A first step

The Third Financing for Development Conference asked the right questions. Now the international community needs to come up with the answers.

FFD3 from the ground

21 July 2015

Last week, governments from across the world met at the Third Financing for Development Conference (FFD3) in Addis Ababa, Ethiopia, to agree a framework to finance the future sustainable development agenda. On the penultimate day of the conference, an agreement was reached and the "Addis Ababa Action Agenda" was adopted on 16 July.

Does the final outcome document live up to our hopes? Does it mark a real turning point in the fight to eradicate global poverty and tackle inequality and climate change? Certainly the first condition – agreeing on a financing framework – has been met. But the deal agreed is just a first step. FFD3 has definitely asked the right questions – how do we mobilise enough high quality resources to finance sustainable development and how do we tackle the underlying systemic issues that restrict countries' ability to finance a sustainable future. In the long negotiation process commitments were largely lost and ambitions decreased. There was a  focus on voluntary action and promises rather than commitments and concrete deliverables.

In some areas, the narrative has moved in the right direction: Domestic Resource Mobilisation (DRM) has been moved higher up the agenda – recognising that, for developing countries, tax is one of the most sustainable and predictable sources of income for financing their own development.

Equally, the Action Agenda contains language on effectiveness and transparency for all financial flows, and could be a starting point for discussions around accountability mechanisms for the private sector. But these undoubtedly important ideas lack specific commitments and concrete next steps to turn them into action.

Promises made in other areas, such as global aid targets, international tax cooperation, and systemic issues remain too weak, and civil society organisations (CSOs) have noted with concern the over-emphasis placed on the role of the private sector.

In Financing the Future, Bond’s Financing for Development Group outlined UK Civil Society’s key asks for Addis – on a range of FFD issues  calling on the UK government to show leadership on tax and aid specifically. Again, in terms of what has been agreed, the results are mixed.

Encouragingly, tax is a central part of the FFD agenda – recognising the central role taxes play in achieving sustainable development, and the resources developing countries lose through tax evasion, tax avoidance and illicit financial flows. However, agreements achieved fall short on tackling the core obstacles like tax transparency and miss the public reporting requirement. Most notably, international tax reform didn’t really happen. There is no new international tax body to address the current problems of legitimacy and representation. These are issues we will now need to address in the future.

The UK has been a strong performer on aid  –  Britain became the first G7 country to meet the UN target of spending 0.7% of its gross national income (GNI) on official development assistance (ODA). And in March this year the UK was first among its peers again when it enshrined in law its commitment to the UN development spending goal.it was the first G7 country to reach the target of spending 0.7% of its gross national income (GNI) on official development assistance (ODA) and to enshrine its commitment to this spending goal in law.

Strong leadership was needed to encourage others to step up, but, despite some movement in this direction by other EU member states, the final outcome – lacking specific timetables and implementation requirements - suggests we would be foolish to hope for real progress on aid quantity in the next few years at least. Similarly, while the Agenda acknowledges development effectiveness as a requirement for the quality of finance, it falls short on commiting to clear and time-bound plans to implement effectiveness commitments and applying key principles to all sources of finance, both public and private.

Luckily, Addis is just the first step. Success will be measured by turning promising words into ambitious action. The UK needs to strengthen the results achieved at FFD3 with initiatives at the national level that go beyond the promises made in Addis, and clear implementation plans for meeting targets. We haven’t quite achieved a turning point for sustainable development, yet. We need to live up to our ambitions by strengthening the results, and providing clear deliverables when we review action in one year at the UN Economic and Social Council. We can still be the generation that ends extreme poverty.

About the author

Mareen Buschmann

Mareen is a Policy Adviser with a focus on Financing for Development, aid quality and quantity and public finance, and European Development Policy. She coordinates the Financing for Development UK group and the European Policy Group.