While the deadline for the Millennium Development Goals (MDGs) is drawing closer, the UN High-level Panel on the Post-2015 Agenda has reaffirmed the principles defined in the Monterrey Consensus in 2002. In a changing world, subject to important challenges, financing for the post-2015 agenda will require establishing a major international partnership for global public policies, gathering all the positive energies around the world.
Economic balances, actors and development assistance policies are changing
Over the past decades, Official Development Assistance (ODA) has changed from being a bilateral tool to support developing countries into a tool to manage new global challenges (food security, fight against diseases, fight against terrorism, international trade regulation, environmental protection…).
It has now become an instrument to “manage interdependencies in the context of globalization”. For aid agencies, this mission involves meeting three core objectives: speed up economic convergence, contribute to achieving the MDGs and preserve global public goods.
Aid policies have developed as a result. A sectoral approach has partly been added to the country approach and is more suited to the major global challenges. This is how major international initiatives have come about, such as the Global Fund to Fight AIDS. These changes have, however, especially affected actors and their operating methods.
There has been a diversification of public donors, which now include countries such as China, Korea and Brazil. Developing countries also have an increasing capacity to mobilize their domestic resources. These upheavals have “shaken international aid governance”, which will need to more closely involve emerging countries in negotiation bodies. Yet the main changes have also – and perhaps even more so – come from non-State actors.
For example, the private sector has moved into the aid industry, via major NGOs and international foundations of course, but also the business community, which is now involved in projects with strong social impacts. The somewhat artificial barriers between “lucrative activities” and “solidarity” are beginning to fall, opening up unprecedented opportunities for public/private partnerships. This type of initiative demonstrates the ongoing changes, which are bringing development into the era of “collective hyper-action”. The increasing number and diversification of actors does, however, pose problems of effectiveness, particularly in terms of coordination. But it is also conducive to a real emulation and a source of innovation at the intersection of public and private initiatives.
What vision for future ODA financing?
The international community’s most recent vision for development financing has been defined via the Monterrey Consensus, which was adopted in 2002. This compact in particular encourages Northern countries to scale up their assistance and open up their markets, but also to mobilize private financial flows for development objectives. In return, Southern countries must adopt liberal measures in order to consolidate their economies: tax reforms, reduction of public expenditure, open up to foreign direct investment… While these principles remain relevant, they must be completed and adapted to a world that has experienced rapid change.
Consequently, the High-Level Panel has defined three main recommendations that aim to enhance and scale up long-term financing for poverty reduction. The first two reinforce the Monterrey Consensus: first of all, Southern countries are called upon to establish stronger tax systems so that they can finance their development themselves. Secondly, it is recommended to scale up external financing, mainly by mobilizing private financial flows. But the panel has also emphasized a third pillar of financing, by promoting the use of new innovative financial instruments that connect global savings with promoters of sustainable projects.
What external financing can be used?
If international action is to meet its ambitions, it will still need to rely on traditional instruments (sovereign loans and grants from States). However, budget constraints in donor countries mean that “innovative financing” is increasingly essential. These recent and innovative tools are likely to develop in order to provide additional, stable and predictable sources of financing.
In this regard, various taxation projects to support international solidarity have come into being, such as the tax on air tickets, which has financed an international vaccine procurement center. In a world marked by high levels of inequality, international taxation is a necessary source of financing for collective international action: it is the only vehicle that ensures the poor in rich countries do not end up financing the increasing number of rich people in poor countries, who should themselves also join the collective effort.
Secondly, the new mechanisms that stimulate direct investments with strong social and environmental impacts (market guarantees, public/private partnerships) should be increasingly used.
Finally, an “open solidarity”, based on the voluntary generosity of citizens, must continue to develop. There are an increasing number of such citizens who “donate” to vulnerable populations via new tools, such as crowdfunding. These efforts are encouraged by tax incentives.
On track for financing for global public policies
The overly restrictive concept of ODA should be replaced by a notion of “financing for global public policies” (FGPs), which would integrate these new tools without excluding traditional methods. It would cover financing for the three core components of sustainable development: convergence between Northern and Southern economies, increased access to essential services and the protection of global public goods.
Abandoning ODA in no way means that the international community is abdicating its responsibility towards poverty. To the contrary, it recognizes that the vision, actors and instruments of development cooperation have changed radically. Today, it is crucial to overhaul this outdated policy by financing global public policies, which will give countries the capacity to more effectively grasp the global challenges of this century.
This is the task that Convergences has engaged in, via its annual forum and its working groups. States and public systems continue to be essential and even retain the monopoly over action, for example, in times of crisis. However, they can less now than ever before implement the long-term structural changes, which require aligning ways of thinking and action within an extremely vast, highly complex and very poorly governed world, where collective action is no longer their monopoly. Indeed, it is shared among millions of widely ranging actors with objectives that are themselves varied. In this context, it is essential to pool energies – all energies – by defining common objectives. It is for this reason that the MDGs of today and tomorrow are absolutely vital, as they define the finish line. Dialogue on the tools and convergence for action, based on each other’s identity, is also the only way to bring together, on a voluntary but consistent basis, all the actors of good will who want to change our world.