Development financing

Bringing South-South cooperation into focus: the journey to measurement

06/03/202020/06/2025 sonia

SDG indicators

Goal 17: Partnerships for the goals

Target 17.2: Developed countries to implement fully their official development assistance commitments.
Indicator 17.2.1 Net official development assistance, total and to least developed countries.

Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
Indicator 17.3.1 Additional financial resources mobilized for developing countries from multiple sources.

Heads of state and government gather at FfD44th International Conference of Financing for Development this year¹ to reshape the global financial architecture for sustainable development. Amid mounting global challenges, from geopolitical tensions and related refugee crises to climate shocks and systemic financial risks, the conference seeks to catalyse a renewed commitment to equitable and resilient financing. While ODAOfficial Development Assistance (ODA) are resource flows to countries and territories which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms (implying a minimum grant element depending on the recipient country and the type of loan). In addition to financial flows, technical co-operation is also included -—
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—-. to developing economies is failing to reach commitments, new solutions are sought. South-South cooperationBroad framework of collaboration among countries of the Global South in the political, economic, social, cultural, environmental and technical domains -—
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—-. SSC involves diverse domains in the global South, both financial (e.g., grants and concessional loans) and non-financial (training, technical cooperation, humanitarian assistance) modalities and is guided by principles such as horizontality, solidarity, respect for sovereignty, country ownership, complementarity, mutual benefit, equity, transparency, and accountability -—
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—-. Data on related issues like trade and FDI among the global South are also provided by UNCTAD., grounded in peer-to-peer partnerships, knowledge exchange and non-financial support, plays a critical role in sustainable development for all, reinforcing other mechanisms.

Table of contents

Official Development Assistance turning downwards, increasing the gap to agreed targets

Despite recent growth, longstanding aid commitments remain unmet. In 2024, ODA fell by 7.1% in real terms compared to 2023 – for the first time in five years – declining to $212.5 billion -—
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—- and representing just 0.33% of donor countries’ GNIGross national income², a sharp reversal from previous modest gains.

For the first time in five years, ODA fell in 2024 (-7.1%).

For , 2023 marked a further ODA decline in an already stagnant decade (figure 1). These levels fall far short of what is needed to support sustainable development for all. Net bilateral flows to LDCs were $35 billion in 2023. The spending gap to achieve, for instance, education transformation was estimated at $5 756.8 billion for LDCs per year, and $20.6 billion for inclusive digitalization -—
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—- ³. ODA plays an essential role, often serving as catalytic funding in areas where private investment is scarce. For some vulnerable countries it is the only reliable source of external financing making it indispensable for achieving the 2030 Agenda.

Figure 1. The falling ODA has increased the gap: disbursements now less than half of what developed economies have committed to

ODA as a percentage of GNI ( 17.2.1)

Source: UNCTAD calculations based on -—
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Notes: 2024 is not shown in the LDCs graph as ODA data by detailed recipient are not yet available.

The previous increases of ODA were driven by conflict-related aid, e.g., to Ukraine, and in-donor refugee costsIn-donor refugee costs include the cost for the first year of receiving refugees and asylum seekers in donor countries. OECD DAC rules have allowed DAC members to report in-donor refugee costs as ODA for decades, but it was considered an exceptional item of ODA reporting, not envisaged to be a major component -—
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—-., and their decrease has contributed to the fall in 2024. This decline was further impacted by reduced contributions to international organisations and lower levels of humanitarian aid. Amidst these shifts, ODA with climate objectives has gradually increased over the past decade, reaching nearly $50 billion in 2021/2022 -—
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—-. Climate financeClimate finance aims at reducing emissions and enhancing sinks of greenhouse gases, aims at reducing vulnerability, increasing adaptive capacity, and mainstreaming and increasing resilience of human and ecological systems to negative climate impacts, and includes financing for actions identified in a country’s nationally determined contribution, adaptation communication, national adaptation plan, long-term low-emission development strategy or other national plan for implementing and achieving the goals of the Paris Agreement and the objective of the Convention. -—
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—-, a broader concept accounting for both bilateral and multilateral flows, including export credits and other public funds and mobilized private finance, surpassed $100 billion annually for the first time in 2022, hitting almost $116 million -—
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—-. Despite this strong growth, the urgency for developed economies to scale up climate finance provided to developing economies remains high, especially in light of evolving dynamics in international development cooperation.

South-South data supporting strategic allocation of resources to reach the 2030 Agenda

South-South cooperation, alongside other international development support, is key to achieving the 2030 Agenda, but is the only form of development cooperation lacking systematic data. This hampers its strategic management and the effective allocation of flows to achieve sustainable development.

Figure 2. UNCTAD has engaged in close collaboration with partners to advance work on SDG indicator 17.3.1

Source: UNCTAD.

Momentum to measure South-South cooperation is rapidly building following the endorsement of SDG indicator 17.3.1 in March 2022 at the UN Statistical Commission -—
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—-, and its voluntary ‘Conceptual Framework to Measure South-South Cooperation’ -—
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—-. Developed by the South for the South, the UN Framework can enable globally balanced, inclusive and representative information on development support through reporting of South-South data to the SDG indicator, first time alongside data on North-South flows which have existed for decades.

The new UN Framework enables globally balanced, inclusive and representative South-South data.

Interest in measuring South-South cooperation is quickly increasing. The first expert meeting in July 2023 in Brasilia brought together 16 member States, and in June 2024, 66 developing economies met in Doha. Four countries have reported preliminary South-South data in the ’Framework’ and eleven are pilot testing it in 2025 (map 1). Early data by pioneering countries confirm non-financial support as essential to South-South cooperation, with scholarships, humanitarian assistance and technical cooperation reported most frequently, targeting (ordered by number of reported activities) SDGsSustainable Development Goals 4 (quality education), 9 (industry and innovation), 8 (decent work and economic growth), 17 (partnership for the goals) and 3 (enhancing health), showcasing the diversity of South-South cooperation.

Early pilots showcase non-financial support is an essential South-South cooperation modality.

UNCTAD leads a Development Account project⁴ carried out with the UN Regional Commissions, , and to support countries of the South in collecting and reporting South-South data through the new Manual -—
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—-. The project enhances developing economies’ capacities to collect data on their mutual support flows, and use it for multiple analytical, policy information and reporting purposes.

Map 1. Pioneering and pilot countries are driving South-South data measurement

Source: UNCTAD, ECAUnited Nations Economic Commission for Africa, ECLACUnited Nations Economic Commission for Latin America and the Caribbean, ESCAPUnited Nations Economic and Social Commission for Asia and the Pacific, ESCWAUnited Nations Economic and Social Commission for Western Asia.

Note: Situation reflected on the map as of April 2025.

Notes

4th International Conference on Financing for Development Sevilla, Spain | 30 June – 3 July 2025; https://financing.desa.un.org/ffd4
Developed economies have committed to a target of 0.7% of ODA/GNI and 0.15 to 0.20% of ODA/GNI targeted to the LDCs -—
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The cost estimates presented are extrapolated values derived by scaling a population-weighted median of per capita costs from sampled LDCs to total LDCLeast developed country population.
Project website: https://stats.unctad.org/measuringSSC.

References

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