FRAGILE STATES 2014:
DOMESTIC REVENUE MOBILISATION IN FRAGILE STATES
THIS IS A CRUCIAL TIME FOR FRAGILE STATES.
They are the ones furthest away from the Millennium Development Goals. They will be home to more than half of the world’s poor after 2018. Yet the aid they receive is shrinking, and they have limited access to alternatives for ﬁnancing development such as remittances and foreign direct investment. The domestic revenues they raise are not enough. Evidence in this report suggests that fragile states mobilise less than 14% of their GDP in tax revenues – a level the United Nations deems to be inadequate to achieve the Millennium Development Goals. Yet accountable tax systems are perhaps more crucial in fragile states than anywhere else. Domestic revenues are not only a way out of aid dependency – they are important for building mutual accountability between citizens and states. The 2014 Fragile States report is a wake-up call for development co-operation providers: it is time to invest more in the capacity of fragile states to mobilise their own revenue to support statebuilding and peace. In international fora held at Monterrey and Busan as well as at the G20 Summit in St. Petersburg, donors aﬃrmed that support for domestic revenue mobilisation is a priority, but this commitment has not been translated into reality. In fact a very small sum – only 0.07% of all aid – is targeted toward building accountable tax systems in fragile states, despite the fact that investments in this sector can yield impressive returns. Domestic resource mobilisation is a top priority of both the Global Partnership for Eﬀective Development Co-operation and the New Deal for Engagement in Fragile States. We trust the evidence in this report will assist them and many other actors to address the challenges. We are convinced that by working together solutions can and will be found that ﬁnance development, including by drawing on the wealth in fragile states. We hope this work can also be taken into account by Member States as the turn their attention to the post-2015 development agenda. Fragile states and the many poor who will live within their borders deserve no less.
Erik Solheim Tobias NussbaumJordan Ryan
Chair, Development Assistance Committee (DAC), Organisation for Economic Co-operation and Development (OECD)Director General, Development Policy, Department of Foreign Aﬀairs, Trade and Development, Co-Chair of the DAC International Network on Conﬂict and Fragility (INCAF) Assistant Administrator and Director, Bureau for Crisis Prevention and Recovery, United Nations Development Programme (UNDP)Co-Chair of the DAC INCAF