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Richest countries urged to follow UK's lead and increase aid spending to alleviate extreme poverty

Anne Gulland
A child is vaccinated in the Democratic Republic of Congo - Phil Moore/Gavi

Extreme poverty could be eradicated if poor countries increased taxes and the richest governments followed the UK’s example and met aid spending targets, a report has said. 

An analysis by the Overseas Development Institute (ODI), a think tank, has shown that by 2030 some 430 million people will be living in extreme poverty - classed as living on less than $1.90 a day. 

However, the report shows that these high levels of extreme poverty could be eradicated if governments of poorer countries increased taxes by a quarter and the world’s richest nations met the United Nations target of spending 0.7 per cent of gross national income (GNI) on overseas aid.

Poorer countries also need to target their spending better and commit to allocating 50 per cent of public spending on education, health, nutrition and social protection.

The report says that 46 countries cannot end extreme poverty on their own and to fill this gap the world’s richest nations must meet UN aid commitments.

Currently, the UK is the only member of the G7 group of the richest nations to meet the 0.7 per cent target.  

Germany is the G7 country closest to meet the spending goal at 0.61 per cent, followed by France on 0.43 per cent. The United States spends just 0.17 per cent of GNI on overseas aid but in absolute terms it has the world’s biggest aid budget - $34.26 billion in 2018, compared to the UK’s $19.4bn.

Marcus Manuel, lead author of the report and lead researcher at the ODI, called on other countries to follow the UK’s lead.

“If the UK can do it in the middle of austerity and all the challenges we have got, it’s not asking for the impossible for other countries to increase their aid budget,” said Mr Manuel.

Nearly half of the world’s poorest people are in middle income countries such as India and Nigeria, which could increase tax revenues.

“This is all feasible and a lot of effort is going in to help share experience between countries so they can raise taxes without penalising growth,” added Mr Manuel.

“There’s a range of things countries can do. Business taxes and value added tax may be very limited. Countries may have income taxes but not many people pay it,” he said. 

The report also says that the proportion of aid going to the poorest countries needs to increase from a quarter to a half. 

“We’re not talking about raising trillions of dollars. It’s a political choice about how aid money is spent,” said Mr Manuel. 

The report says that Ireland has the most effective aid budget in terms of alleviating poverty - around 70 per cent of its aid is targeted in this area, compared to around 40 per cent from the UK.

The majority of UK aid funding is disbursed by the Department for International Development and is judged to be effective at alleviating poverty. But a report earlier this year found that allocating the aid budget to other departments such as the Foreign Office has led to money increasingly being spent on middle-income countries.

The ODI report concludes: “Global leaders have committed to ending extreme poverty. But the prospects of delivering on this commitment are dwindling as we fall further and further behind.”

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