New York

28 February 2018

Deputy Secretary-General's remarks at ECOSOC Operational Activities for Development Segment - Revitalizing the UN development system’s funding architecture: Towards a Compact [as prepared for delivery]

Your Excellency, Mr. Marc Pecsteen de Buytswerve, Vice-President of ECOSOC
Ladies and Gentlemen,
It is a pleasure to open this session on revitalizing the funding architecture of the UN development system.
The issue of funding is critical to the future of the United Nations development system. Any changes we propose to the system’s structures or working mechanism will only be fully effective if we address our fragmented funding basis.
Recent decades have seen recurrent Member State calls for greater system-wide coherence. They have also seen determined efforts by the United Nations to overcome fragmentation – most visibly through the “delivering as one experience”.
Funding trends, however, have gone in a different direction. While overall volumes have continued to increase in the last 15 years – with a positive impact in the life of people around the world - earmarked contributions have grown some six times faster than core contributions. Today, core resources represent only 22 per cent of total contributions, compared to 37 per cent in 2002.
In other words, out of the total funding for UN operational activities for development of USD 29.5 billion, USD 21 billion was strictly earmarked.
In addition, earmarking has become more and more specific – with the allocation of 91 per cent of all non-core flows to single entity projects.
This leaves the development system dependent on the vicissitudes and fluctuations of project-related resources, vulnerable to forum shopping and compelled to compete internally. 
This approach has high transaction costs and leads to unwelcome consequences. Often, the system loses the ability to maintain a long-term strategic focus on key development challenges in a country. As the substantive focus and destination of funds are determined by those providing the resources, it also dilutes our collective accountability to governing bodies.
Ultimately, those who are the most affected are the countries we support and the people we serve. Impact on the ground is not as effective as it could be.
Partners and colleagues,
As the Secretary-General has stated – a fragmented funding base is delivering fragmented results.
Member States recognized this in the QPCR resolution and called for improvements to  the level, predictability and flexibility of the system’s funding base. Tghisis essential for a UN development system that can work effectively in support of the 2030 Agenda.
The Secretary-General has proposed a Funding Compact to make this possible. It is conceived as a pact between the UN system and its Member States to ensure the level, predictability and flexibility of funding with the system in turn guaranteeing increased transparency and accountability for spending and system-wide results.
In designing the Compact, we have taken a pragmatic approach. Principles are well captured in existing resolutions.  What we need now are concrete commitments and specific targets. This is a compact for action, not empty words in a report or resolution.
Our commitment is to deliver a system that is more effective, cohesive, efficient and effective – through a package of seven areas of transformation offered by the Secretary-General in his December report.
As part of the Compact, specifically, we are also committing to a series of measures that will dramatically improve the transparency and accountability of resources entrusted to us for system-wide activities. 
Our request also includes specific targets. Essentially, it covers three dimensions:
First, ensuring a healthier percentage of core budget to individual entities across the system. Core allows entities to be more effective, flexible and strategic partners to countries, and more collaborative members of our new generation of UN Country Teams.
Second, giving a new impetus to pooled funding to improve the quality of earmarked funds. We propose immediate action through two specific interagency funds – the new Joint Fund for the 2030 Agenda, capitalized at $290 million, and an increase in resources for the Peace Building Fund - as well as a commitment to double the current share of pooled funding from 8 per cent to 16 per cent.
Pooled funding brings proven benefits. Compared to individual projects, pooled funds tend to incentivize UN collaboration, ensure better alignment to national priorities and reduce transaction costs.
Third, funding the core capacities of the Resident Coordinator system through assessed contributions, to ensure predictability and ownership across the membership. This would be a logical step as the Organization repositions sustainable development at the heart of its work.
We all know that, today, our development coordination function is vastly underfunded.
In many countries, Resident Coordinators lack the basic staffing capacities to credibly lead the sustainable development activities of the United Nations in support of countries.
We need to address this structural gap.
The total cost for a more robust coordination function is an estimated $255 million. This is about $80 million more than the current system, and represents the cost of enhancing skillsets and capacities of RC offices. Of this amount, 85 per cent would be spent in the field, with 90 per cent of staff serving in country.
A more robust coordination function would cost just 1 per cent of the annual contributions for operational activities for development, and would bring value for money and results for people.
Ladies and Gentlemen,
I am mindful of the tight fiscal space we live with today. The United Nations has made its best efforts to work and build on what we have. Yet, the ambition of the 2030 Agenda cannot be matched by a system designed to respond to the needs of the past.
At this stage, we need to nail down the fundamental elements and targets of the funding compact.  We need building blocks, on which to continue the discussion on whether there are additional elements that can be added now or may need to be handled through a regular funding dialogue where we can jointly review progress and adjust the compact over the years.
Improving the funding base of the United Nations is a necessity for better performance and coherence. Repositioning the United Nations development system is our collective responsibility, and the Funding Compact – perhaps more than any other proposal -- embodies this spirit. 
It will challenge both Member States and the system to review the way we operate and approach funding. It will demand strong commitment on all sides.

But I have no doubt that together, we can do it.
Thank you.