The Addis Agreement: a good foundation, now time to build

15 July 2015
Articles and blogs
Like the fast-growing city where it was launched, with new buildings under construction everywhere, the Addis Ababa Action Agenda provides us with scaffolding for a new global agenda on development finance.

The negotiations were tough and at times deadlocked, but does the final agreement deliver for the world’s poorest?

New commitments

On the positive side, there is an important pledge on a new social compact to deliver a basic package of services to for all, in health, education and income support. This is a groundbreaking commitment that, if realised, could deliver a global minimum standard of living for everyone.

Strong, international support for this is promised, along with a commitment to make more coherent funding available. 

There is also encouraging recognition of the financing needs of post-conflict countries – as well as those of the ‘missing middle’ group of countries, which are seeing their aid fall faster than faster domestic revenues as they get richer.

Funding shortfalls

But disappointingly, there is little in the way of new funds to fill this gap. ODI’s research has shown an estimated shortfall of $84 billion that needs to be filled by aid, in addition to the finance developing countries could potentially raise themselves through tax, if we are to deliver a social compact for the world’s poorest.

In Addis, the only commitment to increase aid volumes came from the EU, which reiterated its commitment to reach the 0.7% target – but only by 2030, so too late to help those who need help escaping poverty now. 

And despite the fact that poor people living in least developed countries receive much less aid per person than those in richer countries, there was no commitment to channel 50% of official development assistance (ODA) to this group, only a reiteration of the existing low levels.  

As for new and potential donors, other countries are only ‘urged to step up efforts’ to increase ODA - a very weak commitment in UN-speak. So-called ‘emerging economies’ have brought little to the table, and with the notable exception of some of the Middle Eastern providers, have been largely absent from the side events and discussions outside of the negotiating room.

Beyond aid?

Perhaps because of this reluctance to commit public funds in an age of austerity, much of the discussion in Addis focused on ‘beyond aid’.

The talk has been about mobilising the private sector and domestic resources in the developing world to fund the new ambitious sustainable development goals (SDGs) to be launched in September. As the price tag for the SDGs runs to trillions, not the billions available from aid money, action on these fronts is clearly vital.

The status of the UN tax committee – which dominated last-minute negotiations – resulted in some small steps towards improving developing countries’ participation in global tax discussions.

On the sidelines, a new Tax Initiative was launched, which includes a commitment to double donor support for tax reform in developing countries by 2020 – one of many, important new initiatives announced at this conference.

Yet Addis has shown us powerfully that we must not write off aid yet. Delegates argued that instead of ‘beyond aid’ – we should be talking about ‘aid and beyond’. Certainly the new social compact cannot be delivered without increases in aid: private sector flows will not fill the gap.

In one session, the testimony of one African mother made us stop and reflect why this is important. She spoke movingly of her pain in passing on HIV to her son – something that could have been prevented with anti-retroviral treatment. She pleaded for a fully funded Global Fund for AIDS TB and Malaria to help other women to avoid this fate.

Overall, the Addis Ababa agreement has set a good direction but will need to be rapidly followed up by action. 

Building the edifice of this new financing deal will require countries to work bilaterally, or in small coalitions: from increasing aid volumes, to allocating more to least developed countries, or making sure that current aid is better spent.

Addis represents the beginning, not the end point, of ensuring ‘no-one is left behind.’