Finance development, not oligarchy
As world leaders meet in Spain, a new Oxfam report reveals the private finance takeover of development
Over 50 world leaders gathered in Seville, Spain, this week for The United Nations Conference on Financing Development. Against the backdrop of the G7’s biggest ever aid cuts and the dismantling of USAID, the conference was billed as a once-in-a-decade opportunity to reset and secure financing to fight poverty and climate change through strong public sector investment.
Launched ahead of the conference, Oxfam’s latest report sets out how private finance has taken over development, amidst an astronomical rise in private wealth. It comes as over 40 former and current world leaders warn of extreme inequality, calling for “a new economic coalition of the willing” to tackle inequality.
Financing for development, in numbers
A world in crisis. More than 3.7 billion people (nearly half the world) live in poverty (PPP$8.30 line), over 700 million face hunger, and gender equality will not be achieved for another 123 years. Only 16% of the Sustainable Development Goal (SDG) targets were on track to be met by 2030. Global development is desperately failing while the interests of a very wealthy few are put first.
Soaring inequality. Since 2015, the richest 1%, who own more than the bottom 95% of the world combined, have gained at least $33.9 trillion, enough to end annual global poverty 22 times over. Billionaires have gained $6.5 trillion, more than the $4 trillion estimated annual cost of achieving the SDGs. The failures of the last decade are in no small part the result of the failure to tackle extreme inequality.
Development for profit, not people. While the world has gotten much richer, governments have not. Between 1995 and 2023, global private wealth grew by $342 trillion—eight times more than global public wealth (the net wealth of governments), which grew by just $44 trillion (Figure 1). Global public wealth, as a share of total wealth, actually fell between 1995 and 2023.
A shareholder first development agenda. Development has become an investment opportunity, without generating enough. Even the World Bank chief economist has called “billions to trillions” a “fantasy.” According to the The Multilateral Development Banks (MDB) Task Force on Mobilization, MDBs and development finance institutions (DFIs) mobilised just $87.9 billion of private finance in 2023 in low- and middle-income countries—a meagre sum considering the financing gap estimate of $4 trillion every year.
The Fiscal Fantasy. Public-private partnerships (PPPs) and concepts like “blended finance” and “de-risking” have become ubiquitous. The countries and projects most in need of development funding received an especially small share of private financing due to concerns about the profitability and risk of the projects.
You can read our bulletin about the challenges of privatisation in education and listen to our shocking Sick Development podcast series about the harms of for-profit healthcare by Development Finance Institutions.
Failing to mobilise. In 2023, just $10.2 billion in mobilised private finance went to low-income countries. For each dollar of public finance, just $0.75 of private finance on average, and only $0.37 in low-income countries was mobilised – a long way from the $2-$5 from the private sector that was claimed.
Debt is swallowing national budgets. Low-income countries are spending, on average, more than 50% of their revenue on debt service to rich creditors. Half of low and middle income country debt is owed to private creditors who apply punitive terms. Debt repayments crowd out other priorities, with some countries spending 60% more on debt servicing than on health, education, and social protection combined, and 12.5 times more than on climate adaptation. 60% of low-income countries are on the edge of a debt crisis.
Wall Street in the driving seat. Private finance has taken over the evidence-backed ways to tackle poverty through public investments and fair taxation. Governments must reject private finances as a development silver bullet and band together in new coalitions to oppose extreme inequality.
Trillions of dollars exist to meet the global goals, but they’re locked away in private accounts of the ultra-wealthy. 9 out of 10 people support paying for public services and climate action through taxing the super-rich. Governments take note.
Something to read/listen to
Read Oxfam’s full report here.
Read the letter from 40 former Heads of State and Government calling for “a new economic coalition of the willing” to urgently tackle inequality and “remake our world in response” to “era-defining disruption”.
Watch Greenpeace take over Venice’s Piazza San Marco with a 20-meter banner of billionaire Jeff Bezos ahead of his wedding.