'The Donors’ Dilemma' - The Age of Equality

This column by Erik Solheim is part of Global Policy’s e-book, ‘The Donors’ Dilemma: Emergence, Convergence and the Future of Aid’, edited by Andy Sumner. Contributions from academics and practitioners will be serialised on Global Policy until the e-book’s release in the first quarter of 2014. Find out more here or join the debate on Twitter #GPfutureofaid.

By 2030, we will have eradicated absolute poverty. For the first time in history, we have the policies and resources required to bring an end to poverty once and for all. Absolute poverty has already been halved since 1990. Finishing the job just requires the will to do it.

The world has made great strides in the fight against poverty. Yet progress has been uneven amongst nations, peoples and genders. Economic inequality is a problem in developing and developed nations alike. President Obama recently called inequality the defining issue of our time. Poverty is about much more than income, it is also about the inequalities and discrimination that persists across the world. Climate change is causing environmental inequalities. The poor didn’t cause climate change, but they will bear the worst effects of it. Having eradicated absolute poverty, reduction in relative poverty becomes the next big challenge. Reducing inequalities is the only way to do that as it would take several planets to eradicate poverty with current growth patterns. As the developing world is catching up to the rest of the world, the 2030s could become the true age of equality if these problems are addressed.

Economic equality

A hundred years ago, most people in most countries were poor. Economic growth has brought country after country out of poverty. China alone has brought 600 million people out of absolute poverty and Africa could become the next growth pole. Economic growth coupled with inequality means that an increasing number of poor people are located in countries that are not poor. Today, there are several hundred million people living in extreme poverty in middle income countries. The number of poor could actually increase by 2030 if current inequality trends continue and economic growth is weak. Economic inequality must be reduced drastically to get to zero poverty by 2030. Inequality is reduced by taxing wealth and provide for the poor. Such changes require strong political leadership and the ability to mobilize political will. Under the leadership of President Lula, Brazil went from a country associated with poverty and inequality to a new era shaped by social policies and fairness. It was the people of Brazil who voted for a political project that united the country in an effort to achieve growth coupled with income distribution and social inclusion. Under the leadership of the late Ethiopian Prime Minister Meles Zenawi, Ethiopia set out on a growth pattern that benefitted the poor. To eradicate poverty by 2030, the world needs to exceed historical levels of equality. That will require strong leadership and the will to mobilize.

Gender equality

The world is marching towards gender equality. Looking twenty years back; who would have thought that Latin America would become known for its female presidents in Argentina, Brazil, Chile and Costa Rica? Or that a third of the parliaments in the world with more than 30% women would be located in Africa. Even so, women and other groups continue to be excluded and discriminated against. That is wrong and bad for development. We know that equality is a requirement for success. Countries will never reach their full potential when half of the workforce and creative talent are excluded. Important changes don’t happen automatically. Slavery was abolished because someone fought for it. Gender equality progressed when women stood up and demanded their rights. Discrimination only stops when people mobilize to stop it. However, we must do what we can to empower those seeking change. Internationally, we must have global goals on gender equality and incorporate gender targets in all development efforts.

Environmental equality

Today’s global growth is causing climate change. Rising sea levels and more extreme weather will impact everyone, but especially the poor. The poor are the most dependent on nature for food, water, housing and energy. That makes them vulnerable to the immediate effects of climate change. Sustenance farmers depend on rainwater for irrigation. More severe drought will have a direct impact on their yields. Floods already threaten millions of farmers in fertile floodplains. The good news is that we have the technology required to reduce emissions and adapt to some of the inevitable consequences. From 2020, OECD countries have committed to mobilise USD 100 billion a year for green energy, emission reductions and climate change adaptation. The recently completed Gomal Zam dam project in Pakistan is a great example of green development. The dam will provide electricity, irrigate farmlands, and protect the area from flooding. Much more needs to be done, but success is contagious. All countries should integrate their environmental policies into the development strategies.

International equality

International politics, geopolitical alliances and economic power change over time. What we know is that the south is growing and global power is shifting to the east. Africa, Asia and Latin-America are expected to grow faster than the developed world. An increasingly equal world with broader leadership and more money is good for development. Better co-operation and closer co-ordination will be essential in a multipolar world. The Global Partnership for Effective Development Co-operation is just what is needed. This unique coalition of governments, civil society, the private sector and international institutions aims to co-ordinate global efforts and resources for more effective development.

Development assistance must change to remain relevant in a changing world. The poor will increasingly live in countries whose budgets may dwarf those of many aid providers. ODA must be smarter and provide more bang for every buck. For example, an OECD Tax and Development Programme in Kenya resulted in USD 12.9 million in additional tax revenues by investing USD 10,000 in training for the local tax authority. That is a 129,000% return on investment. Guaranties and low interest loans for infrastructure projects can provide great benefits at no cost to the lender. Aid for trade initiatives can be beneficial to everyone.

Having eradicated absolute poverty, reduction of relative poverty and inequality will become the next big challenge. Equality must be a political goal. Development policies must incorporate gender quality and environmental issues. Global partnerships will become the new norm and development assistance must leverage domestic resources and private finance to be effective.

Erik Solheim took the lead of the OECD Development Assistance Committee (DAC) in January 2013. He also serves as the United Nations Environment Programme’s special envoy for environment, conflict and disaster.