Sector Financing in the SDG Era

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The Sustainable Development Goals (SDGs) are highly intertwined with sectors such as health, education, energy or agriculture. Hence, measuring official development finance (ODF) flowing to sectors is critical to designing efficient development strategies in the SDG era. Yet, this exercise is complex, and this report is a first attempt to provide a comprehensive picture of ODF allocations by sector.

The analysis includes not only official development assistance (ODA), but also other official flows (OOF) and resources mobilised from the private sector by official development interventions. It provides unique data for the period 2012-16 on sectors financing by country, type of instrument and channel of delivery. It looks into potential data gaps and the challenge of matching the traditional typologies of donors’ investment by sector with their expected, multi-sectoral outcomes, as framed by the SDGs. The report provides policy makers and sectoral experts with some insights into the implications of the 2030 Agenda for the sectoral strategies of development co-operation providers.



Linking sector strategies to national contexts

This chapter provides an overview of donors’ sector allocations of official development finance (ODF) to different country groups. It focuses in particular on the dynamics and trade-offs between various types of flows reaching developing countries. In doing so it takes into account the scarcity of official development assistance (ODA) resources, their declining trend as countries develop and the compensatory role played by other official flows (OOF) when countries embark on a transition path. The analysis of these trade-offs is a first step towards informing the international development community about patterns emerging in financing for development (FfD) flows to sectors. It aims to contribute to the 2015 Addis Ababa Action Agenda, which called for “scaled-up and more effective international support, including both concessional and non-concessional financing”. The first section of this chapter provides an overview of financing and a more detailed sub‑sectoral analysis of ODF flows for three different income categories (low income countries, lower middle-income countries and upper middle-income countries). The World Bank income categories are: low income countries (LICs), lower middle-income countries (LMICs), upper middle-income countries (UMICs), and high-income countries (HICs). The World Bank classifies countries into these groups based on their GNI per capita using the Atlas method. The current thresholds are as follows: LICs: < USD 1 005 per capita; LMICs: USD 1 006-3 955; UMICs: USD 3 956-12 235 and HICs: > USD 12 236. The DAC defines countries most in need as: least developed countries (LDCs), landlocked developing countries (LLDCs), small island developing states (SIDS) and fragile and conflict-affected contexts (FCs). The second section provides a similar overview for countries most in need (least developed countries, landlocked developing countries, small island developing states and countries in fragile contexts). The chapter concludes by looking at the main policy messages that can be derived from these analyses.




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