Paying for progress: how will emerging post-2015 goals be financed in the new aid landscape?

Working and discussion papers
March 2013
Romilly Greenhill and Ahmed Ali

This paper explores options for financing some of the potential post-2015 goals within the changing development cooperation landscape.

It focuses on five sectors which are likely to be included within any successor to the Millennium Development Goals (MDGs):  education, health, water and sanitation, sustainable energy and food and agriculture. In each sector, the paper reviews the literature to identify potential goals which may emerge. It then explores the role of development finance in making progress towards these goals; the orders of magnitude of finance that may be required; the role and effectiveness of different sources of finance; and the potential of these sources to be scaled up to fill the identified financing gaps.

The paper concludes that, despite dramatic changes in the development cooperation landscape, government spending by developing country governments and Official Development Assistance (ODA) will still be critical in meeting financing gaps in these five sectors. Other sources of finance such as South-South Cooperation, philanthropy and private flows can be important in some sectors, but none can entirely substitute for government spending and ODA.

Moreover, governments in low-income countries have only limited capacity to mobilise additional resources or to re-prioritise existing spending. This means that traditional ODA is likely to be needed for some time to come if the likely goals in these sectors are to be met.

The paper concludes by identifying the potential implications the international community of these findings for as it takes forward discussions on the post-2015 goals.