Financing for Development: Welcome focus on the poorest people, but action must follow words

World leaders at the third Financing for Development Conference have signed up to the Addis Ababa Action Agenda, a new global agreement on how efforts to end extreme poverty will be funded.

Michael Elliott, CEO of The ONE Campaign said:

“Against difficult odds, world leaders have signed up to an agreement that could start to reshape how developing countries are supported in their progress towards growth and prosperity. The level of ambition displayed in the Agenda does not yet meet that required to achieve the emerging Global Goals, and some key areas were watered down through the negotiation process. But it provides a decent foundation for action and a few very positive elements.

“There is a new focus on putting the poorest first – particularly girls and women – which is crucial if we are to end extreme poverty. On every measure, girls and women in the poorest countries are prevented from reaching their full potential. The Addis Agenda commits us to smart policies and targeted investments in their health, education and economic potential which could empower girls and women to lift themselves, their families and their communities out of poverty.

“We are pleased that there is clear acknowledgment that more must be done to support the least developed countries on the road to self-sufficiency, and recognition of donors who target at least half of their aid where it is most needed. At the same time, developing countries have acknowledged that they must boost domestic revenues and reduce illicit financial flows. Together, these could provide essential funding for the important new commitment to make basic services including health and education available to everyone.

“One real piece of good news: At Addis, the data revolution moved from talk to action, and we are proud to have worked with partners from the public and private sectors to kick start the mapping of extreme poverty and resources needed to end it.

“We’re disappointed that in some areas such as domestic resource mobilisation, infrastructure financing and transparent country by country reporting of business activity and beneficial ownership of companies, not enough was done in Addis. The whole Action Agenda will need rigorous follow-up – the text is not sufficiently strong on the need for accountability.

“But we’ve got the building blocks. Now the crucial business of implementation must begin, and we and many others will be watching to see how governments go about it.”

Ahead of FFD, ONE set out a five point plan which, if adopted, could accelerate progress towards the end of extreme poverty and preventable disease. ONE’s assessment of the overall impact of FFD is based on progress made on these five areas, both in the official Addis Ababa Action Agenda, and wider action announced during the event. Our snapshot analysis shows progress on each of the five priorities:

WHAT ONE ASKED FOR:

  1. Access to basic services – minimum funding to ensure the basic needs of every person can be met, including health and education, with a focus on girls and women.

VERDICT: Good. In the Action Agenda, countries committed to a social compact to deliver essential services, a crucial step towards leaving no-one behind; now countries must follow up with clear and concrete national plans, financed by public funds from north and south.

The Global Financing Facility, a new global partnership will align funding for maternal and child health from public and private partners behind developing countries’ national plans, supported by contributions from US, Canada, Japan, Norway, Canada and the Bill & Melinda Gates Foundation.

Partnerships were forged on nutrition which will increase investment in nutrition and the data collection around this issue.

 

  1. Increased domestic government revenues – developing countries should drive up revenue through implementing fair tax policies, curbing corruption and stemming illicit financial flows.

VERDICT: More work needed. FFD3 has finally helped put Domestic Resource Mobilisation front and centre of the global agenda, with commitments to boost domestic revenues and reduce illicit financial flows. However, the Action Agenda fell far short of full transparency and accountability: public country by country reporting, public beneficial ownership information, a strong enough commitment on automatic exchange of tax information, and mandatory reporting on extractives were lacking in the outcome document. On the side lines of the event, over 30 countries and institutions signed up to the Addis Tax Initiative, which will help to strengthen tax systems in developing countries, including through a promise to double aid to support Domestic Resource Mobilisation.

 

  1. Development assistance should be targeted where it is most needed, with 50% going to LDCs, and donors setting a timetable to reach the international target of spending 0.7% of GNI on aid.

VERDICT: Good momentum: The text reaffirms past ODA commitments including 0.7% (although with no clear timetable) and 0.15 – 0.2% to the least developed countries (LDCs). The outcome document notes with concern the declining share of aid going to LDCs, with a positive mention of the new 50% target. It falls short of committing to timetables for delivery of aid promises, and language on 50% aid to LDCs was weakened. Momentum is building despite that: Belgium and Ireland have both committed to spend half their aid in the least developed countries and Bretton Woods II will put 50% of their impact investments in LDCs; more must follow their lead.

 

  1. Sustainable inclusive growth – specific investments to drive up productivity, in particular agriculture, infrastructure, energy, trade and private finance.

VERDICT: Some welcome progress: The US and EU pledged to work together on the Power Africa initiative, with the EU aligning its new ‘ElectriFI’ initiative – which aims to invest EUR 270 million in renewable and sustainable energy by 2017 and to provide energy access for 500 million people in developing countries by 2030 – with other partners. Countries also agreed to establish a Global Infrastructure Forum to identify and address sustainable infrastructure gaps, though big new money for infrastructure wasn’t on the table. The importance of the private sector engaging in development was acknowledged – now work will need to be done to set the rules to make sure private sector engagement always benefits the poorest.

 

  1. Strong accountability through a data revolution to ensure that commitments are followed through.

VERDICT: A promising start:  The Action Agenda emphasises high-quality open data, and commits governments to provide support to developing countries, especially LDCs, to build national statistical capacities.

After Addis, the true test for the international community will be to turn these words into action backed by country governments with transparent, time-bound commitments, with clear accountability, that are kept.

On the margins of the summit, this action began:  pledges were made to address the ‘data crisis’ which inhibits the ability of government to make smart investments to fight poverty. More than 20 international organisations, including the governments of Belgium, Kenya, Mexico, Senegal Italy and the United States, the World Bank Group, UNSDSN, CIVICUS and Mastercard committed to be Champions for the formation of a Global Partnership on Sustainable Data, to be launched in September 2015.

 

In addition, ONE called for girls and women to be prioritised.

VERDICT: Good progress, action needed:  The Action Agenda is stronger than previous FFD texts on girls and women, but specific, concrete commitments and pledges must follow.

In Addis, some countries and partners launched an Action Plan on Transformative Financing for Gender Equality and Women’s Empowerment, where they pledged to make policy reforms and significantly increase investments in gender equality across a wide range of areas, including better tracking and publication of public spending flows on gender equality and a commitment to close data gaps.

All commitments will need to be carefully compared against ONE’s TRACK principles to make sure they are all transparent, results-oriented, additional, clear on conditionalities and to ensure they are kept.