It’s no secret that the world is not living up to its promise for developed countries to deliver much-needed aid to countries that cannot adequately address health, hunger, and educational issues with their domestic budgets.
Despite the fact that the UN General Assembly agreed in 1970 that developed countries would put 0.07% of their gross national income toward overseas assistance, very few have lived up to that promise.
In fact, only four countries hit this target in 2024, with bigger declines expected as the US fundamentally shifts its approach to foreign aid.
At the same time, the drumbeat leading to 2030, the year the world promised we’d achieve the end of extreme poverty, keeps getting louder.
Without countries around the world living up to their promise to dedicate funds from their budgets to this goal, the world needs new ideas for closing the funding gap.
Bucking the Trend
One country which has consistently lived up to its foreign aid commitment is Norway, due to its vast oil and gas reserves and effective management of its natural resources.
Discovered in the early 1970s, Norway has maximized the impact of a massive oil deposit in the North Sea. By building an innovative fund to capture and secure the wealth of the deposit, the Nordic country has enjoyed decades of revenue, all but cementing its financial security as well as its ability to live up to the 0.07% ODA commitment.
In 1983, finance leaders in Norway proposed that proceeds from the oil wealth be kept in a fund for safekeeping and responsible fiscal management. In addition to giving the government more financial flexibility should it ever need it, the fund was also dedicated to securing the health and wellbeing of Norway’s aging population.
The financial impact of this Oil Fund is enormous. It generates healthy returns to help secure the financial future of Norwegians for generations to come.
But some argue that the Oil Fund can and should be doing more for people outside of Norway as well, especially during a time when global economies are pulling back. This has created a leadership vacuum, which Norway could step up to fill.
Political Will for Global Gain
Right now, there isn’t a direct line of revenue coming from the Oil Fund being applied directly to global aid needs.
But the Nordic Government Pension Fund is still advancing the SDGs in some ways, says Eirik Mofoss, the Managing Director of Tank Langsikt, a think tank in Norway.
The fund does this, he says, by investing in companies that prioritize climate and other sustainability initiatives.
“The Fund, which holds approximately a 1.5% stake in all publicly traded companies worldwide, already partly recognizes that addressing the Sustainable Development Goals directly protects its extensive financial interests from risks that it can not hedge against in any other way,” Mofoss told Global Citizen.
That said, Mofoss thinks there is more the Oil Fund can do, if there was political will.
“Proactively investing in assets and infrastructure that address global challenges, such as green technology, more sustainable food systems and research and development,” Mofoss said, “could yield higher long-term economic returns” and leave the world’s systems stronger for it.
But there are some barriers, he said, including the Oil Fund’s strict investment mandate, which is primarily a mandate that the fund maximize its returns. He also said there lacks political will to change this mandate, due to the fear of financial risk, and because of the global political climate.
“Overcoming these barriers would require clear political decisions, adjustment of investment guidelines, and broader acceptance that investing strategically in global sustainability issues is directly aligned with Norway’s long-term financial interests as an universal investor,” Mofoss said.
Bigger Ideas for Global Aid
Hans Jacob Huun Thomsen, who works with the Norwegian think tank Civitas focusing on global aid, agrees that shifts in how the Oil Fund operates to support global aid initiatives, may be viewed as too political.
“While international diplomats and heads of state often discuss the Fund as a kind of political bargaining chip, there is broad consensus in Norway that the Fund should not be used as a political tool,” Thomsen said.
However, he thinks there are changes that could help leverage the Fund for global aid efforts.
“One low-hanging fruit is to remove the geographical restrictions on the Oil Fund's investments,” Thomsen told Global Citizen. “Currently, the Fund is allowed to invest up to two percent of its capital in unlisted renewable energy infrastructure. However, due to risk assessments, these investments are restricted to advanced economies in Europe and North America.”
That means other regions are being left in the dark, including the 600 million people on the African continent who don’t have access to electricity today. Without electricity, education, healthcare, nutritious meals, and prosperity are harder to come by.
And, Thomsen argues, it’s actually a bad investment choice — figures from 2024 show a 9.8% loss on these investments.
In comparison, Norway’s Climate Investment Fund (a separate development-oriented institution), reports an average return of 14.4% on investments made in low- and middle-income countries. While not an apples to apples comparison, this shows the opportunity for investment in less developed economies is there.
Thomsen recommends that the Oil Fund delegate part of its renewable energy investments to the Climate Fund, which, he argues, would help cut emissions, continue strong investments for the fund, and create a positive impact on poverty-reduction efforts.
Further, Civitas has proposed that a small portion, 0.25%, of the Oil Fund be invested in climate finance.
“Such initiatives could improve the lives of tens of millions through clean energy access, climate-resilient agriculture, or by preventing displacement due to climate change,” Thomsen said.
If the same small portion was applied to poverty, health systems or refugee crises, Thomsen argues, the impact would be substantial.
What’s Next?
One throughline of this exploration of the Oil Fund is political will. Norway has historically not waded into geopolitical waters, and in today’s climate, any shifts may be seen as political, even though global citizens know that it’s not political to help people who can’t access clean water, nourishing food, or clean air to breathe.
As countries retreat from global aid, one hopes that Norway will find the courage to step up and take action.