Financing the Sustainable Development Goals - reflections on FfD3

Last month the Third ‘Financing for development’ (FfD) conference in Addis Ababa agreed on a global action agenda – known as the “Addis Ababa Action Agenda” (AAAA or the “Outcome”) - for financing the Sustainable Development Goals (SDGs) between 2015 and 2030. Following endorsement of the AAAA by the UN General Assembly on 27 July, UN Secretary General Ban Ki Moon hailed it as “a foundation for success at the UN summit to adopt the UN post-2015 development agenda, in New York this September, and at the Conference of Parties of the UN Framework Convention on Climate Change (UNFCCC) (or COP 21) in Paris in December”.

“Historic”, “groundbreaking”, “a milestone” are some of the words the UN has used to describe a blueprint that it said would forge “an enhanced global partnership that aims to foster universal, inclusive economic prosperity and improve people’s wellbeing while protecting the environment”. Erik Solheim, Chair of the Development Assistance Committee (DAC) tweeted from the conference ‘I believe historians will see Addis #ffd3 as the turning point for development’. Similarly, in her speech Justine Greening, UK Secretary of State for International Development, announced ‘the FFD outcome is historic’.

Other commentators, however, have noted that while there was agreement on broad frameworks and ‘key messages’ the Outcome fell short in terms of concrete commitments. According to Mary Robinson, former President of Ireland and UN High Commissioner for Human Rights, the “Action Agenda falls short of committing concrete proposals to reshape the global framework for financing development; its business as usual approach does not match the aspirations of the post 2015 Development Agenda and SDGs.” The CSO Forum of 600 civil society organisations concluded that “on more than 20 areas, the AAAA represent a step backwards or, at best, maintenance of the status quo in relation to the pre-existing Monterrey/Doha body of commitments”. In their joint statement ‘Third FfD Failing to Finance Development’, the Forum concludes the AAAA “lost the opportunity to tackle the structural injustices in the current global economic system and ensure that development finance is people-centered and protects the environment.”

This mixed picture is perhaps most strikingly reflected in the closing plenary statement of the G77 which, while applauding progress made, noted a number of issues “important to, and fully endorsed by, the Group that have not been adequately accommodated in the current text.” That this diverse group, representing 134 countries “found common ground in expressing discontent with the Outcome cannot be overemphasized."

‘Beyond aid’

‘Beyond aid’ is the refrain that has pervaded post-2015 FfD negotiations throughout. According to Justine Greening “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.” Erik Solheim of DAC summed it up thus: “From now on we will walk on three legs: Aid. Business. Tax.”

However, Oxfam argues that the “the Addis Action Agenda has allowed aid commitments to dry up” and on the issue of climate change “FfD has barely dealt with the huge additional burden which will be faced by countries least responsible for causing the problem”. Meanwhile the issue of debt relief, which played a central role in the development financing agenda in the MDG era, was not even on the table. As Bhumika Muchhala of the Third World Network explains, the AAAA “explicitly ignores a landmark initiative in the UN itself to establish an international statutory legal framework for debt restructuring. Instead, it reaffirms the dominance of creditor-led mechanisms, such as the Paris Club, whose inequitable governance was criticised in the Doha Declaration of 2008.”

Furthermore, the hoped for action on international tax cooperation - a key reform needed for developing countries to be able to mobilise domestic resources for sustainable development - also failed to materialise. As Romilly Greenhill of the Overseas Development Institute observed: “The key question was whether discussions on tax cooperation should take place in the United Nations - where every country has an equal say - or the Organization for Economic Cooperation and Development, a rich-country club.” In the end OECD members blocked proposals to upgrade the UN Tax Committee to an intergovernmental body, asserting the OECD’s continued leadership role on tax issues. Nobel prize-winning economist, Joseph Stiglitz was particularly scathing of this manoeuvre. ‘“It’s not just that they’ve failed to live up to their moral obligation, their social obligations, their own commitments,” Stiglitz told Devex on the sidelines of a debate on international tax reform, “They’re actually doing harm.”

If outcomes on aid and tax were less than was hoped for, the one ‘leg’ that was strengthened in the conference outcome was ‘business’. According to Oxfam, “the outcome document puts private finance front and centre of financing for development”. ‘Catalytic aid’ (where aid is used to ‘leverage’ private finance) and ‘blended finance’ are now the watchwords. As Aldo Caliari of the civil society group Centre of Concern explains, ‘the AAAA placed strong optimism on the role of the private sector without evidence to back it up and without parallel recognition of the developmental role of the State and commitments to safeguards States’ ability to regulate in the public interest or to protect human rights and the environment’.

These developments give new impetus to the promotion of private finance initiatives or public private partnerships (PPPs) as a preferred mechanism for development financing (particularly infrastructure development). However a recent report from Eurodad (European Network on Debt and Development) strikes a note of caution, with evidence that ‘shows that liabilities from PPPs can pose a huge risk to the public sector’. Meanwhile, another point of contention is the conflict, as yet unresolved, between “States’ ability to regulate in the public interest or to protect human rights and the environment” and terms of preferential trade agreements which include Investor State Dispute Settlement (ISDS) mechanisms that are “more coercive than any review mechanism we can hope for in defence of sustainable development."

‘A shaky start’

The FFD3 summit in Addis Ababa is the first of a three landmark conferences this year, including the UN summit to adopt the UN post-2015 development agenda in New York in September and the Climate Change conference (COP 21) in Paris in December. Simon Maxwell of the Overseas Development Institute has predicted, reassuringly perhaps that “on content matters, the Post-2015 settlement will outrank the FfD document” (which begs the question why FfD3 came first…). Nevertheless, FfD3 has been a “shaky start to the three conferences of this year”. It remains to be seen how these not insignificant differences will be resolved (or not) as the year progresses.

Sally Brooks