Financing for development: the view from Addis

Ishbel Matheson
14 July 2015
Comment
In the UN conference centre and upmarket hotels of Addis Ababa, the buzz of international summitry is underway. Thousands of delegates from all over the world have converged on the Ethiopian capital this week to discuss the direction of international development and where the resources might come from to finance it.

African presidents sweep through the corridors, escorted by their security details. UN Secretary-General Ban Ki-moon is whisked from one packed meeting on ‘shifting billions to trillions’ (a catch-phrase for dramatically ramping up finance for development) into another on sustainable energy for all. World-famous economists like Joseph Stiglitz debate the growing prospects for low-carbon development, while African fashion designers talk about the importance of fair trade rules.

The air is peppered with the jargon of development: ‘catalytic’ aid is to be blended and leveraged (this involves turning a little into a lot through judicious private sector tie-ups); capacity and institutions must be built; and absolutely everyone agrees it can’t be ‘business as usual’.

Despite the giddy pace of side events and meetings, the actual negotiations are proceeding more slowly. The mood on Monday evening was reported to be decidedly bad-tempered as donor nations and the G77 (a grouping which includes developing nations and emerging economies such as China) wrestle over final details, including whether developing countries could be given a say in how global tax regulations are formulated.

Underpinning these arguments is a sense of sourness from some developing countries that they are being asked to sign up to a deal which asks a lot of them, but delivers little in the way of concrete commitments for them.  After all, as one delegate from Brazil commented last night, this is a financing conference where there is no new international public finance on the table.

Much of the talk at the conference has been of how to improve developing nations' domestic resource mobilisation through, for example, better tax collection systems , clamping down on the billions of illicit flows, as well as incentivising private sector investment. These are important, but they are not the whole story.

Despite these misgivings, there is widespread conviction that #FFD3 is worth the effort. Plenty of people are saying an agreement  here will  be just the beginning, not the end. The draft outcome document contains important language on committing to new social compact – meaning support for a basic standard of living for the world's poorest.

ODI's research, which Romilly Greenhill outlined at the conference today, shows that meeting these basic social standards will not be possible for the poorest countries even allowing for improved domestic resource mobilisation.

For them, for the foreseeable future, international public finance will continue to play a critical role in health, education and providing social protection for their citizens. In this sense at least, and however we deliver that help, the purpose of international development – if not the business of it – remains unchanged.

Ishbel Matheson