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2015 is the final stage in a long round of negotiations on the climate and the modernization of Official Development Assistance. The Addis Ababa Conference is based on a question that appears to be simple: “How to finance development? There are numerous stakeholders and very diverse visions and proposals.   what can be the role of international public financing?  What financial solutions can be proposed to a category of rapidly expanding countries, the middle-income countries, while maintaining efforts for solidarity and the concentration of aid in the least developed countries? These questions were debated at the Agence Française de Développement.

Organizers

2015 is the final stage in a long round of negotiations on the climate and the modernization of Official Development Assistance. It is the starting point for a new transformational agenda and is definitely set to be a critical year. By aligning together the worlds of “Financing for Development” (Addis Ababa Conference in July), the “Sustainable Development Goals “ (New York Summit in September) and the “Climate” (COP21 Conference in Paris in December), the three international agreements will have an impact on development strategies and the means for their implementation for the next fifteen years. States have a rare opportunity before them for a collective departure towards sustainable development. But will they seize it?

The Addis Ababa Conference is based on a question that appears to be simple: “How to finance development?”. There are numerous stakeholders and very diverse visions and proposals. In the codified language of the United Nations, what are States, local governments, development banks, civil society and companies actually proposing?

The key idea is that sustainable development is endogenous. The virtuous circle is triggered by good governance. This leads to efficient public management and tax collection, which themselves generate domestic public resources able to finance the human and economic investments required for sustainable growth and development. This new conducive environment encourages private companies to invest and develop, creating wealth and employment.

But if sustainable development is endogenous, what can be the role of international public financing? How to use a critical mass of public funds in order to trigger a chain reaction for endogenous and sustainable development (leverage effect)? What financial solutions can be proposed to a category of rapidly expanding countries, the middle-income countries, while maintaining efforts for solidarity and the concentration of aid in the least developed countries?

This new ID4D event aims to clarify the major questions raised by the Addis Ababa Conference and to present you the opinions of actors from diverse backgrounds.

 

Financing for development: What visions behind the figures?

Date

Thursday 25 June 2015

Hour

17:30-19:30

Place

Agence Française de Développement
Bâtiment « Mistral »
3 Place Louis Armand
75012 Paris

Conference-debate coordinated by Claire Hédon, journalist at RFI.

With:

Luis Enrique BERRIZBEITIA, Executive Vice-President, Andean Development Corporation, CAF
Caroline DOREMUS-MEGE, Advocacy Director, CCFD Terre solidaire
Philippe ORLIANGE, Executive Director for Strategy, Partnerships and Communication, Agence Française de Développement, AFD
Majdouline SBAÏ, Vice-président of région Nord-Pas-de-Calais
Tancrède VOITURIEZ, Program Director Governance, Institute for Sustainable Development and International Relations, IDDRI

The debate was coordinated by Claire Hédon, journaliste à RFI. The speakers were Luis Enrique BERRIZBEITIA, Executive Vice-President, Andean Development Corporation, CAFCaroline DOREMUS-MEGE, Advocacy Director, CCFD Terre solidairePhilippe ORLIANGE, Executive Director for Strategy, Partnerships and Communication, Agence Française de Développement, AFDMajdouline SBAÏ, Vice-président of région Nord-Pas-de-Calais and Tancrède VOITURIEZ, Program Director Governance, Institute for Sustainable Development and International Relations, IDDRI.

 

2015 marks a milestone for development assistance: the Sustainable Development Goals (SDGs) will replace the Millennium Development Goals (MDGs) set in 2000. The Addis Ababa conference in July 2015 will specifically focus on the issue of financing for development. This will provide the opportunity to take note of the changes that have occurred in 15 years and review the financial tools that will allow the SDGs to be achieved.

 

Financing for development: New actors, new challenges

 

Since the 2000s, addressing the issue of financing for development “as a negotiation of flows between the North and South” has become “an obsolete conception” (Tancrède Voituriez). Certain States have changed posture: the BRICS (Brazil, Russia, India, China and South Africa) are both “recipients and providers of financing” (Philippe Orliange). This is not without ambiguities. They continue to be members of the G77+China and, in development finance, uphold a “North/South divide” which does not necessarily reflect the reality of the situation: “China is now a rich country with many poor people and no longer a poor country with many rich people” (Tancrède Voituriez).

In addition, new interlocutors have emerged in the negotiations: local actors and private foundations. The “global movement of increased transfers of responsibilities to local actors (Philippe Orliange) can be seen in both recipient countries and in countries that provide financing: for example, in France, “local and regional authorities have produced an advocacy plan to uphold decentralized cooperation” (Majdouline Sbaï). Private foundations, for their part, have taken on major importance: for example, the Gates Foundation “provides USD 3bn of grants a year for development finance” (Philippe Orliange).

The emergence of new issues can also be seen in the preparation of the SDGs. The notion of development has grown in ambition: its financing now focuses on “an increased capacity to implement public policies” and the achievement of overall objectives such as “industrialization, growth and full employment” (Tancrède Voituriez). Another strong theme is the climate, a “common global challenge” (Majdouline Sbaï). Finally, the reference to governance issues in the SDGs is a “remarkable step forward” (Philippe Orliange). In practical terms, the challenge is to develop institutions that are “more just and more transparent which give a voice to civil societies: for example, CCFD-Terre Solidaire “seeks to strengthen the capacities of societies [in the South] to challenge their own government” (Caroline Doremus-Mege).

 

Diversified financial tools…

 

Financing for development assistance is gradually becoming more diverse in order to support these changes.

Political actors have a wide array of catalysts. A “priority issue” is consequently to “make every effort to increase the domestic resources of States […] and move towards endogenous development” (Caroline Doremus-Mege). This requires an effort by the States themselves to foster fair taxation, as well as “international initiatives” (Philippe Orliange), such as “the creation of an intergovernmental organization” to combat tax evasion (Caroline Doremus-Mege). Another initiative by political actors involves partnerships in the context of decentralized cooperation. Their “contribution is not simply financial”, but also involves “expertise” (Majdouline Sbaï).

Other financial tools are those provided by development banks, which are central actors in financing. An agency like AFD has a wide range of financial tools: grants, loans, loan-grant blending, instruments adapted to local and regional authorities and NGOs… Indeed, “the ideal toolkit” is one that “can meet a large number of diversified demands” (Philippe Orliange). The Latin American Development Bank (CAF), the “only multilateral financial institution almost exclusively owned by developing countries”, also combines “traditional […] mechanisms” with “new” mechanisms that aim to “promote the participation of the local and international private sector in development finance” (Luis Enrique Berrizbeitta).

 

…at the risk of a privatization of development assistance?

 

“The increasing importance given to private finance” via public-private partnerships is, however, a major area of concern for NGOs which, like CCFD-Terre Solidaire, “participate in development finance”: “All investments do not guarantee development”: they may come with “environmental degradation, violations of human rights…” (Caroline Doremus-Mege). For AFD, it is consequently important for there to be a “mutual benefit in the partnership in terms of economic, environmental and social sustainability” (Philippe Orliange). For example, France’s Nord-Pas-de-Calais Region refused private financing for a project for access to health by ethnopharmacology in Madagascar, considering that it involved a risk of “patenting or [the] exploitation of active ingredients for commercial purposes” (Majdouline Sbaï).

“The creation of safeguards to oversee the private sector and its involvement in development will be one of the major issues of the SDGs (Caroline Doremus-Mege). While States like France, which have “major budgetary constraints”, do not plan to provide “higher budgets for developing countries”, the new development cycle that is beginning involves achieving a balance between public and private commitment, with an “understanding that is now more realistic of what [both parties] can do” (Tancrède Voituriez).

 

In a couple of days download the full transcript of the debate !

 

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