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Financing for Development: A Rapid Assessment

 

1. Overview

In this piece, I review the Outcome Document of the Addis Ababa conference on Financing for Development, and make two recommendations for follow-up action:

  • First, there needs to be systematic cross-checking between the content of the FFD and the latest draft of the SDGs. All the items in the FFD document need to be cross-tabulated against the 17 goals, 169 targets and 300+ indicators of the SDGs. Are they entirely consistent, or have some items been missed in one document or the other?  There may be some items that need to be added to the SDGs (though let us hope not). Equally, and with reference to my next suggestion, there may be some topics the FFD agenda has missed.
  • Second, given the overall weakness of the FFD document in terms of commitments, it would be very useful for countries to produce action plans of their own, explaining how all those ‘we wills’ and ‘we commits’ will be translated into national action. For many developed countries, this will amount to a new policy statement on development, of course with implications also for domestic policy. Ideally, these document should be completed very soon, though realistically it would be sensible for White Papers or similar to be written at the beginning of 2016, after the New York and Paris meetings.

2. Introduction

I don’t know what your Twitter feed looks like, but mine has been overflowing with enthusiastic pictures of people celebrating the adoption of the Addis Ababa outcome document on Financing for Development: the ‘Addis Ababa Action Agenda’. Judging by the pictures, the Ethiopian wine industry must be celebrating too.

It is always a relief when fraught negotiations are concluded, especially for the people who have worked for months on the text, and who have endured late nights in pursuit of last-minute compromise. They deserve a glass of wine and a day or two off. So too do the people who participated in the 200 side-events that took place during the conference.

For the rest of us, this is the time to cast a dispassionate eye over the 134 paragraphs and 9,000 odd words of the document. Is it a breakthrough or a damp squib? Already, there are different views (Figure 1).

Figure 1

Different views on the Addis outcome

3. The overall framing

As far as I can see, everyone agrees that the overall framing of the Action Agenda is helpful, focusing not just on aid, but on domestic finance, foreign direct investment and other ‘means of implementation’, including trade and technology. Frankly, that is not really a surprise, and those who claim the wider framing as a breakthrough could usefully re-read the outcome documents from the first FFD Conference, in Monterrey in 2002, and the second, held in Doha in 2008. The table of contents of the Monterrey outcome document is in Figure 2 and greatly resembles Addis. Doha did not have a table of contents, but the coverage is similar. Of course, there are differences in emphasis. There’s probably a Master’s dissertation there for someone. If you are picking up that challenge, don’t forget also to look at the Crisis Conference, convened as a follow-up to Doha in 2009. Anyway, the bottom line is that there has been strategic continuity on this topic since at least the beginning of the century.

Figure 2

Table of contents of the Monterrey Consensus.

4. Specifics

In terms of content, my own initial reaction is that large parts of the document are redundant, in that they repeat, perhaps better pre-figure, background material and general statements of direction likely to be found in the SDG Outcome document. On content matters, the Post-2015 settlement will outrank the FFD document.

I can see that huge amounts of effort went into negotiating statements about the importance of social protection, for example, or tackling malnutrition, and these statements will doubtless act as useful negotiating tools if the wording of the Post-2015 document has to be strengthened. But, mostly, the topics touched on are already well-embedded in the various drafts of post-2015. In a parallel universe, the FFD meeting would have taken place after the SDG framework had been adopted (as Monterrey took place after the Millennium Declaration had been adopted). Then, the first two sentences could have read:

‘We note the new Post-2015 SDG Framework. This document sets out what we are going to do to implement it.’

That doesn’t mean there are not some interesting nuances in the FFD document. For example, social protection (and a new social compact) heads the list of cross-cutting areas (Para 11ff), followed by ending hunger and malnutrition. Trailing in behind come infrastructure, industrialisation, employment, ecosystems, and peace. Is that indicative of new political priorities? It is also important to recognise the debate on how to handle taxation and illicit financial flows that almost brought the Conference to its knees. The recognition of the importance of climate change is notable. The new technology mechanism might (but might not) be useful. And open data has its moment in the sun. So, the substantive agenda is not identical to that of previous meetings.

I haven’t checked systematically what issues in the SDG framework are not covered by the FFD framework. There is no reference to democracy, though there are 17 to governance. I can find only one reference to inequality (in Para 79, on trade). There is no reference to ‘lifestyle’ (as in ‘sustainable lifestyle’ in the SDG draft). The omissions could well be important.

More interesting than the primer on global development, however, is the question of commitments to action. Here, critics are on pretty firm ground when they complain that it is hard to find specific commitments to celebrate. Contrary to (some) expectations, this was not a pledging conference.

That doesn’t mean there are not many declarations of intent. There is another dissertation to be written on the use of verbs in documents like this, but on my count, there are

  • 44 occurrences of the words ‘affirm’ or ‘reaffirm’
  • 153 occurrences of the words ‘we will’, plus a few other ‘will’s not preceded by ‘we’.
  • 10 occurrences of the words ‘we commit’, and 36 other uses of ‘commit’
  • 1 occurrence of ‘decide’

There are also quite a lot of uses of words like ‘welcome’, ‘acknowledge’, ‘recognise’, or ‘urge’.

The problem is that very few of any of these words is associated with either a deadline or a specific financial commitment. Thus, it is hard to know whether the statements are aspirational for the long-term, or items that will be picked up by, so to speak, the end of the week.

The aid paragraphs illustrate the point – and of course, I recognise that there is much more to the action plan than oda. Still, have a look at this paragraph, No 51 in the document:

‘We welcome the increase in volume of ODAOverseas Development Assistance since Monterrey. Nonetheless, we express our concern that many countries still fall short of their ODAOverseas Development Assistance commitments and we reiterate that the fulfilment of all ODAOverseas Development Assistance commitments remains crucial. ODAOverseas Development Assistance providers reaffirm their respective commitments, including the commitment by many developed countries to achieve the target of 0.7 per cent of ODA/GNI and 0.15 to 0.20 per cent of ODA/GNI to least developed countries. We are encouraged by those few countries that have met or surpassed their commitment to 0.7 per cent of ODA/GNI and the target of 0.15 to 0.20 per cent of ODA/GNI to least developed countries. We urge all others to step up efforts to increase their ODAOverseas Development Assistance and to make additional concrete efforts towards the ODAOverseas Development Assistance targets. We welcome the decision by the European Union which reaffirms its collective commitment to achieve the 0.7 per cent of ODA/GNI target within the time frame of the post-2015 agenda, and undertakes to meet collectively the target of 0.15 to 0.20 per cent of ODA/GNI to least developed countries in the short term, and to reach 0.20 per cent of ODA/GNI to least developed countries within the time frame of the post-2015 agenda. We encourage ODAOverseas Development Assistance providers to consider setting a target to provide at least 0.20 per cent of ODA/GNI to least developed countries.’

Really, I don’t know what to make of this. Well, I do know what to make of it. It is admirably aspirational and disgracefully lacking in specificity. The European Union commitment is laughably weak, especially given that the EUEuropean Union had promised to reach 0.7 by 2015 (for the older Member States, 0.33 for the newer Members) and is currently short by some 38 bn euros per year (Figure 3).

Figure 3

Source: http://data.consilium.europa.eu/doc/document/ST-9144-2015-INIT/en/pdf

But where are the other large donors, including emerging donors like the BRICS or the Arab States? Frankly, I am amazed that developing countries let the richer countries get away with this. Paragraph 51 should have read as follows:

‘We welcome the increase in volume of ODAOverseas Development Assistance since Monterrey. Nonetheless, we express our concern that many countries still fall short of their ODAOverseas Development Assistance commitments and we hereby commit to fulfilling all ODAOverseas Development Assistance commitments. Members of the DACDevelopment Assistance Committee (of the OECD) agree to achieve the target of 0.7 per cent of ODA/GNI and 0.15 to 0.20 per cent of ODA/GNI to least developed countries by 2018 at the latest. We welcome the decision by the European Union which had previously reaffirmed its collective commitment to achieve the 0.7 per cent of ODA/GNI target, but only within the time frame of the post-2015 agenda, but now commits to the 2018 target. We note with approval that the US, Canada, Japan, and all the Gulf States have made similar commitments. We also note that BRICS countries and other emerging donors have agreed the targets contained in Appendix 1.’

Perhaps donors are holding fire, waiting for the SDG Summit or even the climate meeting (interesting, by the way, that the phrase ‘new and additional finance’ for climate does not appear in the document). If so, that would be consistent with my advice earlier this year that the Sendai, Addis, New York and Paris conferences should be treated as a whole; but not consistent with my advice that conditional offers should be made in Addis to help maintain momentum.

Anyway, the paragraph about oda is just an illustration of a general problem with the document.

5. What should happen next?

What, then, should happen next? I would like to recommend two steps:

  • First, there needs to be systematic cross-checking between the content of the FFD and the latest draft of the SDGs. All the items in the FFD document need to be cross-tabulated against the 17 goals, 169 targets and 300+ indicators of the SDGs. Are they entirely consistent, or have some items been missed in one document or the other?  There may be some items that need to be added to the SDGs (though let us hope not). Equally, and with reference to my next suggestion, there may be some topics the FFD agenda has missed.
  • Second, given the overall weakness of the FFD document in terms of commitments, it would be very useful for countries to produce action plans of their own, explaining how all those ‘we wills’ and ‘we commits’ will be translated into national action. For many developed countries, this will amount to a new policy statement on development, of course with implications also for domestic policy. Ideally, these document should be completed very soon, though realistically it would be sensible for White Papers or similar to be written at the beginning of 2016, after the new York and Paris meetings.

The follow-up is important, though. Otherwise, we will be looking back in 2019, when an Addis follow-up is proposed, and will be wondering where the time went.

Comments  

# What happens when you put lots of aid officials in a room & make them come up with a statement...Alan Harding 2015-07-20 12:05
Simon,

Thanks for the useful summary. Without having read the document in any detail, just a quick comment based upon my own recent experiences with DfID of negotiating these kinds of statements/ agreements (which I did while in DfID's Europe Dept from 2010 - 12 and then in Brussels)...

The problem is that all parties to the agreement (whether aid providers or aid recipients) will want to simultaneously be able to claim that they have influenced the final outcome and also that the statement/ agreement reflects their priorities.

From perspective of aid providers (and particularly main bilaterals) the officials negotiating the text also don't want anything in the document that commits them to doing anything differently, as this would require Ministerial or Board approval.

Hence, the result is usually a statement that reads like a shopping list (i.e. has something for everyone) and also which doesn't commit anyone, particularly aid providers, to doing anything differently. So, business as usual is the default setting.

So from perspective of the people negotiating the agreement, the Addis Ababa Action (??) Agenda is clearly seen as a success....henc e why the wine was flowing. However, from the perspective of informed commentators, like Alison and Owen, the result is bland and disappointing.

The point being, that both things can be simultaneously true (i.e. it is both a success and a failure) depending upon what your interests and expectations were of what the outcome would be.

However, I agree with you that the final SDG agreement will be far more important and far more controversial as will actually commit/ bind both aid providers and aid recipients to achieve things - against which their collective performance will be monitored. And no-one in the aid world like to be held accountable for things unless absolutely necessary and unavoidable!

Regards, Alan
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# head of strategy, AFD, FrancePhilippe ORLIANGE 2015-10-07 08:31
dear Simon,

Addis has produced some very interesting results that have not been sufficiently highlighted so far.
-the critical role of local governments (and the need to increase their financial capabilities, incl funding from international agencies),
-the (again critical) role of development banks (domestic, regional, bilateral, multilateral) on the road from billions to trillions,
-the (untapped) potential of blending (ie adequately combining grants and loans, from public sources, and susequent leveraging of private finance)
-the need to consider finance for development globally (and not reduce it to oda on one side and private money on the other side), since FFD mirrors the SDGs both of them being universal in nature.
now that the SDGs have been adopted, we have a reasonably sound basis on which to work towards Paris and beyond.
best
philippe
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# Head: UN Global Agenda & Reforms DeptCharles Tellier 2015-10-09 10:51
Hi Simon,

Apologies for commenting late on this good piece. I'm in agreement with Alan, of course, and I think his point is reinforced by the fact the Sendai/Addis/NY /Paris conference are indeed a whole, which we (France) saw right from the start and knew to be critical to the success of the COP 21.

As for why this was negotiated before the SDGs, I don't think it's a secret that there was a strong push by developing countries to preempt the SDG financing debate by holding the Addis Ababa first. And I'm afraid some donor countries, including UK, thought it might be good to shape the SDG means of implementation debate. I fear both developing partners and the donors who went along with that got a weaker text than they thought they would in that respect. So was Addis a missed opportunity for a stronger text? Sure, but then all Sumits usually are.

Regards,
Charles
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