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The Costs of Attaining the Millennium Development Goals *
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The Costs of Attaining the Millennium Development Goals *
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Overall, the microfinance sector is continuing to expand despite tremendous operating obstacles in serving the market in a sustainable way. The lack of access to financial services for households and micro and small enterprises is quite striking in Africa and microfinance institutions are crucial in responding to the unbanked segments. However, the microfinance sector is still relatively small and weak compared to other global regions and despite the huge potential market. In this context, the role of savings banks in microfinance should be recognised and boosted. Furthermore, a distinctive feature of the microfinance sector in Africa is the relative weight. | The Costs of Attaining the Millennium Development Goals Summary Using two different approaches the World Bank estimates that if countries improve their policies and institutions the additional foreign aid required to reach the Millennium Development Goals by 2015 is between 40- 60 billion a year. This estimate is consistent with other agencies estimates of the costs of achieving individual goals such as those for education and health. By itself this additional aid will not be sufficient to attain the goals as many countries will have to reform their policies and improve service delivery to make the additional spending effective. The World Bank s approach to estimating the costs of attaining the Millennium Development Goals MDGs is based on two findings from research and experience in development. First financial assistance is one of many inputs required to reach the goals. In particular given the weak links between public spending on say health and health outcomes overall policy reforms and improvements in service delivery would be at least as important as financial assistance. Second foreign aid is effective in countries where the policy and institutional environment is conducive to poverty reduction. Thus if additional financial assistance were available it should be allocated to those countries that have or are developing policy and institutional environments in which foreign aid will be effective. These two findings imply that we should be extremely careful in interpreting the resource estimates of the cost of attaining the MDGs. The estimates should not be taken as an amount of money which if available would guarantee that the MDGs will be reached. Money is not the only input or even the most important input. If the aid goes to countries with poor policies and institutions it is likely to be wasted. The question we are asking therefore is the following If the necessary changes in policies and institutions are forthcoming how much additional financial resources
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