Financing for Development – stuck in the mud?

This post has been written by Publish What You Fund’s CEO Rupert Simons and Head of Policy and Advocacy Jeannet Lingán.

Two months remain until the third international conference on Financing for Development (FfD3) in Addis Ababa. The conference is intended to agree actions in the implementation of unfinished past financing for development commitments (Monterrey and Doha), including addressing new challenges posed by the post-2015 sustainable development agenda and strengthening its follow-up process.

There was a lot of frantic diplomacy at the second drafting session of the outcome document in New York this month, but overall the conference felt a bit stuck. One reason is there is no new money on the table. At previous conferences, in 2002 and 2008, the OECD donors promised to increase aid, and most of them did so. However, many are still behind expected targets. Now, the focus is on how countries can mobilise more tax revenue, use public finance to unlock private investment and respond to a broader (sustainable) development landscape. Development is going beyond aid and beyond the Millennium Development Goals.

In the run-up to the second drafting session, Publish What You Fund, alongside other civil society organisations as part of our Road to 2015 campaign, called for governments to step up and commit to transparency of development finance by including:

  • A commitment for all development actors to publish information on their development activities using a common open standard (eg. IATI), because we need to know where development finance is going and what it is delivering
  • Invest in capacity building to produce and use data by all stakeholders- because we want better policies, country ownership and accountability
  • Support the interoperability of transparency initiatives and standards – this allows us to compare different financial flows for sustainable development (aid, extractives, country budgets) and use it to make decisions

We made this case as part of the discussion on ‘Data, Monitoring and Follow-up’ in the Financing for Development, and a number of countries spoke in support. The G77+China group reiterated their demand for developed countries to provide timely and comprehensive information on aid. Bangladesh made a strong call for all development providers to publish information in a standardised, open and electronic format. Ghana asked for high quality data on financing and called for a common reporting platform. The European Union spoke up for transparency using an open and electronic format based on global open data standards. The USA spoke in favour of standards and enhancing data use and interoperable standards.

We have two big concerns about the discussions, though. First, the negotiations resembled a zero-sum game, with too little of the creativity needed to strike a deal. Second, there was little agreement on the follow-up process from the conference.

If governments stay in their geopolitical comfort zones, the negotiations will remain stuck and Financing for Development will fail. That will cripple the Sustainable Development Goals and diminish the chances of action on other global problems like climate change.

We believe, however, that creative negotiators can craft a deal that doesn’t cost more but delivers benefits all round. Transparency could be the key to unlocking it. We could envisage, for example, a grand bargain in which G77 countries open their public flows (data on budgets or south-south cooperation, for instance) in return for the OECD countries opening more private flows, such as investment or tax payments, to scrutiny. Better data on all financial flows, public and private, could reduce mutual suspicion as well as tackle problems everyone recognises like tax evasion and illicit financial flows.

What will it take to achieve such an outcome? Two things, in our view. First, governments need to remember development is a critical, global issue not just a foreign policy one. That means Presidents, Prime Ministers and finance ministries should join the negotiations. Second, governments everywhere need to get out of the mud and raise their ambition. We hope that it is not too late to do that.

Rupert Simons
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