<p><em>UN's Addis Ababa meet will discuss the funding issues and flows for the proposed Sustainable Development Goals which are set to replace the Millennium Development Goals, writes <strong>Simar Singh</strong></em><br><br>Discussion has reached unparalleled heights in the run up to the Third UN Conference on Financing for Development (FFD) which will be held in Addis Ababa from the 13th to the 16th of this month. One such panel discussion was the ‘Consultation on Financing for Development’ held in New Delhi last Wednesday. The discussion was organised by the Research and Information System for Developing Countries (RIS), Forum for Indian Development Cooperation in association with the UNDP.<br><br>The conference that is to be held in Addis is to discuss and finalise the funding issues and flows for the proposed Sustainable Development Goals (SDGs) which are set to replace the Millennium Development Goals (MDGs) that will expire by the end of the year. These will set the guidelines and benchmarks for the post 2015 development agenda.<br><br>The issue of financing is at the heart of any global development agenda, with its ultimate success and implementation heavily reliant on it. Recognising this, the panel consisting of various stakeholders across academia, civil society, students and government representatives, agreed that there was the need for a clearly defined, healthy and inclusive finance structure.<br><br><strong>Move From A Donor-centric Approach</strong><br>Concerns were raised about the donor centrism of existing global development financing, which unwarrantedly had a tendency of prioritising the wants, views and ideals of the developed nations, further bifurcating the North-South divide. This has been the existing structure of the MDG implementation and something that has been solidified in the Monterry Consensus in 2002, the subsequent Doha conference in 2008 and ODA (Official Development assistance) style funding.<br><br>According to one of the panellists, Prof. Deepak Nayyar of JNU, where the MDGs lacked was that their real focus was on “concessional development” through aid, which essentially was the outcome of a donor-centric worldview. He stressed on his belief that “the connection between concessional development and development outcomes was elusive.”<br><br>Instead, most agreed that there was a need to move away from a focus on external funding through transfers and aid to that derived from mobilizing nationally or regionally domestic resources.<br><br>“There is more to development than external finance and there is more to external finance than aid”, said the professor as external financing tend to come paired with unfair rules that constrict and encroach upon internal policy spaces that are traditionally meant to be sovereign.<br><br>Even when it came to external finance, issues were raised by the likes of Adarsh Saikia who is a member of the UN Department in the Ministry of External Affairs. Contention was about their unstructured and sporadic nature and the fact that they were no specific commitments made by developing countries.<br><br>This reality possibly stems from the fact that till date there has not been the acceptance of the notion of common differentiated responsibility. This is an idea that has been largely resisted by global heavyweights and has lead to an ideological divide on the development template.<br><br>“Cohesive nationally owned sustainable development strategies, supported by integrated national financing frameworks, will be at the heart of our efforts to eradicate poverty through facilitating sustainable economic growth and industrialization, social inclusion and environmental sustainability”, says the May 6 draft of the Addis FFD Accord, echoing this sentiment.<br><br><strong>New Strategies For Internal Funding</strong><br>Development finance has historically been primarily flowed to fund poverty alleviation strategies and other social issues- compartmentalising itself to the social purview.<br><br>Although industrial finance has contributed to the development trajectory, according to some of the panellists these provisions have been inadequate and did not solve long term problems on normal days, let alone crisis days.<br><br>They added that the Capital market, particularly in India, was too restrained and unwilling to take risks. This local investment could help turn the wheels of development only if investors were willing to take risks, think long term in the way of creating a steady flow of capital over a sustained period of time. “This would create a variety of financial assets to cater to everyone.”<br><br>Other ways to activate financial avenues apart from development finance were also discussed including deepening markets to supplement it, mobilizing savings and the local corporate debt market, developing a national capital market and promoting small local investments.<br><br>The achievement of these was believed to be reliant on three dimensions – the promotion of inclusive economic growth, social inclusion and good governance.<br><br>Subrat Das, Executive Director at the Centre for Budget and Governance Accountability added that the low cash to GDP was also an indicator that there was scope to mobilize domestic resources. Most developing Asian countries, including India, have less than 17% cash when compared to their respective GDPs because of the general inability to collect adequate tax revenue.<br><br>According to him there was a need to strengthen tax administration and cooperation between countries to avoid the ‘race to the bottom’ (the phenomenon in which nations competitively engage in lowering tax concessions to attract investment).<br><br><strong>Learning From The Shortcomings Of MDGs</strong><br>There was a reiteration of the need for SDGs to be different from the MDGs, not in terms of goals necessarily, but in terms of being more result orientated and creating stronger and better quality fund flows. A system that reviewed and created some accountability needed to be set up.<br><br>Some even called for a paradigmatic shift from a concentration on poverty alleviation to the post-colonial concept of justice- a move away from a patronising lens or charitable approach to one that rendered greater inclusivity and empowerment. This process was seen to be best for India- which does have the capability of becoming reliant on internal funding as long as a global network of technology and knowledge sharing and transfer was set up. Development has to be “underscored by the principle of national ownership”.<br><br>Involving the private sector is something that has been mentioned in the May 6 draft itself. This calls for “strengthening public finance and unlocking the transformative potential of people and the private sector, while ensuring that investment and consumption and production patterns support sustainable development, strengthening national and international policy environments, closing technology gaps and increasing capacity building at all levels”. This is a concept that has increasingly become important with the turn of the century.<br><br>Some panellists criticised the existing draft for, just like the MDGs, being ambitious-which was good- but not looking at the problems of the existing structure that spurred inequality. This creates an essential, underlying incoherence in the document.<br><br>It was agreed that there was the need to concentrate on the creation of a fair global economy and the reformation of hegemonic global monetary structures like the Bretton Woods institutions. This could be done by promoting greater South-South cooperation for eventual collective bargaining.</p>
