In­ter­view: Wu Hongbo, UN Un­der-Sec­re­tary-Gen­eral for Eco­nomic and So­cial De­vel­op­ment and the Sec­re­tary-Gen­eral of the Fi­nanc­ing for De­vel­op­ment Con­fer­ence

Coun­tries to choose tar­gets best suited to lo­cal con­di­tions

Africa Renewal - - CONTENTS -

The United Na­tions Third In­ter­na­tional Con­fer­ence on Fi­nanc­ing for De­vel­op­ment in Ad­dis Ababa, Ethiopia, is ex­pected to come up with an ac­cord that will de­fine how the global com­mu­nity will mo­bi­lize funds to sup­port Sus­tain­able De­vel­op­ment Goals (SDGs). In this in­ter­view with Tim Wall for Africa Re­newal, Wu Hongbo, the UN Un­der-Sec­re­tary-Gen­eral for Eco­nomic and So­cial De­vel­op­ment and the Sec­re­tary-Gen­eral of the Con­fer­ence, talks about his ex­pec­ta­tions.

Africa Re­newal: The ob­jec­tives en­tailed in the Fi­nanc­ing for De­vel­op­ment (FfD) draft doc­u­ment are many and am­bi­tious. But they are non-bind­ing and all ad­dress needs gen­er­ally known to be im­por­tant. What then is the value added of an Ad­dis agree­ment?

Wu: The UN mem­ber States de­cided to have this con­fer­ence be­fore the Septem­ber sum­mit in New York where they are go­ing to adopt a post-2015 de­vel­op­ment agenda with Sus­tain­able De­vel­op­ment Goals (SDGs) at its core. The pur­pose of the Ad­dis con­fer­ence is to de­velop the fi­nan­cial in­fra­struc­ture needed to im­ple­ment the new agenda. There are three ma­jor ex­pec­ta­tions for the Ad­dis con­fer­ence. First, the fi­nal fi­nanc­ing frame­work has to be holis­tic, com­pre­hen­sive and am­bi­tious. We are not propos­ing so­lu­tions for one coun­try or one group of coun­tries, but for all 193 UN mem­ber coun­tries. That means there’s no one-size-fit­sall so­lu­tion. Sec­ond, we need con­crete de­liv­er­ables and po­lit­i­cal com­mit­ments from all mem­ber States to pro­vide the fi­nances needed for sus­tain­able de­vel­op­ment projects. And third, we need strong fol­low-up ac­tion.

In your es­ti­ma­tion, are mul­ti­lat­eral fi­nan­cial in­sti­tu­tions, in­clud­ing the Bret­ton Woods, ready and able to ful­fil a key role in FfD im­ple­men­ta­tion?

The mul­ti­lat­eral process iden­ti­fied five ma­jor in­sti­tu­tional stake­hold­ers – the World Bank Group, the In­ter­na­tional Mon­e­tary Fund and the World Trade Or­ga­ni­za­tion, the UN De­vel­op­ment Pro­gramme and the UN Con­fer­ence on Trade and De­vel­op­ment. One of my pri­or­i­ties, and that of the UN Sec­re­taryGen­eral, is to mo­bi­lize these in­sti­tu­tions. You may be aware there was a Spring ( March-April) meet­ing or­ga­nized by the World Bank and the IMF, in which, for the first time in the history of the UN, Sec­re­tary- Gen­eral Ban Ki-moon par­tic­i­pated and got their po­lit­i­cal com­mit­ment to sup­port the FfD con­fer­ence. I am glad to say that all the five ma­jor in­sti­tu­tions are on board. Their prin­ci­pals will bring to Ad­dis new ini­tia­tives and con­crete de­liv­er­ables. The other sup­port is from play­ers who have be­come very ac­tive at the re­gional and global lev­els such as the BRICS [Brazil, Rus­sia, In­dia, China and South Africa], the Asian In­fra­struc­ture Bank, the Silk Road In­fra­struc­ture Fund and the Asian De­vel­op­ment Bank. We will try to bring all of them on board for a com­mon vi­sion and a com­mit­ment to take what­ever ac­tion is needed to sup­port the Ad­dis con­fer­ence.

The out­come of the first con­fer­ence on fi­nanc­ing for de­vel­op­ment, the Mon­ter­rey Con­sen­sus, ad­dressed the role of the pri­vate sec­tor in FfD, but largely for ob­jec­tive pur­poses. The cur­rently-cir­cu­lat­ing draft FfD text dif­fers in that it as­signs and asks for a will­ing, sub­jec­tive pur­pose, es­pe­cially in ar­eas such as cor­po­rate sus­tain­abil­ity, sus­tain­able fi­nance, im­pact in­vest­ing, etc. Would you agree with this as­sess­ment?

I would go along with your as­sess­ment. The im­por­tance of pri­vate sec­tor fi­nanc­ing was rec­og­nized a long time ago. We need to mo­bi­lize pri­vate fi­nance for sus­tain­able de­vel­op­ment. The UN wants to de­fine the roles of the pri­vate sec­tor and pri­vate re­sources be­cause we are con­fronted with un­prece­dented chal­lenges. In the past, we used to talk about de­vel­op­ment of a group of coun­tries or of eco­nomic growth alone. We are now step­ping be­yond that. We are talk­ing about eco­nomic growth, so­cial de­vel­op­ment and en­vi­ron­men­tal pro­tec­tion—the three dif­fer­ent as­pects of one is­sue—sus­tain­abil­ity. So you can imag­ine the amount of re­sources needed to sup­port this

pro­gramme. We need all types of fi­nan­cial re­sources— do­mes­tic, in­ter­na­tional, public and pri­vate.

Pri­vate fi­nan­cial re­sources are very im­por­tant, but the chal­lenge is how to mo­bi­lize them. We be­lieve public poli­cies will play a cen­tral role in cre­at­ing an en­abling en­vi­ron­ment at the do­mes­tic, re­gional and in­ter­na­tional lev­els. And of course, both the quan­tity and qual­ity of pri­vate in­vest­ment, par­tic­u­larly in in­fra­struc­ture, is im­por­tant. I hope the Ad­dis ac­cord will pro­vide a new fi­nanc­ing frame­work that will bring the pri­vate sec­tor on board so it can make mean­ing­ful con­tri­bu­tions to sus­tain­able de­vel­op­ment.

Another area that has emerged since the Mon­ter­rey con­fer­ence on FfD is the ex­panded role of South-South co­op­er­a­tion. How do you see that tak­ing shape in the Ad­dis dis­cus­sions and af­ter?

South- South co­op­er­a­tion is be­com­ing in­creas­ingly more im­por­tant. Tri­an­gu­lar and South-South co­op­er­a­tion are im­por­tant new fea­tures in the chang­ing global fi­nan­cial sys­tem since the Mon­ter­rey Con­sen­sus. We are very sup­port­ive of this de­vel­op­ment. We be­lieve that in many ways it serves as a good ex­am­ple for all coun­tries. The pro­grammes de­vel­oped are con­sid­ered cost-ef­fec­tive. They in­volve tech­nol­ogy trans­fer, and the cost of per­son­nel over­head is low, hence not much is spent on the cost of ex­perts, their travel and ac­com­mo­da­tions com­pared to what is ac­tu­ally spent in host coun­tries.

How­ever, it is im­por­tant to stress that this kind of mu­tual as­sis­tance will not serve as a sub­sti­tute for North-South co­op­er­a­tion. Of­fi­cial de­vel­op­ment as­sis­tance is still es­sen­tial. The two for­mats can sup­ple­ment each other. But we of­ten think of South-South as poor coun­tries help­ing the poor, so it is dif­fer­ent in na­ture than North-South. We would like to see South-South co­op­er­a­tion play­ing a more im­por­tant role in the world, just as we urge donor na­tions to do more – at least to ful­fil their own com­mit­ments.

The renowned Mar­shall Plan pro­vided Europe with re­con­struc­tion monies in the amount of 0.2% of GDP of the US. The world fi­nance-to-GDP ra­tio of the SDGs is var­i­ously es­ti­mated at 2, 3 or 4% and in­cludes economies much less pros­per­ous than the US in the 1950s. Is the new re­quire­ment likely to bur­den low-in­come re­gions such as Africa?

We are not in the 1950s, and so a Mar­shall Plan would not be good for the fu­ture of sus­tain­able de­vel­op­ment. We are try­ing to mo­bi­lize all re­sources pos­si­ble – in­ter­na­tional, do­mes­tic, pri­vate and public. In ad­di­tion, we need to en­cour­age tech­nol­ogy trans­fer, tax re­forms, ef­forts to stop illegal fi­nan­cial out­flows, re­duc­tions in the cost of trans­fer­ring re­mit­tances and strengthen ca­pac­ity build­ing. If we mo­bi­lize these ini­tia­tives suc­cess­fully, we will be able to meet our needs. How much money would be needed? It’s very dif­fi­cult to pre­dict or quan­tify be­cause that de­pends on many un­cer­tain­ties.

True, many de­vel­op­ing coun­tries lack re­sources. But it’s im­por­tant to note that there is own­er­ship of fi­nanc­ing for sus­tain­able de­vel­op­ment at the na­tional level. His­tor­i­cally, all eco­nomic de­vel­op­ment has been driven by a coun­try’s own re­sources mo­bi­lized by na­tional gov­ern­ments. That’s why the Mem­ber States em­pha­sized the own­er­ship of lo­cal re­sources. In many cases, how­ever, these are not enough. Coun­tries need strong and ef­fec­tive in­ter­na­tional part­ner­ships. On their part, the na­tional gov­ern­ments need to cre­ate an en­abling en­vi­ron­ment; oth­er­wise the money will not be forth­com­ing. This is pre­cisely why of­fi­cial de­vel­op­ment as­sis­tance will be vi­tal. Fur­ther, not all coun­tries will im­ple­ment all the 169 tar­gets; that is im­pos­si­ble, even for the most de­vel­oped coun­tries. Coun­tries will choose tar­gets that are best suited to their lo­cal con­di­tions. The Ad­dis con­fer­ence will of­fer more pol­icy rec­om­men­da­tions from which to choose and con­sider.

The SDGs text says that tar­gets are “as­pi­ra­tional”, with each gov­ern­ment set­ting its own na­tional tar­gets guided by the global level of am­bi­tion but tak­ing into ac­count na­tional cir­cum­stances.” Does this qual­i­fi­ca­tion pro­vide a safe­guard that al­lows poor coun­tries to im­ple­ment SDGs with­out strain­ing their bud­gets?

The sus­tain­able de­vel­op­ment agenda not only cov­ers a wider area, but also ap­plies to all coun­tries. Plans are of­ten de­signed or tar­geted largely for cer­tain coun­tries or groups of coun­tries. The chal­lenge this time is for all coun­tries to sit down to­gether and pro­duce a com­pre­hen­sive plan that will ac­com­mo­date all in­di­vid­ual sit­u­a­tions. De­spite the prin­ci­ple of uni­ver­sal­ity, the re­al­ity is one can­not ap­ply uni­formly all SDGs to all coun­tries. The U. S. or Switzer­land, for ex­am­ple, would not im­ple­ment the same goals as the least de­vel­oped coun­tries be­cause the de­vel­oped coun­tries have al­ready achieved some of the goals. I should em­pha­size that first we need to change the mind-set of public ad­min­is­tra­tors. Sec­ond, we have to tear down all the po­lit­i­cal and eco­nomic si­los at min­is­te­rial lev­els. When we start im­ple­ment­ing the sus­tain­able de­vel­op­ment agenda, it will be im­por­tant for min­is­ters to change their tra­di­tional ways of do­ing busi­ness. I urge them and their gov­ern­ments to think in rev­o­lu­tion­ary ways on how we can work to­gether, how we can make sus­tain­able de­vel­op­ment work.

UN Photo/Loey Fel

Wu Hongbo, the UN Un­der-Sec­re­tary- Gen­eral for Eco­nomic and So­cial De­vel­op­ment and the Sec­re­tary- Gen­eral of the Fi­nanc­ing for De­vel­op­ment Con­fer­ence.

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