Archive for May 12th, 2015

Financing For Development

Extremely excited that this third FFD Conference will be held in Addis. We are expecting about six to seven thousand participants. We are certain of a globally useful outcome of the conference. Just delighted to be part of this huge undertaking by Ethiopia.

Professor Mekonen Haddis

Financing for Development second draft expands, somewhat, on local finance

Following on a month and a half of negotiation and additional consultation, talks to create a global framework on how to pay for new anti-poverty and climate-related development efforts have resulted in a newly revised negotiating text.
Talks for what’s known as the Financing for Development (FFD) process aim for the first time to come up with a collective approach to paying for the new sustainable development agenda being agreed to later this year. The previous global development approach — the Millennium Development Goals — did not include agreement on how to finance the various massive interventions required, in education, sanitation, energy and the like.
Ahead of the MDGs’ replacement, the Sustainable Development Goals (SDGs), the international community is now trying to rectify this problem. While the SDGs are to be finalized in September, the Financing for Development process is trying to come to agreement at a major summit in mid-July, in Addis Ababa. The new approaches will also facilitate implementation of a climate-related accord expected in December as well as the New Urban Agenda to be finalized at next year’s Habitat III conference on cities.
From all reports, however, the Financing for Development negotiations remain highly contentious, and thus this newly revised negotiating draft will be keenly scrutinized. (The first FFD draft came out in mid-March; the revision was released during the first week of May. A summary of civil society input can also be found here.)
A key issue of debate is the extent to which local government authorities — in cities, municipalities and others — will have powers and freedom to determine how and where new development funding associated with the SDGs will be spent. This is a controversial prospect, however, particularly given that it is the central governments of member states that are doing the negotiating. As noted in previous Citiscope reporting, advocates have expressed frustration at the very minor mention that cities and sub-national governments received in the draft text.
In the revised text, for the most part, this hasn’t changed all that much. Cities and local authorities do receive a smattering of references, some new. But a key overview strengthened this contextualization only slightly.
“The fundamental responsibility for organizing this global partnership lies with governments,” the revised text notes. “But our success will also depend on the resources, knowledge and ingenuity of business, civil society, the scientific community, academia, philanthropists and foundations, parliaments, local authorities, volunteers and other stakeholders.”
Much of the concern around local authorities is focused on infrastructure. Some USD 1 trillion a year is forecast to be needed over the next decade and a half to pay for the roads, electricity lines, floodwater embankments and other needs seen as central to current development aims. And in many cases, no one knows better than local authorities where and how this money could be best spent.
In the second draft of the Financing for Development text, a key section (Paragraph 31) on these issues does indeed include some substantive revisions. The text of that section is reproduced here in full, with deletions in square brackets and additions in bold:
We further acknowledge that in [more and more] many countries, responsibilities for revenues, expenditures and investments in sustainable development are being devolved to the sub-national level and municipalities, which often lack adequate technical capacity, financing and support. We therefore commit to develop mechanisms to assist them, including to strengthen capacity, particularly in areas of infrastructure [project] development, local taxation, sectorial finance and debt issuance and management, including access to domestic bond markets. We will strive to support [our] local governments in their efforts to mobilize revenues and strengthen links between urban, peri-urban and rural areas within the context of national sustainable development strategies. We commit to scale up international cooperation to strengthen capacity, particularly in climate friendly policies and infrastructure investments. We will support cities and local authorities, particularly in LDCs, in implementing resilient infrastructure, including energy, transport, water and sanitation and buildings. We will also support them to implement climate-friendly policies [. and investments. Reliable support for national and local capacity for prevention and mitigation of external shocks and risk management is needed. We must also] In these efforts, we will ensure appropriate local community participation in decisions affecting their communities, based on country circumstances. We will develop and implement holistic disaster risk management at all levels in line with the Sendai Framework. In this regard, reliable support for national and local capacity for prevention, adaptation and mitigation of external shocks and risk management is needed.
The Sendai Framework, reference to which is included in the new revisions, is new global guidelines on disaster-risk mitigation, agreed upon at a major summit in March.
The changes in the local-financing section are extensive but still largely tweaks. Nonetheless, such revisions indicate clearly the contours of the debates that have been taking place behind the scenes and which will likely continue through the July conference in Addis.
Elsewhere, however, one of the most notable insertions to the new Financing for Development draft likewise deals with this looming infrastructure-financing need. The member states are now making a new call for an “infrastructure platform”, to facilitate multiple aspects of the process of getting necessary infrastructure built in developing countries.
“We note with concern the large gap in financing for resilient and quality infrastructure, in particular in developing countries,” Paragraph 46 reads. “Given the importance of this challenge, particularly for developing countries, more needs to be done, and we call for a new infrastructure platform to bring together all stakeholders to make to ensure that no countries or sectors are left behind, and that investment is aligned with sustainable development.”
The section continues:
To address constraints, we will imbed resilient infrastructure investment plans in our national sustainable development strategies, and strengthen the domestic enabling environment. We commit to ensuring the technical support for countries to translate these plans into concrete project pipelines, as well as for individual implementable projects, particularly with regard to the preparation of feasibility studies, negotiation of complex contracts, and the management of projects. Efforts should aim to develop local skills and capacity.
– See more at: http://citiscope.org/habitatIII/news/2015/05/financing-development-second-draft-expands-somewhat-local-finance#sthash.URn1Qd3V.dpuf

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