We’ve reviewed the [1] proposals of the [2] UN Millennium Project, the top-level think-tank set up by [3] Jeffrey Sachs and [4] Kofi Annan to recommend ways for the world to meet the [5] Millennium Development Goals. Like Sachs’ [6] personal plan for ending poverty by 2025, it’s a considerable shopping-list of investments and reforms to be heavily supported by rich-country aid. So let’s get down to the nitty-gritty and see how much it will all cost - and why the Project believe it’s worth it.

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To calculate the aid needed to achieve the goals, of course, breaks down into two calculations: the total cost of the project, minus the level of extra spending poor countries can afford to provide themselves. The report recommends a detailed assessment process for each country to calculate its needs and ability to spend, so a hard-and-fast number wouldn’t be available until that process was complete. However, to get a sense of it, the Project worked with local organisations to come up with “needs assessments” for five countries including, most usefully for our purposes, Ghana. The basic costs for all low-income countries studied were similar, although the balance of different spending priorities differs. Here’s a detailed look at Ghana’s plan. (p56)

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You can click for a larger view. As you can see, education and health are the main investment priorities, closely followed by energy and transport infrastructure. In terms of funding, the level of aid required (bottom row) increases consistently up to 2015. Note, however, that the level of funding from Ghanaian households and the government also increases. In fact, the report estimates governments will be able to spend 4% more of GDP - that’s a considerable increase in government budgets - on investments to meet the goals by 2015. This would be met by new taxes and re-directing current low-priority spending. So this isn’t a free lunch.

What do these calculations translate into at global level?

The report - which was published in early 2005 - estimates that financing every low-income country to meet the MDG’s would cost $73 billion in 2006, with annual spending rising to $135 billion by 2015. However, there are a host of other costs: $10 billion to support middle-income countries like Brazil and India, spending on staffing and running aid agencies, debt relief, etc. In total, the cost of meeting the MDG’s everywhere is for $121 billion in 2006, with annual payments rising to $189 billion in 2015. The table below shows the costs laid out.

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So that’s the amount of aid needed, right? Well, not quite. Some existing aid can be “reprogrammed” to meet the MDG’s, which takes a bit off the figure; but equally, some existing aid needs to be maintained that isn’t strictly goal-related. What’s more, to help all low-income countries to meet the goals won’t be possible; governments that don’t show the necessary planning, and commitment to democracy and human rights, won’t be eligible for help.

With these adjustments, we get a final figure of $135 billion in 2006, with annual spending rising to $195 billion in 2015. As the table below shows, this is substantially more than the current levels promised when the report was published. (p57)

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So what does this work out as, in real money? Well, it’s between 0.44 and 0.54% of rich countries’ GNP. So this is still short of the 0.7% of GNP we’ve been promising for aid for around thirty years. To put it another way, it’s around double the current level of aid. This roughly chimes with the [10] report of the [11] Commission for Africa, who proposed providing another £25 billion (around $50 billion) of extra aid now and more after 2010.

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Of course, this doesn’t mean donors don’t have to reach 0.7%. The table above doesn’t include many things currently receiving major aid, such as spending in countries of geopolitical importance, like Afghanistan and Iraq. To accommodate that spending on top of the MDG spending would probably need aid of 0.7% rich-country GDP by 2015.

Since the 0.7% target was agreed in 1970, it has been reaffirmed several times, most recently in 2003. But so far, only five countries -[12] Denmark, Luxembourg, Netherlands, Norway and Sweden - have reached the target. Several other countries, including Britain, have timetables to meet it by 2015. But the US, which because of its vast economy would account for almost half of the total extra aid needed, is [13] currently at less than 0.2%. The report endorses Gordon Brown’s plan for an [14] International Finance Facility to front-load aid by issuing bonds based on donor commitments. In other words, bonds are sold on the market that give the buyer the right to receive future aid, and the money raised can be given right away to poor countries.

The benefits of meeting the goals

Is it worth it? The report certainly thinks so. Meeting the goals means a host of changes of great benefit to the world’s poorest people:

• 300 million more people lifted out of poverty between now and 2015 than on current trends; In Africa, 150 million people lifted out of poverty, as opposed to an increase of 75 million in the number of extremely poor people under current trends
• 230 million fewer people undernourished than on current trends; in Africa, 75 million fewer; as opposed to 25 million more on current trends
• 3.4 million fewer children dying each year, the benefits seen almost entirely in Africa

HIV infections, deaths in pregnancy and childbirth, slums, and poor sanitation would all be reduced. Plus, the report notes, millions of people, particularly women and girls, would have increased rights and opportunities, and the environment would be better protected. (p60-62)

What’s more, the goals are a step on the way to eliminating extreme poverty altogether. If countries maintain 0.7% GNP aid after 2015, the report argues, extreme poverty can be “substantially eliminated” by 2025. Here the report is unsurprisingly in agreement with the Project’s director, Jeffrey Sachs. (p60)

In addition, the report argues, there are security benefits to achieving the goals. Poverty is linked to state failure, conflict, excess migration and other causes of instability. And, the report argues, poor countries’ faith in the international system - already impaired by previous broken promises on aid - will be lost entirely if the goals aren’t supported. “If we do not act now,” it says portentously, “the world will live without goals.” (p64)

So that brings to an end our long trawl through the poverty proposals of Jeffrey Sachs and the UN Millennium Project. I’ll prepare a quick one-post summary of the key points for reference. Then, we’ll look at some of the critics of Sachs’ proposals, and what it is they dislike.