G7 and the Urgency of Now

As part of their 2022 campaign “End Extreme Poverty NOW” Global Citizen brought together policy-makers, activists, and thought leaders in advance of the G7 Summit to share strategies for achieving a more equitable, sustainable, and healthy future for everyone, everywhere. The Donor Tracker, an official supporter of this campaign, was proud to attend the event and present some data-driven insights into why is now an important moment for donors to step up their financing of international development through ODA and why we need G7 leadership on this issue. Below is a revised version of the speech delivered by SEEK Development's Sinead Dwyer at the event.

 

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Why is now the right moment for donors to step up their financing of international development through ODA?

Before the pandemic, the world was already off track to meet the Sustainable Development Goals. When the COVID-19 pandemic began in 2020, it represented a prime opportunity to rally the international community around shared goals and the need for collective action. It was in was in some ways, the perfect advocacy moment. And we saw this play out, with global leaders trumpeting the mantra on the world stage that “nobody is safe until everyone is safe.” However, this rhetoric of a united global response to COVID-19, has so far, not been matched by real funding commitments from the governments of high-income countries.

While official development assistance (ODA) did increase between 2019 and 2020, the growth was not commensurate with the scale of the additional challenges the international community was facing. While most G7 donors did increase their ODA in the first year of the COVID-19 crisis, those increases were mostly relatively small and, in absolute terms, were largely offset by a large decrease in ODA from the UK (see figure). Faced with the biggest global health crisis in a decade, only two countries managed to reach the 0.7% target in 2020, a target that most of them agreed to more than 50 years ago. In 2021, if the costs of vaccine dose donations are excluded, real volumes of ODA barely even increased, rising by only 0.6% compared to 2020.

ODA growth

The increases in ODA observed in the first two years of the crisis were not enough to address the direct additional costs of COVID-19, never mind protecting against the indirect negative impacts on progress against the SDGs. It should have been that donors’ funding for COVID-19 came on top of their regular ODA funding, but instead, the COVID-19 response drew funds from other sectors, compromising funding for the development challenges that we were already struggling to achieve.  

It wasn’t that donor governments didn’t increase spending in response to COVID-19: they did, they just did it in a very insular way. Donor governments launched unprecedented domestic fiscal stimulus packages to protect their citizens and economies but only three of them – Germany, the US, and Australia – directly used some of this emergency funding for the international response. 

The COVID-19 crisis could have been a pivotal moment for international development but, as of yet, it hasn’t yielded the step-change in funding that we might have expected. Three years in, not only is the pandemic not over, but other challenges that need global responses are accumulating. The war in Ukraine has triggered a humanitarian crisis that requires the international community to step up, while the climate crisis is becoming increasingly dramatic. At the same time, the wider economic damage of the conflict in Ukraine and the COVID-19 crisis are expected to contribute to a significant slowdown in global growth in 2022. This will challenge the governments and citizens of high-income countries, but it will hit vulnerable populations in low-income countries hardest.

More than ever, we need a concerted push on the part of global leaders to increase ODA and other funding mechanisms to support the poorest and most vulnerable. We need to make sure that our global leaders learn from past experiences to look outwards rather than inwards in the face of global crises.

As well as increasing the scale of their funding, it is also essential that donors ensure that funding for crises is additional to existing development budgets. We saw governments pivot development funding to urgent and severe problems during the global response to COVID-19 at the expense of longer-term development goals. It is a major risk that this happens again in the face of the next crisis. Indeed, there is a real risk that is it is already happening given the additional costs of in-country refugees as a result of the war in Ukraine. The Centre for Global Development (CGD) estimates that this could amount to US$30 billion a year, equivalent to total bilateral assistance to Africa in 2020. If this funding comes at the cost of other priorities, it will set us back even further in achieving the SDGs.

Why are we calling on the G7 for their leadership?

As some of the largest global economies and leaders on the world stage, the G7 has a responsibility to demonstrate their commitment to funding global responses to global problems. In 2021, Germany was the only G7 country to reach the 0.7% target. If all of the G7 economies were to live up to this target, ODA would more than double; think about how many problems we could solve with that additional funding (see figure).

 

ODA at 0.7 in 2021

Given their relative economic weight, G7 governments have the ability to use their financial resources to change the course of global development overall. But on top of that, if the governments of G7 countries were to step up to collectively achieve the 0.7% target, it would also send a powerful signal of leadership to other countries. Both other high-income countries that also don’t reach the target, but also emerging donors like Indonesia who are increasingly showing an interest in investing in global solutions to global problems. We hope that Germany will use its G7 Presidency and its leadership position in global development to inspire the governments of the other G7 countries to step up and sustainably fund global development.