Finance
VIDEO: Make budgets public now
Last October, I told you about BTAP, the Global Movement for Budget Transparency, Accountability and Participation. Last week, BTAP launched their budget transparency campaign – Make Budgets Public Now!
The campaign will focus on ensuring that governments publish the essential documents that enable citizens and civil society to participate in the budget processes in their country, and ensure that their priorities are being addressed in those budgets.
This video explains exactly how important budget transparency really is:
This is a big deal. Without information about the budget, citizens can’t hold their leaders accountable for their tax dollars, or any other resources the government spends in their name. Every government should publish the budget proposal, an audit of the progress against the proposal, and a citizens’ budget (a simplified version of technical budget documents) – and allow public hearings during the budget debate. Most of these documents exist already – they’re just not public. And that’s plain wrong.
Read this post for more information about the International Budget Partnership’s Open Budget Index, which ranks and measures the transparency of 100 country budgets.
Together, we can make sure that budget processes become more transparent and accountable to citizens.
G20 endorses initiative to connect people, projects, and capital in Africa
Africa suffers from an infrastructure deficit that greatly limits growth and poverty reduction on the continent. 70% of the population do not have access to electricity and many rural communities lack road to access to markets or health facilities. In some areas a lack of infrastructure reduces economic output by as much as 40%.
However both government and private investors often find it difficult to find African infrastructure projects to invest in. This isn’t because of a lack of projects, but rather a lack of information being made available to investors. As a result potential investors find it very hard, time consuming, and at times, expensive to find information on projects and other potential investors. This impedes investment even though new projects often yield attractive rates of return. The result of this is that African people continue to suffer from this lack of infrastructure.
Today however at the G20 summit in France world leads took steps to address this problem by endorsing the establishment of the Sokoni African Infrastructure Marketplace. This African Development Bank and the Zanbato Group Sokoni proposal (‘Sokoni’ is Swahili for ‘marketplace’) should help overcome many of the challenges investors face by creating a single platform for information on a large number of African infrastructure initiatives. Governments and investors will be able to come to find transparent information and link up efficiently with each other. Using ICT and technology Sokoni will help enhance efficiency, transparency, and connectivity in the market and help to mobilize increased resources from Africa and abroad for badly needed infrastructure projects.
ONE welcomes this initiative and the support of the G20 world leaders for it. You can find out more about Sonoki from its website http://www.sokoni.com/
Green Growth Now: An African Perspective
Edith Jibunoh is in Lisbon this week attending the African Development Bank’s (AfDB) Annual Meetings in Lisbon.
The AfDB is the premier finance development institution in Africa, building a track record for responsiveness to Africa’s development challenges, especially in infrastructure, as well as support in traditional social sector development.
On Tuesday, June 7th, the African Development Bank convened a stellar group of panelists to debate – “Green Growth Now: An African Perspective” where the discussions centered around the opportunities and trade offs of climate smart development in Africa, including the key issues that policy makers must address, and the role of different stakeholders in promoting green growth. Two new AfDB products were launched at this event, the Sustainable Energy Fund for Africa (SEFA), which will support small and medium scale entrepreneurs in the renewable energy and energy efficiency subsectors, and the Africa Carbon Facility (ACF) which will support low carbon investments in Africa. Hela Cheikhrouhou, the Director of the AfDB’s Department for Energy, Environment and Climate Change, told me that SEFA is being supported by initial seed resources (approximately $60 million) from the Danish government and they are expecting other donors to support this instrument. Hela is also hopeful that these two funds will be able to access the “fast start” climate resources that have were committed by climate compliance countries during COP15 in December 2009.
Green growth is a very important topic in development today and is key to breaking the link between economic growth and the destruction of the environment. Hannah Ryder, a Senior Economist with the UK’s Department for International Development (DFID) told the audience that the her organization is doing it’s part to promote green growth and spoke about the importance of placing more emphasis on the “green” in green growth and stated that access to information and the encouragement of innovative solutions for Africa are the major critical tools needed for delivering green growth.
AfDB staff and counterpart government officials from the Government of the Democratic Republic of Congo (DRC) and the Central African Republic presented the projected clean energy potential of the Inga site on the Congo River which is estimated to deliver up to 40,000 MW and will benefit not just the people of the DRC but also people in countries well beyond the DRC borders.
In this early seminar in the series of events the AfDB will roll out this week, the institution showcased their willingness to take risks, promote innovation and be responsive to African countries need to adopt clean energy solutions that are adapted to the African context.
Speculation and food prices
During the food crisis of 2008 when the price of food spiraled out of control causing hunger across the developing world, some financial companies posted record profits from betting on the prices of these very commodities.
Now it looks like these speculators are at it again, gambling on global hunger and contributing to spikes and volatility in food prices, actions that might in turn risk another global food crisis.
The number of speculators in financial markets and the complexity of contracts involving food commodities increased dramatically since deregulation in 2000, providing an opportunity for traders to diversify their portfolios.
President Nikolas Sarkozy has referred to food market speculation as “pillaging” and “extortion”.
Speculators trade ‘derivatives’, contracts that are related to the value of goods but don’t actually involve a physical transfer of goods, in the hopes of profiting from future price movements. Speculation keeps markets ‘liquid’ and futures markets can potentially help producers protect themselves against changes in value of their goods.
But the U.N. Food and Agricultural Organization (FAO) suggests that the tight link between speculation and price volatility in markets makes it increasingly difficult for producers to use futures markets to actually protect themselves against shocks. Since speculators trade commodities at prices that rarely reflect actual supply and demand at enormous volumes, they can drive prices up or down at a moment’s notice. High and volatile prices can make big profits for speculators, but can also cause increased poverty.
If just a few speculators can have this great of an effect on global markets, speculation should be regulated to reduce its potentially destabilizing effects on poor countries.
This is why the G-20, led by France, has put the issue at the top of its agenda. Even lobbyists for the French Financial markets have made public their support for regulating the volume of trading that can take place for food commodities and ensuring that speculation doesn’t become excessive.
Creating regulation based on information-sharing and transparency is important for ensuring market stability. Equally important is making sure that developing countries become less vulnerable to agricultural price shocks that are bound to exist even without the activity of speculators. Global leaders need to proactively protect poor producers and poor countries from agricultural price shocks by creating and bolstering safety nets and risk management tools.
Most importantly, donors should fulfill the commitments made at the 2009 G8 L’Aquila Summit towards global food security – providing $20 billion towards agriculture development over 3 years – as an important first step. Donors should provide funding for multi-lateral initiatives like the Global Agriculture and Food Security Program (GAFSP) that support country-led agriculture initiatives and have demonstrated positive results.
As the deadline on L’Aquila draws nearer, we should also look to additional leadership from the French-led G20 in the upcoming Cannes Summit, particularly on the issue of regulation in the commodity futures markets.
Nigeria to establish a sovereign wealth fund
Finally, Nigeria, Africa’s largest oil producer, has decided to set up a Sovereign Wealth Fund, safeguarding some of its riches for future generations. Since the discovery of large petroleum deposits in the late 1950s, there have been several attempts to put aside some of the unexpected bounty that comes from rising oil prices. The most recent version of these initiatives was the aptly named the Excess Crude Account (ECA).
At the end of 2007, there was $20 billion in the ECA, but sadly it has dwindled down to barely $400 million in recent months. The depletion was due to state governments claiming their share of the account in order to stabilize their local economies, which were affected by the financial crisis. There was no constitutional barrier to prevent the raiding of the account.
Nigeria’s new Minister of Finance, Olusegun Aganga, a former Managing Director at Goldman Sachs, announced in September, 2010 that a Nigerian Sovereign Wealth Fund draft bill has been submitted to the National Assembly. The fund has already been seeded with $1 billion of capital. This is very good news for the future generations of Nigeria since little of the $1.6 trillion the country has earned from petroleum resources has been conserved. It is important that the bill be passed because this will give the fund the necessary legitimacy to protect its assets from getting into the wrong hands and from the vagaries of changing regimes.
Osahon Akpata was born and grew up in Lagos, Nigeria. After completing his undergraduate degree in Accounting & Finance in England, he moved to the US where he has had an extensive career in finance and marketing. He has written articles for NEXT newspaper, Black Star News, Saharareporters.com and the African Sun Times. Osahon is currently enrolled for an MBA at Columbia University in New York City. He is working on a project evaluating Nigeria’s proposed Sovereign Wealth Fund as part of his coursework.
Brussels delivery
Yesterday I met with Hugo Sobral, adviser to the EC’s President Barroso on Development and Climate Change, to hand over our petition on using the revenue from a tax on banks to reduce extreme poverty. Mr Sobral took the message straight to the President and received a positive response:
“The President is committed to ensuring development remains an EU priority, particularly as we head to the UN MDGs Summit in September and on the road to 2015. It is vital that in times of recession we keep our commitments to those most in need. In this context we have to work, at a global level, on innovative financing mechanisms with significant revenue generation potential.”
It may seem odd for a development group like ONE to get excited by financial regulation, but it provides a potentially huge opportunity to raise much-needed revenue to fill the funding gaps of the poorest countries. Right now Chancellor Merkel and President Sarkozy are talking more and more about going ahead with some kind of regulation.
What we want is to see a principle established at the very outset that some of the money raised would be allocated to fighting poverty and addressing the impacts of climate change in the countries where it is most needed.
We’re excited that President Barroso is sympathetic to this issue, and we will keep on working in the coming weeks and months to get a guarantee that a substantial portion of any money raised from financial regulations will go where they are needed most.
Thank you for taking action, and we’ll keep you to date.
Time the bankers give back
We have all been affected by the impact of the financial crisis, the repercussions of which have been felt by people around the world. I was shocked to hear that up to 100 million more people fell into extreme poverty as a result of the crisis. A crisis that was caused by the few but has hurt the many.
Thankfully, there’s an opportunity to ensure bankers give something back…
At this month’s EU Summit Commission President, José Manuel Barroso, will push leaders to agree regulations to make bankers pay now for any future bail outs. That’s great, but I also think we need to push for some of this funding to go where it is urgently needed today—to help people in the most dire of situations.
Click here to sign the petition
Dear President José Manuel Barroso,
Good luck with the new European financial regulations. Please make sure that any new money raised dedicates a substantial percentage to effective, proven projects to beat poverty and disease, and to address the impact of climate change.
A percentage of any money raised could mean millions of people receive life saving medicines and have the chance of a better life and hey down the line this could help African economies to flourish which in turn could help us all. Bravo.
Thank you for taking part.
Stop feeding the vultures!
Activists from Jubilee Debt Campaign outside Dechert LLP’s office in London
This morning, our friends from the Jubilee Debt Campaign could be found outside the London office of the law firm Dechert LLP.
Why? Well, the law firm, in spite of its humanitarian credentials, has represented so called “vulture funds”. These funds are private investment companies that take advantage of the relaxed laws in British courts to buy up poor countries’ debt at dramatically reduced prices, and then sue the same countries for their full value plus costs. In the process, companies make excessive rates of profit. In fact, last November, Dechert LLP represented two funds in the High Court in London, winning a $20 million award against Liberia, one of the poorest countries on the planet.
The good news is that there is a Bill currently going through the UK parliament that aims to prevent such vulture actions against the world’s poorest countries. The UK Government also recently came out in support of legislation against vultures, saying that such legislation could save poor countries as much as £145 million. Yet Dechert LLP have opposed legislation against vultures, on behalf of several hedge funds, telling a Government consultation that legislation would be “unfair” and “unprincipled”.
To draw attention to all this, the Jubilee Debt Campaign organised a ‘Call to Charity’ this morning in front of Dechert’s London office, with a cake sale, some singing, people dressed as vultures, and a big sign saying ‘Don’t Feed the Vultures’. The central message behind the action was that we need to support Dechert LLP as it must seriously need funds if it has to take money from the world’s poorest people
An article in today’s Guardian covers the story well.
We’ll never know the true impact of the stunt, but one woman, while taking a cake on her way in the building, said that she had no idea that Dechert was working on these sorts of cases. Hopefully she and others like her in the office will talk about it and call into question their firm’s work. That was perhaps the worry of the people who called the police to try and end the cake sale. The polite officers however noted that the activists weren’t doing a thing wrong and moved them a mere 50 cm forward, as apparently that part of the pavement belonged to the law firm. It’s a good thing one doesn’t need a hunting license to hunt vulture funds, then we all would be really be in trouble.
Climate change panel must be about action, not words
Tucked away in the accord agreed in December’s Copenhagen climate change summit was a promise to form a ‘High Level Panel’ to examine how exactly the target of mobilising $100bn a year for developing countries by 2020 would be reached. Now, after a frustrating delay, it appears that the Panel is finally up and running. UN Secretary-General Ban Ki-moon announced last week that it would be chaired by Prime Minister Meles Zenawi of Ethiopia and Prime Minister Gordon Brown of Britain. Other members of the Panel will be announced shortly and are likely to be appointed for 10 month terms.
Now that the Panel is set up it is critical that it acts swiftly to come up with a range of options for raising substantial additional finance. For example, there is headway being made on new taxes of the financial sector and it may also make sense to authorise use of the International Monetary Fund’s Special Drawing Right to help make the transfer to a low carbon economy. New levies on aviation and shipping could also be part of the solution, whilst there will also be revenue raised from carbon certificates.
The Panel needs to look at all of these and come up with a realistic plan of action – possibly using a combination of the above options rather than one alone. What we know is that all of these ideas are technically feasible, but it is political will that is lacking. The Panel therefore needs to play its role in galvanising politicians across the world to make sure that promises to developing countries are kept.
There is no doubt the members of the High Level Panel will have one of the most challenging jobs in the world this year. However, as long as they are focused on action and not just talk, then they could be the people who restore trust in climate negotiations and deliver the vital extra resources to help Africa adapt to climate change.
Muhammad Yunus at One Young World
Last week the One Young World Summit took place in London, and being 25 myself, I thought I would go and check out what it was all about.
One Young World is the world’s first global youth leadership summit, bringing delegates together from around the world to address the most challenging issues of today. Speakers included Archbishop Desmond Tutu and ONE co-founder Bob Geldof.
One of the speakers I caught was Professor Muhammad Yunus, founder of the Grameen Bank and Nobel Peace prize laureate, who gave a truly amazing talk.
He didn’t simply tell the delegates that they were great, that they were the leaders of tomorrow and that they were going to make the world a better place, and that there was a lot of work to do… (I don’t know about you, but for me, “changing the world” is a rather daunting mission!). Instead Yunus, fully aware of the challenges ahead, told us to start small and not to be afraid of not knowing or having the perfect solution. His suggestion was that we start off with one small idea, try it out ourselves or with one other person, see if it works, and if it does, use it with 5, 10 and 50 more people. If the idea works, it’ll grow almost on its own, no need to worry about that. And if it doesn’t, well, it’s time to come up with a new one.
I also admired how Yunus encouraged us to think outside the box and ignore the rules as he does. (“We made the rules, we change the rules. Don’t become slave of the rules” as he said).
Thinking about it, I find it fascinating that he challenged the concept of ‘business’ as we know it, and now can justify a perfectly well functioning alternative to it; the social business. The kind of business we know is all about profit making. Nothing wrong in itself with that, but a problem arises when that’s the only thing we are doing. “Are we all just a money making machine?” asked Yunus. He answered that we also have a selfless dimension to us. So why not create a business model that is based on this other characteristic as well? Why not think outside the box, ignore the existing rules, and come up with our own new rules? Do business, but a new kind of business, through which it is society or communities who benefit, and it’s no longer just about me, me, me.
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The International ONE Blog is a daily log of the anti-poverty movement. The site is operated by ONE staff, with guest contributions from ONE volunteers, members and allies.
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TAGS: Finance, ONE, Transparency