by Dr Sipho S. Moyo
16 July 2015
The people for whom this week’s Financing for Development (FFD) Conference matters most will likely never hear a thing about it. They are the young girls and boys unable to complete school. They are women farmers not assured of inputs, tenure or a market for their produce. They are a growing legion of young people more globally connected but less certain than ever about securing a job. And they are families and entire communities fighting a seemingly relentless tide of poverty and lacking access to decent health, education and water & sanitation services that would help them to win the fight. In contrast, world leaders – including many African leaders – converging in Addis have a historic opportunity to give hundreds of millions of people a fairer chance at a more prosperous, healthy and dignified life.
If ordinary people on the streets of Abuja, London or Kathmandu ask us, ‘will FFD deliver for Africa?’, for us to say yes, there are four key things the summit must achieve:
- Governments both south and north make a real commitment to unlock significantly more domestic revenues in developing countries.
African governments in particular should set ambitious, nationally-defined revenue targets, and halve their revenue gap towards this target by 2020, through strengthened tax administrations implementing fair tax policies and curbing serious revenue losses due to corruption and illicit flows.
As the report of the High Level Panel on Illicit Financial Flows from Africa made clear, efforts at the national level to tackle illicit financial flows are crucial but can only go so far. In our globalised world, reforms of the international tax system are a vital part of the solution. At FFD, there is a good opportunity for governments from across the globe to commit to public country-by-country reporting of corporations’ taxes and profits, the publication of beneficial ownership information, and mandatory extractives industries reporting, as well as multilateral automatic exchange of tax information that benefits developing countries.
- Addis seals the deal on more and better development assistance.
Development assistance that’s well-targeted can play a vital and unique role in targeting poverty improving welfare, and broadening the reach of economic growth. It is critical for ensuring that the most vulnerable people and the poorest countries – especially the least developed countries (LDCs), over two-thirds of which are in sub-Saharan Africa – can join in global progress over the next 15 years. Partner governments must reaffirm their official development assistance (ODA) promises, including 0.7% ODA/GNI, and set out clear timetables to achieve this target by 2020.
FFD can also move the ODA agenda forward if providers commit 50% of their total ODA to LDCs, a proposed new target backed by many African countries and gaining widespread traction. The LDCs’ combined share of the global extreme poverty burden is projected to rise to 50% over the next 15 years and it is largely this group of countries that will require the most sustained support to achieve the new sustainable development goals.
- Leaders seize the historic opportunity to agree to a social compact that will deliver basic health, education, and water & sanitation services to all people, including the poorest and most marginalised and in particular, girls and women.
Governments should set out national plans to deliver a guaranteed minimum level of spending on basic services such as health, education and water & sanitation by 2020. As shown in ONE’s recent DATA Report: Putting the Poorest First, our analysis suggests that $500 in purchasing power parity (PPP) terms or 10% of GDP per capita (whichever is greater) is an ambitious but achievable target, with those countries currently spending less than $150 PPP committing to reach an interim target of $300 PPP
This will be funded primarily through domestic revenues in most countries. However, providers of development assistance must promise to fill the funding gap where domestic resources are simply not enough to reach every citizen and ensure quality services.
- All development partners agree specific, practical initiatives to boost productive capacity, particularly on agricultural development, infrastructure, energy, trade and private finance.
We know that agricultural growth can be an amazing 11 times more effective in reducing poverty in sub-Saharan Africa than growth in other sectors, and we know that building high-quality infrastructure (including transport and energy) can boost productivity by as much as 40%. We also know that many African countries and LDCs are desperately hampered in their development efforts by difficulties in accessing regional and international markets for trade and by insufficient transfer of new technologies from wealthy countries. Lastly, we know that while some African countries are now getting glittering volumes of private investment, these flows are largely restricted to just a handful of countries, with others receiving minimal investment.
If Addis can launch practical new initiatives to galvanise investment in agriculture, infrastructure, energy, technology transfer, trade, and private finance, it will have a truly lasting legacy. As a few examples, ONE is looking out for developments on the new Technology Bank for LDCs, commitments by development banks and international financial institutions to increase support for the poorest countries, and a pledge by long-term institutional investors (such as pension funds and sovereign wealth funds) to dedicate at least 1% of their assets or profits to social impact investment, development finance or civil society support, with 50% going to LDCs.
- FFD begins to concretely realise the much-heralded data revolution.
How do we know if we are improving the life of the last girl at the end of the last mile, especially if her birth has never been registered and she does not – officially – exist? Shockingly, this is the case for one-third of children under the age of five today. As made clear in the African Data Consensus adopted in March, the data revolution is particularly urgent on the continent, since many national statistical offices lack sufficient budget and capacity.
FFD provides an opportunity for governments to make concrete commitments to deliver and finance a data revolution, including promising to open up their budgets by publishing accurate, timely and standardized and comparable revenue and expenditure data in open data formats. Furthermore, at a side event in Addis, ONE, together with the US and Mexican Governments, the Sustainable Development Solutions Network and the United Nations Economic Commission for Africa, brought together governments, innovators, academics and the private sector to announce new commitments to invest in and use data for better policymaking.
At ONE we believe that the much-anticipated FFD conference would make a genuine difference to the lives of the poorest through these four key steps – (1) commitments at both the national and international level to boost domestic resources and stop revenue leakages; (2) a deal securing more and better development assistance; (3) a fully-financed social compact ensuring that nobody goes without access to basic services; and (4) a data revolution to track every financial flow and monitor every development outcome.