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.