Beyond Addis – How will the world finance the SDGs?

Matthew Martin from Government Spending Watch reflects on what happened in Addis and what’s next for financing the SDGs.

With the new post-2015 global goals text – “2030 Agenda for Sustainable Development” –  agreed a few days ago at the UN, ready for Heads of State adoption in New York in September, the world is one step closer to bringing to life this ambitious new development agenda.

All eyes must now turn to how this vision will be implemented and brought to life.

The recent outcomes of the Addis Ababa conference on Financing for Development hold some interesting lessons for moving forward and what will be required next in financing the new SDG agenda,

The Addis FfD conference was an exhausting week – during which I inputted into discussions on spending, tax, aid, innovative financing and many other issues, provoked by our latest Government Spending Watch analysis and 2015 report. This blog looks at the outcomes of Addis – and given everyone in development finance circles is probably feeling slightly jaded post-Addis also goes ‘beyond Addis’ to look at what we need to do next to finance the SDGs.

As for the outcome, it seems that what you see depends on your viewpoint. Those who expected or hoped that the conference would identify enough financing to fund the SDGs were sorely disappointed – as Winnie Byanyima of Oxfam said in her roundtable speech, and in a side-event on the final day, “We must all admit that we have failed to finance the SDGs”. CSOs and developing countries who hoped for a fundamental reform of global governance on tax, by a beefing up of the UN Committee of Experts on Tax into a full intergovernmental commission reporting to ECOSOC, were also very disappointed.

On the other hand, based on past experience of two FfD conferences, my expectations were never that high. Monterrey was a high point, with most governments in the world committed to delivering more financing for the recently-agreed MDGs, but even so – as one of the co-facilitators said to me – was successful only in starting various processes which have subsequently borne fruit (such as efforts to increase the amounts and results of aid, accelerate and increase debt relief, and mobilize more innovative financing). Doha was a low point, with nobody interested in discussing providing any money for anything as the financial crisis was hitting – and when the MDGs were more than halfway over.

Judged from this perspective – and given the global swing towards fiscal conservatism where many countries do not need at all to cut their aid budgets, but are doing so anyway to achieve budget surpluses – Addis was a mild success. Nobody expected EU countries to commit to reaching 0.7% (even if this has a faraway deadline of 2030, it gives us something to hold them accountable for). The CSO and developing country campaigns on tax issues led to tax being by far the most popular subject of the week, and to major pledges of increased technical assistance to help countries increase their tax revenues. There were also important steps forward on technology transfer.

The highlights of the week for me were nevertheless four side events.

The first was one GSW organized with the Organisation Internationale de la Francophonie, looking at why we need much more fundamental global tax reforms if we are to have any chance of funding the SDGs. As the GSW 2015 report says, we will need at least US$1.5 trillion more of public spending a year if we are to fund the SDGs in low and middle-income countries. We can do this only if those countries are able to increase their tax/GDP ratios by 10% (compared to the 8% they achieved under the MDGs) – which requires concerted global action to get corporations to pay tax in the countries where they extract resources, eliminate tax exemptions, fight against a global “race to the bottom” in tax rates, and combat evasion, avoidance and illicit flows – as well as national action to increase or introduce progressive taxes on income, wealth and land. In our meeting, Mauritania, Senegal and the Seychelles, on behalf of 26 other countries, committed to delivering their part of the bargain – and we will carry on pressing the international community to do the same, including in the buildup to the IMF Annual Meetings in Lima.

The second was a group of events on key sectors – education, food, health, social protection and WASH  – which showed that sector experts are much more advanced in costing the spending which we will need post-2015 to reach the various different SDGs. The latest contribution to this was a UNESCO report which covers a broader range of education spending (including upper secondary, technical and vocational training), and increases their estimates of additional needs from US$21 billion to US$39 billion a year in LICs and LMICs (though still leaving out tertiary education). Several of the side events drew on GSW work – on African health spending, for the UNESCO Education for All report, and on WASH absorption. They showed that globally we have a relatively clear idea of how much needs to be spent, but as GSW’s analysis keeps stressing, if we want this spending to be delivered post-2015, it needs to be country-designed and led (not top down via global funds and declarations), and made fully transparent so that governments and donors can be held accountable.

The third was organized by the UN Development Cooperation Forum. Commenting on a paper I wrote for DCF on how to assess the contribution of private and blended cooperation to the SDGs, stakeholders from all sides agreed that, if we are to finance a large share of the SDGs through private sector resources, and to use official money to “blend” with and encourage private flows, we need much closer tracking of the effectiveness and impact these flows are having on the SDGs.

The fourth was on innovative financing. This was the only event I attended which actually promised more public money for the SDGs ! Various speakers talked about the forthcoming European financial transaction tax, carbon taxes to fight climate change, allocating shares of mining revenues to the SDGs (as Ghana and Mali are now doing) including in a new UNIT-LIFE initiative, and a global declaration by like-minded countries promising to increase global solidarity levies, which will gather steam with more signatories as more developing countries decide how to introduce their own innovative financing levies in their next budgets.

Between them, these events really gave me a feeling that we can manage to finance the SDGs. It will be a long struggle, and to achieve results, we will need to monitor the “means of implementation” for the SDGs much more closely – spending on the different goals and whether it is fighting inequality, tax revenues, aid and its allocation among sectors and countries, the impact of private flows, and innovative financing. Setting strong clear indicators for the “MoIs”, together with a strong process for ensuring they are monitored, will be the next key requirement between now and the SDG summit in September, as we said in the last section of the Government Spending Watch report, and in our research with IBP and Oxfam last year.

Beyond the summit, we need – as a development community – to stop focusing on sectoral and national interests, and mobilize together to make sure solidarity levies, tax revenue and aid are sufficient to fund the extra public spending we need. And while we are mobilizing this money, we need to empower developing countries to design SDG plans and cost their spending priorities as decided by their citizens, and then to sign up to country compacts in which donors promise to provide aid and innovative finance, and help countries double their tax revenues, and all sides undertake to be more transparent and accountable to their citizens. If we don’t succeed, as an African finance minister said to me at the end of the conference, “we might as well throw the SDGs in the bin”.

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