP, at a mere 0.16 percent in 2007; its aid to Africa was a mere 0.04 percent of GNP!

The failure of the donor countries to honor their commitment to increase aid is now the limiting factor in achieving the MDGs in Africa. The next U.S. administration should therefore make good on the unfilled aid commitments, by making concrete efforts to reach 0.7 percent of GNP in aid, targeted through practical investments in agriculture, health, education and infrastructure. U.S. aid should be raised to around 0.5 percent of GNP by 2012 and then to 0.7 percent by 2015. That much aid would still be only a small fraction of the U.S. military budget (which is roughly 4.5 percent of GNP) and would help prevent far more expensive and far less effective military operations in impoverished and unstable regions.

The next president should signal to the world that the U.S. is actively supporting the MDGs by including them in the inaugural address next January. The global goodwill resulting from such a high-profile vow would be enormous. It would inspire the kind of confidence and hope that John F. Kennedy did in 1961, early in his presidency, when he famously committed the U.S. "for as long as it takes" to help the world’s poor break the bonds of mass misery.

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