Sign the letter to help finance millions pulling themselves out of poverty
Flickr: Laura Stokes Estrada
I know what you’re thinking. Ugh. I don’t come to this website to read the same articles as my dad/mom or articles that don’t use the word poop. But I need to make something clear to you right off the bat: In order for us to accomplish all the other amazing, worthy, goals you read about on this site, you need to think about where that money is coming from and how we can get more of it in cool, innovative ways. And who doesn’t like talking about money anyways!?
What is Innovative Finance?
Let’s start with something more familiar, the traditional forms of public and private development funding. Like when a Prime Minister gets up on a concert stage in front of 60,000 people with some awesome musicians and pledges $1 Billion for child health...for example.
Yea, that happened. Source: Gavi.org
This type of funding, known as Official Development Assistance (ODA), is a vital resource in the campaign to solving the world’s gravest social issues. Even though it totaled $135 billion last year, it’s simply not enough. The international community today agrees that new forms of financing are essential if we want to achieve the Sustainable Development Goals and end extreme poverty by 2030.
To meet the needs of the poorest people on our planet, we will need to harness the opportunities offered by the changing global economy. The theory behind Innovative Finance is founded on a reduced role for government led ODA and a much larger role for the private sector in development. In short, the world can no longer rely on charity alone, whether it comes from the private or public sector.
Occupy Wall Street; David Shankbone
Having flashbacks of Occupy Wall Street protests? Of the financial excesses and beguiling “innovations” that not long ago brought the worlds’ economies to their knees? Well stay with me. There is a way to use financial innovation for good, and with a potential for massive impact at very little cost to consumers and institutions alike.
To sum it up in encyclopedic terms: “Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions.” (Thanks World Bank, 2009).
Ok, now that we have that definition out of the way, I can talk about an amazing example that has proven incredibly effective. One that YOU have probably participated in and didn’t even realize. Then you’ll see why this is so important.
Since 2006, the global health initiative UNITAID has raised an astonishing $2 billion from a 1€ levy on air tickets leaving France and 10 other countries. What this means is that every time a traveler purchases an airline ticket, they are contributing 1€ to the fund. The sum is virtually invisible to consumers and, importantly, airlines have reported no negative consequences for their business. But the impact has been exceptionally powerful so far.
The funds raised are invested in initiatives to fight HIV/AIDS, tuberculosis, and malaria. Today, there are now 700,000 children living with HIV who are receiving proper medication and care (compared to only 10,000 receiving that care in 2006). The money has ensured 351 million treatments of malaria and similar action against child tuberculosis.
Well done UNITAID, well done. Source: Seronet
There are now two new initiatives that Global Poverty Project, in partnership with the Innovative Finance Foundation, are rallying behind. And this is where you can help.
Today, one quarter of the world’s children (162 million) under age 5 suffer from chronic malnutrition. In Africa, it is the leading risk factor for death and disability among children.
UNITLIFE will work as a micro-levy, or really small added fee. Multiple African countries have already agreed to the initiative of using a small solidarity levy in extractive industries (oil, gas, mining, etc.) to combat chronic malnutrition. In the oil industry, for example, the sum collected would be a nominal $0.10 per barrel of oil.
If expanded to eight African countries, the 10-cent oil levy would generate $100-200 million per year, and a worldwide rollout would generate at least $1.64 billion a year. These revenues would go towards a fund dedicated to ending childhood malnutrition and related deaths.
2. Financial Transaction Tax
Since the outbreak of the recent economic crisis, interest in a financial transactions tax (FTT) has increased dramatically.
By implementing a very small tax on each trade of stocks, bonds, derivatives, and other financial instruments, high-income countries can raise massive revenues for international development, while at the same time naturally curbing short-term financial speculation.
Let me tell you right now, this will not be an easy sell. In countries like the US and UK (global trading centers), this is a political nightmare. But as someone who worked on the buy and sell side in finance, I can tell you I’m completely behind this.
I’m going to try to use the word “tax” as little as possible - it tends to spook people. The imposition would be an incredibly low percentage, negligible to the vast majority of individuals and institutions aside from the funds engaging in incredibly high-speed trading. The type of trading that leads to stock market crashes within the span of a few minutes. I might get some heat for this from those of you in the finance sector, but all I can say is...DISCUSSION SECTION! (Which I won’t read because people are mean).
What Can Global Citizens Do?
The French government and ten other European countries have already put in place a financial transaction tax. France has voted to allocate part of the proceeds to development, and we are now asking those ten other nations to do the same.
Join me in calling on these countries to commit 30% of this transaction tax to development in the TAKE ACTION on the side of this article
Innovative finance mechanisms have proven that it is possible to achieve real impact through small, sustainable contributions. That there is a way to engage millions of individuals and institutions to produce sustainable aid funding. Help this innovation become the standard by signing the petition asking European finance ministers to allocate revenue from the Financial Transaction Tax to poverty reduction efforts.