Steve Lewis, Head of Policy Advocacy blogs ahead of travelling to one of the most important international conferences in 2015. With just a week to go until the Financing for Development (FfD) conference in Addis Ababa, Ethiopia, countries are finalising their negotiating positions. The conference, which begins next Monday 13th July, is seen as a crucial milestone to determine if the financial resources will be available for the next fifteen years of development work. This September, in New York City, the new Sustainable Development Goals will be agreed, but a shiny new set of goals will be of little value if there is not a solid funding plan behind them. In the run-up to FfD in the UK, Justine Greening, the Secretary of State for International Development, spoke about her priorities in a speech last Thursday. On aid she said “we urge more countries to step up to the plate and meet the commitment to devote 0.7% of national income to development”. In her statement she is very clear that aid alone is not enough. “Lifting a billion people out of poverty will take far more than global development budgets can ever provide. To deliver the SDGs…we are going to need to attract trillions of dollars a year in investment from governments and, crucially, from the private sector.”
So what needs to happen next? “We’re all talking about the Beyond Aid agenda... acknowledging that while aid is still necessary it’s not sufficient either for the next development leap, either in its scale or in its nature” continues Justine Greening. In the new FfD era there are more sources of finance – such as increased domestic mobilisation of resources, and also potential affitional sources such as remittances and foreign direct investment. Some of these are under national control but much needs international action, as Greening states: “We require global action on tackling corruption, illicit financial flows and tax evasion … all absolutely critical issues for the world’s poorest”. In the new era of development, the Minister emphasised that there are more ‘players’ on the development scene than ever before: governments, donors, NGOs, philanthropists, and the private sector to mention just a few. She noted the success of Gavi, the Vaccine Alliance, and the Global Fund to fight AIDS, TB and Malaria as examples of agencies that successfully bring together all these partners. However, not everyone is optimistic about the FfD conference. Negotiators from scores of countries have been working on the draft outcome document for many months – there were originally three rounds of debate scheduled, but there have already been three additional drafting sessions. It seems likely that negotiations will continue right up to the wire, in Addis itself. RESULTS UK staff have been collaborating with other experts in development finance, working within BOND, the umbrella association of development NGOs in the UK. The group has been studying the various drafts of the final ‘Outcome Document’ – the document agreed upon by states at the conference which will guide development finance policy for the foreseeable future. Unfortunately in some paragraphs we would say that the document is getting weaker - less specific – as we approach the conference itself. For example, the Outcome Document call’s for donor nations to reach 0.7% of GNI for aid – but without specific time commitments. Some of the calls on tax, governance and transparency have been weakened, and the document so far lacks specific steps to hold governments to account on pledges made in Addis. There is a general feeling that leaders from the global South are taking the conference more seriously than donor nations, for example, while dozens of African and Asian Prime Ministers will attend, from the UK neither the Prime Minister nor the Chancellor of the Exchequer is attending, and there is a similar story from most of the richer countries. In their position paper released last week the BOND FfD group recognised that, “[FfD3] could be a real turning point for sustainable development and help build a future that is more equal, safer and more prosperous for all. But this will only happen if ambition is met with equal action.” As well as calling for high-level UK attendance, and global ambition on increased aid, the group emphasise the importance of improving tax transparency and governance. Tax is of crucial importance to development. It is now recognised that domestic mobilisation of resources (DRM) will become a more important source of finance than Overseas Development Assistance (ODA). However, this can only happen if the global ‘rules of the game’ are transparent. The BOND FfD group are therefore calling on the UK government to support:
- Strengthened tax transparency, including public country-by-country reporting by multinationals, public registers of ownership of companies, and automatic exchange of tax information between countries
- Supporting improved international tax governance by creating a new adequately resourced international UN tax body.
If transparency can be improved then analysts are now sure that domestic taxation – for example of multinationals and high net-worth individuals – could finance improved health and education programmes in most countries. In a new study by RESULTS and partners in Africa, including KANCO in Kenya, we found that the untapped tax capacity in Kenya is around $2.8 billion dollars per year – this is more than double the current government spending on health. Furthermore, if illicit finance flows out of the country can be plugged, then Kenya could reduce its current high dependence on donor funding. The new report shows that Kenya currently loses around $4.9 billion per year in capital flight – approximately $120 dollars per person. The report , Who Pays for Progress? will be launched in Addis on Monday 13th July, the first day of the FfD Conference. By the end of next week we will know if some of the global calls have been agreed, and rules and regulations tightened. Only in this way will the ‘Beyond Aid’ agenda become realistic.