The Post-2015 Development Agenda & Financing for Development
Delivered at the Asian Development Bank Board of Director’s Colloquium in Manila, Philippines.
Distinguished Members of the ADB Board,
Thank you for the invitation to join you this afternoon. It is good to be back at ADB.
Multilateral development banks, including the Asian Development Bank, make an invaluable contribution to the United Nations development agenda. Your enhanced support for the implementation of post-2015 sustainable development in the Asia-Pacific region is key to the success of this agenda.
In my remarks today, I will highlight the:
- Importance of a coherent and fully integrated conceptual framework for sustainable development, with a focus on core elements of the agenda;
- Significance of enhanced and diversified resource mobilization, supported by new and enhanced global partnerships for financing sustainable development; and
- Process changes in the United Nations to support implementation, and the imperative for regional commissions to foster closer partnerships for sustainability with regional development banks (RDBs).
An Integrated & Coherent Framework
Transitioning beyond the Millennium Development Goals, and seizing the generational opportunity to shape development in the post-2015 era, requires a coherent and fully integrated conceptual framework for sustainability.
What is different about this agenda?
It emphasizes “balanced integration of the three dimensions of sustainable development” – economy, society and environment. Within this framework, social justice and ecological sustainability must be established as fundamental policy objectives, rather than as secondary considerations to growth. Environmental protection and the sustainable use of natural resources must be informed by the best possible science, implemented by the right technology, and must engage all stakeholders. These essentials call for a rethink and a shift to a different growth trajectory – one which is more resource-efficient, able to meet the needs of present and future generations within planetary boundaries, and which puts people at the centre of development.
So how do we go about it?
Moving from short-term exigencies, the post-2015 development agenda requires long-term vision and perspective. National governments must adopt holistic approaches to shape their development strategies and frameworks, by mainstreaming the inter-linkages of the three dimensions of sustainable development.
Grounded in shared values and principles, the sustainable development agenda will be universal and transformative, with poverty eradication at its core. Reinforcing the inherent sectoral and thematic interlinkages and synergies, this agenda, as the United Nations Secretary-General has said, offers us a “once in a generation opportunity” to end extreme poverty, reduce inequalities, achieve shared prosperity and foster real sustainability.
In shaping coherent and integrated policy frameworks for sustainable development, a number of strategic elements must be kept in view, amongst these are:
- Ensuring that social welfare goes beyond the provision of a minimum income, to promoting wider social protection and social justice. This requires inclusive policies to promote the quality of economic growth and development, without undermining GDP growth goals;
- Dealing squarely with growing and widening inequalities that negatively impact on sustainable development by reducing economic growth, undermining social cohesion and solidarity, as well as hampering environmental governance;
- Promoting social protection, not only to address income distribution, but also to enhance equality of opportunity through development of human capital development – both in terms of improving access and quality of services. The impact can be profound, breaking cycles of intergenerational inequality and building productive assets;
- Respecting environmental boundaries by shifting from resource-intensive to resource-efficient growth paths, based on sustainable consumption and production across sectors;
- Treating expenditures on social and environmental protection as investments in critical forms of “capital,” which enhance long-term productivity of the economy and public welfare;
- Supporting sustainable development with a combination of national efforts and global partnerships, to make available the finance and technology needed to implement the sustainable development agenda; and
- Accelerating regional cooperation and integration, which offers good opportunities to harness South-South investment and trade flows, to complement North-South, as well as science and technology.
In September this year, after exhaustive regional and global consultations, the United Nations General Assembly will negotiate a universal set of sustainable development goals (SDGs). With the rather daunting prospect of 17 proposed goals and 169 targets for the proposed sustainable development goals (SDGs), there are some valid concerns:
- First, some fear that a proliferation of goals and targets will diffuse and distract attention from the core goal – the elimination of poverty. This ignores the reality that poverty eradication cannot be sustained without all-encompassing achievements in economic and social justice, as well as ecological sustainability, that I just talked about;
- Second, concerns linger regarding the means and institutional mechanisms of implementation - the complexity of “how” this ambitious agenda will be realized. Key to implementation will be political commitment, effective governance and national coordination across critical institutions on the three aspects of sustainability, which are managed by different ministries and agencies, and which by and large still operate in silos;
- Third, there is yet to be global consensus on how finance, as well as science, technology and innovation, will be harnessed to service sustainable development. Total global and regional savings exceed the resource requirements of the post-2015 development agenda, so the emphasis has to be on governments and markets deploying financing for development and concluding trade deals and transfers of sustainable technologies; and
- Fourth, substantial work needs to be done to develop national indicators and strengthen national statistical capacities.
Aspirational universal goals are laudable, but we must have a robust and transparent framework in place for national and regional priorities, and an institutional mechanism must be defined for follow-up and review of implementation at all levels.
Most critical for implementation of the SDGs will be a new framework for financing development, with supportive policies and partnerships. The global crisis has underlined the inherent financial system risks and weaknesses. Financial exclusion is pervasive given lack of financial and sector diversification. Financial actors have, for too long, perceived development finance to be the business primarily of government. Policy and regulatory environments remain unsupportive of sustainable financing, while unchecked concentrations and excesses have resulted in the recurrence of global and regional financial crises. With high development resource requirements, unlocking massive savings and private sector finance will be critical. There is substantial scope for additional resource mobilization, both at the domestic and international levels:
- Developing countries globally have the potential to increase average tax/GDP ratios by as much as five percentage points (from a current average of 13.2 per cent of GDP to 18.2 per cent of GDP ), potentially mobilizing $1.5 trillion. ESCAP’s analysis shows that if 16 Asia-Pacific developing countries alone could realize their tax potentials, they could mobilize an additional $300 billion;
- In Asia and the Pacific, a rise in stock market capitalization in the order of 10 per cent, as a proportion of GDP, will raise domestic equity and debt by $1.8 trillion;
- In developing countries, additional long-term funding, in the order of $2.2 trillion, could be mobilized if long-term institutional investors increase the share of infrastructure assets, as a proportion of total assets under management, from the current 3 per cent to 5 per cent;
- Tackling illicit financial flows could mobilize an estimated another $1 trillion worldwide; and
- If DAC member countries meet their original commitment, ODA to developing countries would increase by from $135 billion to $315 billion.
In Asia and the Pacific, there is great potential to use public funds to leverage private investments. In the region, private investment, equivalent on average to about 19 per cent of GDP, constitutes almost three fourths of total regional investments.
Calling for tapping alternative sources and options of financing, and underscoring effective allocation of public expenditures and development effectiveness, the Third International Conference on Financing for Development, in Addis Ababa in July, will offer a global framework for financing. It will not be a pledging session – the draft outcome document (the “Addis Ababa Accord”) is instead intended to encourage commitments to a set of concrete proposals, as well as to call for strengthening global partnerships. The draft outcome document advocates a new compact for investing in people, and offers guidance such as:
- Governments with revenue levels below 20 per cent of GDP should progressively increase tax revenues, with the aim of halving the gap by 2025;
- Enhancing cross-border cooperation to reduce international tax evasion;
- Increasing public spending on basic social infrastructure and services, such as health and education – quoting a study calling for investment of a minimum of $300 per person in purchasing power parity terms, or 10 per cent of GDP (whichever is higher), to provide essential public services;
- Deploying national development banks (NDBs) to fill gaps in credit markets;
- Urging developed countries to deliver, by 2020, on their commitment to allocate at least 0.7 per cent of GNI as ODA to developing countries, with 0.2 per cent of GNI to least developed countries;
- Advocating that MDBs/RDBs better leverage their contributions and capital, and mobilize resources from capital markets, to provide concessional and non-concessional development finance while working with governments on sector policy environments and project feasibilities etc.;
- Reinforcing the establishment of new vehicles for infrastructure financing; and
- Calling on WTO members to redouble their efforts to conclude trade negotiations and address protectionism, including by eliminating of all forms of agriculture export subsidies etc.
Debates, however, continue on the context and content of the Addis outcomes, especially on issues such as:
- The approach and scope – e.g. how the financing framework deals with sector finance and cross-cutting areas, as well as how climate finance is treated, given the position of some that it is better deliberated exclusively in the UNFCCC track;
- The need for augmentation and appropriate mix of climate finance with some clear country positions that UNFCCC fund mobilization should be treated as “additionality” and not counted as part and parcel of development financing;
- The balance between financial and non-financial means of implementation;
- Further harnessing the Development Cooperation Framework;
- Not losing sight of the needs of middle income countries (MICs);
- The need for the new framework to respect common but differentiated responsibilities in financing, with others calling for a sharper focus on South-South arrangements;
- Social and environmental protection expenditure, which needs to be positioned as an investment in long-term social progress and shared prosperity, rather than as a purely financial cost;
- The linkage between monitoring and the follow-up on the financing for development outcomes; and
- Deployment of ODA and MDB funds for capacity development.
Without a far-reaching financing strategy, our visionary goals and new agreements will not be deliverable.
UN Processes & Partnership with ADB
Some key changes have been made to existing United Nations processes to strengthen oversight of the sustainable development agenda:
- A High-level Political Forum (HLPF) was established to provide political leadership, guidance and recommendations, including to follow-up and review implementation of the SDGs to be adopted;
- At the regional level, the Asia-Pacific Forum on Sustainable Development (APFSD) has been institutionalized by ESCAP to promote sustainable development and strengthening monitoring and accountability;
- Both the UN Statistical Commission and ESCAP’s Committee on Statistics, are focusing on developing monitoring and accountability mechanisms. National statistical offices (NSOs) will need to play a leading role in this process to ensure national ownership;
- An Inter-Agency Expert Group on Sustainable Development Goal indicators (IAEG-SDG), comprising 25 NSO representatives and, as observers, regional and international organizations, including ESCAP, will be created. The group will be tasked with developing a proposal for a global indicator framework in an inclusive and transparent process; and
- A High-level Group for Partnership, Coordination and Capacity-Building for Post-2015 Monitoring (HLG) will be tasked to ensure that the post-2015 monitoring system is nationally-owned and will foster capacity building, partnership and coordination for post-2015 monitoring.
In conclusion, having seen ADB in action during my own 15 years in these corridors, I know that your capabilities and capacities will serve well to promote sustainable development.
ADB has partnered with ESCAP in monitoring and driving delivery of the MDG agenda, and its collective efforts with other MDBs, to offer insights on financing for development and capital enhancement for infrastructure financing, have been noteworthy. Both the United Nations General Assembly and the Secretary-General have underscored that the United Nations regional commissions and regional development banks must work together more closely, to reinforce the implementation and review of the SDGs.
ADB’s investments in infrastructure, environment as well as the social sector are key to sustaining economic growth and development. We would welcome even more strategic and directed efforts by ADB to support national governments in operationalizing the SDGs, and to enhance their implementation through capacity building.
In conclusion, I hope that ADB’s already-valuable work in this field will be enhanced in the coming years under your guidance and with your support. ESCAP looks forward to continuing our strong partnership with ADB in conducting research and building national capacities for a more integrated and sustainable Asia-Pacific.
I thank you.