Where are the concrete plans for action in the development finance deal?

The article was initially published by The Guardian on July 16 2015

Start with the good news from this week’s finance for development conference in Addis Ababa: at least it got the narrative right. Three key messages stand out. First, that no one gets left behind: governments committed to a “global social compact” that promises universal access to social protection, a crucial way of unlocking the sustainable development goal of ending extreme poverty by 2030.

Second, that everyone has a part to play in financing development: the private sector (emphasised much more powerfully in Addis than in the 2002 Monterrey Consensus), aid donors both old and new, and developing countries themselves as they increase tax revenues.

And third, that the only development worth having is sustainable development: correcting an omission in the Monterrey Consensus, which barely mentioned environmental issues, and climate not at all.

But as far as concrete actions are concerned, there’s no debate on whether the glass was half full or half empty: it was dry.

Developed countries came across as deeply hypocritical in being ready to sign up to the soaring ambition of the sustainable development goals but not – according to the Addis Ababa Action Agenda – to any significant additional actions to bring them to life.

Nor were the emerging economies any better. Rather than championing proposals from the least developed countries, they focused on pointless battles with developed countries over language in text that would have made zero difference to poor people even had it been included.

But while it was always going to be hard to make a decisive breakthrough in Addis – with too few senior policymakers present, too little noise from civil society, and too little media coverage to put politicians under pressure – the good news is that none of those things will be true of the SDG summit in New York in September.

Almost all countries will send their heads of government. The Pope’s presence will guarantee blanket media coverage. NGOs are preparing a massive mobilisation. To capitalise on this moment of opportunity, campaigners need to focus on asks in a few key areas, with a mixture of political quick wins, and longer-term transformation agendas. What might these be?

First, tax. While the idea, discussed in Addis, of an intergovernmental tax committee at the UN has real flaws, this week’s controversy on the issue has shone a valuable spotlight on the fact that the OECD – a developed country club – cannot be the place where global norms on tax that affect every country on earth are set.

At the same time, we also still need greater transparency on who really owns companies (“beneficial ownership”), and for multinationals to report revenue on a country-by-country basis – not just to tax authorities, but also publicly.

Second, the private sector. Business has a crucial role to play in the SDGs: it creates 60% of GDP, 80% of capital flows, and 90% of jobs in developing countries, after all. Yet with a few exceptions, like Unilever’s Paul Polman, businesses have been oddly shy of showing leadership on the SDG agenda.

But while more CEOs need to step up, they also need to do more than just call for better “enabling environments” for the private sector, essential though those are. It would be welcome if they were to add their voices to calls for a fairer global tax system, for instance, or be more vocal in calling attention to market failures that only governments can correct.

On that note, and this is my third key area, governments need to be pushed much harder on how they will deliver the sustainability aspects of the SDGs. By 2030, we need to be well on the way to a circular economy, in which everything is reused and nothing is wasted. In practice, this means transforming tax systems towards taxing things like emissions or pollution, so that prices “tell the truth” about environmental impacts.

Global climate policy, meanwhile, desperately needs to be founded on a science-based global emissions budget – instead of the failed incremental approach that has seen global emissions rise 60% since 1992.

If such an emissions budget were shared out fairly – on an equal per capita basis – then emissions trading within could also unlock a massive new source of development finance. Forthcoming research from the Centre for Global Development estimates that by 2025, low-income countries could make $153bn a year from emissions trading – while also making it cheaper for high emitters to meet their commitments.

That could in turn help with a fourth priority: financing the global social compact that governments promised in Addis, and which the Overseas Development Institute estimates would cost around $148bn a year. The case for developed countries to spend 0.7% of national income on aid hence remains as strong as ever – as does the argument for spending at least 50% of aid in least developed countries.

Fifth and finally, campaigners need to push for developed and emerging economy governments to take a much more global, long-term view in domestic policy decisions.

As important as aid is, its development impact is far less than policy decisions on areas like migration, trade, intellectual property, arms sales or financial regulation. Campaigners will have plenty to keep them busy between now and 2030.

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Jul 16, 2015
Alex Evans