$1.4tn a year needed to reach global goals for world's poorest

Mark Anderson

It will cost $1.4tn (£920bn) a year to end extreme poverty for 700 million people and meet the other ambitious targets enshrined in the world’s new development agenda, the UN says.

The 17 sustainable development goals (SDGs), agreed by world leaders in September, also include aims to stabilise climate change, achieve gender equality, bring about food security, boost access to energy and give everyone clean water and sanitation.

To meet these targets, more than $1.4tn must be poured into low- and lower middle-income countries. Investment will be required in health, education, agriculture and food security, social protection systems, energy, infrastructure and ecosystem management, according to a report by the UN’s Sustainable Development Solutions Network (SDSN).

The most expensive investment is projected to be infrastructure. Rolling out telecoms infrastructure and granting access to modern energy will cost a combined $743bn every year, the report said. “It’s infrastructure – particularly energy and transport – that are the most important [investment areas],” said Guido Schmidt-Traub, executive director of the SDSN and co-author of the report.

Previous estimates put the cost of meeting the goals – across all countries, regardless of income level – at as much as $11.5tn every year.

“It came as a welcome surprise to me that the financing needs [of low- and lower middle-income countries] are lower than is often reported, and lower than even I had thought at some point,” said Schmidt-Traub, noting that his study found more overlaps in investment areas than previously thought.

If different areas of investment are carved out and development priorities are properly defined, the world is much more likely to achieve the SDGs, Schmidt-Traub said. “Financing needs of $1.4tn in low- and lower middle-income countries are substantial, but they can be financed if governments set the right policy frameworks.”

Low- and lower middle-income countries can raise $654bn through private sector financing and $836bn from public funds, the report said.

Low-income countries are defined as those with a gross national income (GNI) per capita of $1,045 or less. Lower middle-income countries have a GNI per capita of between $1,046 and $12,735.

Countries need good domestic policies, rule of law and an effective regulatory framework in order to raise tax revenues that can pay for development programmes, the report said. It added that this should be complemented by a healthy private sector that can create jobs and generate funding. The study also urged governments to invest in infrastructure, education, health services and roads.     

According to the report, “Achieving the SDGs in [low- and lower middle-income] countries will … require not only significant increases in domestic resource mobilisation and private investments, but also expanded international concessional and non-concessional public finance.”

A comprehensive financial tracking system must be developed so policymakers know where funds are being channelled, the report also said. “The international community, perhaps through UN organisations, should systematically track public and private investments in the SDGs and compare these flows against projected investment needs from SDG needs assessments.”

The report used figures from research by the World Health Organisation, the Food and Agriculture Organisation, the World Bank and academic studies to paint a portrait of the overall investment needed to meet the SDGs.

The report did not take into account required investments in social protection, large-scale water supply and sanitation infrastructure, incremental investment needs for climate change mitigation and adaptation for ecosystems, and changes to the composition and scale of current infrastructure investments.

It also said emergency response and humanitarian work were projected to be entirely funded by public financing.

The international community should develop “consistent and coherent” policies on trade, financial regulation, transfer pricing, tax evasion, money laundering and transnational crime, Schmidt-Traub said.

“We are in an immeasurably better situation [now] than at the launch of the millennium development goals, [when] the world lacked a robust understanding of the investment needs,” he said. “By filling the remaining knowledge gaps, we can move to a serious and honest discussion about how to finance the goals. And we will see that this is very doable.”

• This article was updated on 18 November 2015 to clarify that the report projected that $743bn will be needed every year for telecoms infrastructure and to grant access to modern energy to low- and lower middle-income countries. Also, we have made it clear that the $11.5tn estimated cost of meeting the SDGs was for the entire world, not just low- and lower middle-income countries.