Fund­ing the planet’s fu­ture

Will the bil­lions re­quired for the SDGs be sus­tain­able?

Africa Renewal - - CONTENTS - By Tim Wall

As the Mil­len­nium De­vel­op­ment Goals ex­pire to­wards the end of this year, world lead­ers will gather at the UN head­quar­ters in New York in Septem­ber to launch the post-2015 de­vel­op­ment blue­print, the Sus­tain­able De­vel­op­ment Goals (SDGs). The cost of im­ple­ment­ing the SDGs is ex­pected to run into tril­lions of dol­lars span­ning over 15 years. To ad­dress the is­sue, global lead­ers are hold­ing a fi­nanc­ing for de­vel­op­ment con­fer­ence in Ad­dis Ababa, Ethiopia.

The del­e­gates at the Third In­ter­na­tional Con­fer­ence on Fi­nanc­ing for De­vel­op­ment in Ad­dis Ababa will dis­cuss how to fi­nance global sus­tain­able de­vel­op­ment goals, forecast by the UN Con­fer­ence on Trade and De­vel­op­ment ( UNCTAD) to cost $2.5 tril­lion a year over the next 15 years. The big­gest chal­lenge hu­man­ity faces to­day is how to achieve a min­i­mal level of pros­per­ity and well-be­ing while pro­tect­ing the planet at the same time.

The Sus­tain­able De­vel­op­ment Goals (SDGs), drafted by the UN Gen­eral Assem­bly and up for ap­proval this Septem­ber, are a 15-year, 17-point plan for achiev­ing what could be de­scribed as the Mil­len­nium De­vel­op­ment Goals (MDGs) plus peace­ful and in­clu­sive so­ci­eties plus eco­nomic ca­pac­ity and in­fra­struc­ture. In the midst of this swirl of press­ing global needs is the ever more present vis­age of cli­mate change, which has now been al­lo­cated its own goal in the SDGs lineup.

This is not the first time that world lead­ers have con­vened to con­sider fi­nanc­ing for de­vel­op­ment (FfD), or how to raise money to fund projects that will im­prove global wel­fare. The first UN sum­mit on fi­nanc­ing for de­vel­op­ment took place in Mon­ter­rey, Mexico, in 2002. The im­pe­tus came from de­vel­op­ing coun­tries, many of whom had ex­pe­ri­enced crip­pling fi­nan­cial crises only a few years ear­lier. More­over, lev­els of of­fi­cial de­vel­op­ment as­sis­tance (ODA) had stag­nated fol­low­ing a sharp slump at the 1992 con­clu­sion of the Cold War. The ques­tion these coun­tries raised was: given heart­stop­ping volatil­ity in fi­nan­cial flows and the paucity of de­vel­op­ment as­sis­tance, ex­actly where were the re­sources to fi­nance their de­vel­op­ment to come from?

The Mon­ter­rey an­swer ap­pears to have worked well. Be­tween 2002 and 2015, ODA in­creased by two-thirds in real terms in the wake of Mon­ter­rey donor pledges; an­nual lev­els of for­eign di­rect in­vest­ment (FDI) have roughly dou­bled and in some years

quadru­pled, with de­vel­op­ing coun­tries now tak­ing the lion’s share of in­com­ing flows; and shored-up fi­nances meant that the next global cri­sis to oc­cur orig­i­nated in the de­vel­oped North, not the de­vel­op­ing South. Progress on the MDGs gained mo­men­tum, and the rate of ex­treme poverty in de­vel­op­ing coun­tries was cut in half by 2010, five years ahead of sched­ule, ac­cord­ing to the United Na­tions.

The task be­fore the Ad­dis Ababa gath­er­ing, how­ever, looks big­ger. For ex­am­ple, three of the eight MDGs ad­dressed health needs: re­vers­ing the spread of HIV/AIDS, malaria and other killer dis­eases; im­prov­ing ma­ter­nal health; and re­duc­ing child mor­tal­ity. Yet a sin­gle goal out of the 17 SDGs dwarfs these three MDGs com­bined. SDG 3 is to en­sure healthy lives and pro­mote well­be­ing for all at all ages.

Within SDG 3 are 10 tar­gets, of which only one takes on “uni­ver­sal health cov­er­age, in­clud­ing fi­nan­cial risk pro­tec­tion, ac­cess to qual­ity es­sen­tial health care ser­vices and… af­ford­able es­sen­tial medicines and vac­cines for all.” Fund­ing such a tar­get, in con­trast to con­cen­trat­ing on a sin­gle dis­ease or fund­ing vac­ci­na­tion cam­paigns, al­most cer­tainly will re­quire user-fi­nanced health in­sur­ance schemes. But in­comes and the de­gree of par­tic­i­pa­tion in for­mal work sec­tors are so low across the de­vel­op­ing world that con­sid­er­able progress on SDG 1 (poverty erad­i­ca­tion) and SDG 8 (in­clu­sive and sus­tained eco­nomic growth and de­cent work for all) would ap­pear to be pre­req­ui­sites for SDG 3 achieve­ment.

Also to be con­sid­ered is the sheer ex­tent of the in­fra­struc­ture re­quired to meet the health goal, in terms of clin­ics, hos­pi­tals, train­ing schools, phar­ma­ceu­ti­cal pro­duc­tion fa­cil­i­ties, and oth­ers. With health care fund­ing on the de­cline af­ter an MDG-re­lated string of suc­cesses, con­sid­er­able ex­pan­sion in in­vest­ment by large-scale health care com­pa­nies will be re­quired. Higher av­er­age in­comes would most likely in­crease gains by build­ing a more lu­cra­tive mar­ket.

For­tu­nately, many health care firms prac­tic­ing cor­po­rate sus­tain­abil­ity, which says so­cial and en­vi­ron­men­tal well-be­ing pays off in in­creased rev­enue op­por­tu­ni­ties and busi­ness sta­bil­ity, have been de­vel­op­ing public-pri­vate part­ner­ships. Public part­ners in­clude but are not lim­ited to global United Na­tions ini­tia­tives on vac­cines and on ma­ter­nal and child mor­tal­ity.

Nev­er­the­less, ex­am­ples from the United States in­di­cate the scale of the chal­lenge ahead. If the world’s largest econ­omy is still ex­pe­ri­enc­ing chal­lenges in ex­pand­ing its health in­sur­ance cov­er­age, what are the chances of suc­cess in coun­tries where, for ex­am­ple, the healthcare in­fra­struc­ture is se­verely lim­ited due the lack of re­sources?

As the health care ex­am­ple il­lus­trates, fi­nanc­ing the SDGs is likely to be a mul­ti­fac­eted ef­fort. It will re­quire syn­er­gies among the var­i­ous goals and tar­gets and, in con­trast to most of the MDGs ef­fort, de­pend ex­plic­itly on busi­ness, civil so­ci­ety, phi­lan­thropy and sci­en­tific and aca­demic in­sti­tu­tions, as well as on gov­ern­ments and ODA.

Rather than set­ting out a nu­mer­i­cal bud­get of ex­pen­di­tures and seek­ing to bal­ance it with the same amount of cred­its, the deputy di­rec­tor of strat­egy and pol­icy for the In­ter­na­tional Mon­e­tary Fund (IMF), Sean Nolan, told Africa Re­newal that “it’s more use­ful to ask, ‘ What kinds of poli­cies at na­tional and in­ter­na­tional lev­els will gen­er­ate re­sources for de­vel­op­ment?’”

The UN In­ter­gov­ern­men­tal Com­mit­tee of Ex­perts on Sus­tain­able De­vel­op­ment Fi­nanc­ing, in its Au­gust 2014 re­port, di­vided the play­ing field of sources of fi­nance neatly into four ar­eas: public do­mes­tic, pri­vate do­mes­tic, public in­ter­na­tional and pri­vate in­ter­na­tional. Some of the lead­ing con­sid­er­a­tions at­tract­ing at­ten­tion within these four cat­e­gories are:

Public do­mes­tic: Taxes pro­vide a ma­jor base for de­vel­op­ment. But the lev­els of tax col­lec­tion in low-in­come coun­tries are at about 10–14% of GDP, ac­cord­ing to the Com­mit­tee of Ex­perts re­port. This is about one-third less than in mid­dlein­come coun­tries, and both rates are in

con­trast to the 20–30% of GDP col­lected in high-in­come na­tions.

Pri­vate do­mes­tic: The pres­ence of in­sti­tu­tional in­vestors in de­vel­op­ing coun­tries is grow­ing, and emerg­ing mar­ket pen­sion funds are man­ag­ing $2.5 tril­lion in as­sets, ac­cord­ing to es­ti­mates cited in the re­port. In ac­cess­ing these funds, the trick will be guid­ing in­vest­ments to the right des­ti­na­tions.

Pri­vate in­ter­na­tional: Like­wise, “There is a re­al­iza­tion that profit shift­ing by multi­na­tional cor­po­ra­tions is go­ing on,” says the IMF’s Nolan. “These com­pa­nies are tak­ing ad­van­tage of at­tempts by coun­tries to at­tract in­vest­ment with very favourable tax regimes.” Ef­forts by the G20 and oth­ers to crack down on un­fair tax regimes could un­lock re­sources from il­licit fi­nan­cial flows.

A more pos­i­tive trend lies in the realm of FDI. In­vestors and multi­na­tion­als are in­creas­ingly seek­ing in­vest­ment des­ti­na­tions with a pro­tected en­vi­ron­ment, co­he­sive so­cial re­la­tions and good gov­er­nance. Gov­ern­ments, for their part, are tak­ing so­cial and en­vi­ron­men­tal im­pacts into ac­count when ap­prov­ing pro­pos­als. The re­sult is of­ten a race to the top rather than the bot­tom in FDI, ac­cord­ing to UNCTAD.

Public in­ter­na­tional: The latest re­port from the Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment shows ODA hov­er­ing in the range of $130 bil­lion to $135 bil­lion a year from 2010 to 2014, a record high. Aid did not nose-dive af­ter the global cri­sis, as was feared. But fal­ter­ing economies and na­tion­al­ist sen­ti­ment in the de­vel­oped world may mean that a plateau has been reached. There is the dan­ger that de­vel­op­ing coun­tries will feel be­trayed that ex­pected in­creases are not ma­te­ri­al­iz­ing, which would cloud the prospects for im­ple­men­ta­tion.

The re­port of the com­mit­tee of ex­perts and the draft FfD doc­u­ment take into ac­count large, of­ten un­der­uti­lized, re­sources for de­vel­op­ment, and pos­si­ble ways to use them. But bring­ing the right fac­tors into play will re­quire ag­ile eco­nomic and po­lit­i­cal co­or­di­na­tion. Hence ex­perts worry about re­ports that fi­nance min­is­ters and of­fi­cials ar­riv­ing at the spring meet­ing of the Bret­ton Woods in­sti­tu­tions were seek­ing out in­for­ma­tion on the SDGs, in­di­cat­ing they knew scarcely any­thing about them.

The pres­ence of in­sti­tu­tional in­vestors in de­vel­op­ing coun­tries is grow­ing, and emerg­ing mar­ket pen­sion funds are man­ag­ing $2.5 tril­lion in as­sets.

Panos/Fred­eric Courbet

Work­ers take mea­sure­ments while lay­ing the tar­mac on a new road be­ing built near Arusha, Tan­za­nia. Africa needs funds for such de­vel­op­ment projects.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.