CPDE Statement to the 2018 Financing for Development Review Forum
Billions to Trillions? Then go beyond 0.7%
The recently released 2017 aid figures suggest that the increase in Official Development Assistance (ODA) in real terms in 2016 was due in large part to increases in in-donor allocations for refugees. As these allocations fell in 2017, so has overall ODA. The ODA to LDCs specifically increased; but,in reality, the international community is still far below the 0.7% global commitment, at an average of 0.31% of GNI, and is as well a long way from the goals set for aid to LDCs.
The mantra of billions to trillions has seemingly given most development partners license to ignore the 0.7% commitment, with few exceptions. The failure to meet this target is more disturbing in light of the financing needs to realise the Sustainable Development Goals (SDGs). Many governments now suggest that financing flows must come from sources other than ODA. This has been incorrectly used as a way to diminish the relevance of aid and divert attention away from the reality that many governments are abandoning their the 0.7% commitment. If governments, especially development partners, are expecting other sources of financing to fill the SDGs financing gap, they should lead by example and not only meet but go beyond the 0.7% target.
ODA is as relevant now as ever
Filling the financing gap to meet the SDGs is a major challenge, but it is only addressing one side of the coin--quantity. There is the equally important issue of the quality of development financing to be taken into consideration.
One of the central tenets of ODA is poverty eradication, which is a deep contrast to other international financial flows which are motivated by profit. This distinction cannot be understated, especially in the context of the SDGs, as ODA is the only international financial flow that is explicitly intended to benefit the public. We note with regret that ODA is steadily being diverted from its core purpose to eradicate poverty and recommend that governments exercise greater caution when deciding how and where to allocate public resources. For CPDE, intrinsic in the quality of ODA is this express purpose to benefit the public and bring people out of poverty, and this should be safeguarded.
Making ODA more effective
ODA is unique compared to other international financial flows as it has a set of principles and a supporting process to make it more effective. The effectiveness principles of ownership, inclusiveness, transparency and accountability, and results provide an important scaffolding to support the quality of ODA. Unlike other international financial flows, we are able to evaluate and eventually improve the quality and effectiveness of ODA by applying these principle to ODA flows and should make every effort to apply them, both politically and at a policy and technical level.
CPDE strongly supports the effectiveness agenda and we regret that progress on meeting the commitments associated to it‑ like providing an enabling environment for civil society, untying aid, and using country systems, amongst others ‑has been slow and in some instances regressed. The "unfinished business" since the Paris Declaration is long overdue in its achievement and CPDE calls upon governments to redouble efforts and establish time bound targets to deliver on these long standing commitments.
CPDE also supports calls for these principles to be extended beyond traditional ODA and to be applied to international financial flows, especially private finance, which benefits in some ways from ODA. There is a need to eliminate the risks for ODA to undermine the effectiveness principles to which it is supposed to adhere.
CPDE remains cautious towards the promotion of blended finance in the absence of necessary and broadly developed accountability systems to monitor the impact of these types of flows. Shifting focus to the catalytic role of ODA can dilute core purpose of ODA, which is poverty eradication and can make it less accountable as the "catalysed flows" are more difficult to monitor.
Risks around blending and other innovative instruments
CPDE continues to express reservations on efforts to divert already scarce ODA resources towards less tested and trusted types of instruments that do not have an express public interest character. The narrative around these types of instruments suggests only opportunities, but rarely takes into account opportunity costs and associated risks, which have the potential to undermine the SDGs.
The increasing use of public resources such as ODA to catalyse additional finance from the private sector through modalities like blending and public private partnerships carries with it some deep and inherent risks. The risk of mobilising private resources go beyond the question of its effectiveness as a form of development finance. It also presents the potential to drive the development agenda backwards if not properly scrutinised and managed. For example, there is a real risk that using instruments like blended financing will lead to increases in tied aid, which is in direct contradiction with the effectiveness agenda.
To mitigate these risks, accountability systems must be in place to make sure that both public and private actors are complying with existing frameworks, including ILO and UN protocols, UN guiding principles on Business and Human Rights, and the OECD guidelines for Multi National Enterprises. Systems must be in place to ensure that these financing modalities are aligned to democratically agreed national development strategies, are fully transparent and accountable, and in full compliance with international human rights and environmental standards. Here the role of CSOs, trade unions and workers representatives in keeping enterprises accountable is critical. In the absence of these assurances, there is no reason to favour public-private financing over purely public financing, which must withstand public scrutiny.
Weak Democratic Ownership of Development Strategies
CPDE believes that aligning development cooperation with national development strategies is not enough for poor and marginalised peoples to own their development. Whether it is North-South, South-South or triangular cooperation, the design of national development strategies must be pro-poor and rooted in the participation of, and accountability to, stakeholders and citizens as the intended beneficiaries of development. Consequently, while it is absolutely important that all international financial flows align to national development strategies, it is equally important to guarantee that there be democratic ownership of these strategies.
Women’s empowerment cannot remain in the confines of the economic impact that investing on gender equality would bring to a country. It should be about how women and girls’ access their economic rights and autonomy. Development partners are still falling short when it comes to allocating resources to gender equality, women’s human rights, and empowerment and we call upon governments to scale up resources in these areas.
We support the recognition that South-South Cooperation is complementary to and not a replacement for North-South Co-operation. However, this does not mean SSC should not adhere to the same principles and standards we have for traditional ODA. That is to say SSC must also uphold human and workers rights, be in support of gender equality, be geared towards environmental sustainability and be pro-poor.
CPDE stresses that discussions on financing, especially financing for sustainable development should safeguard country leadership and policy space, align all kinds of cooperation with effectiveness principles, boost the implementation of the effectiveness agenda, keep ODA focused on poverty reduction, and enjoin the private sector to effectiveness, human rights and safeguard mechanisms. The follow-up on Financing for Development must endeavour to achieve the reform the current global governance system, overcome power imbalances, and address systemic issues.
The Civil Society Partnership for Development Effectiveness (CPDE), a platform of civil society organizations spanning seven regions and eight sectors, welcomes the Outcome Document of the third Financing for Development (FfD) Review Forum. Some positive developments to note include the recognition of the country leadership of national development processes, the importance of realising agreed global commitments and a nuanced approach to TOSSD and blended finance. We appreciate the emphasis on policy coherence with respect to the Addis Ababa Action Agenda (AAAA). We commend the document’s recognition of the development co-operation effectiveness principles, and the important role of the Global Partnership for Effective Development Cooperation has in promoting these principles. On the other hand, both the Outcome Document and IATF Report remind us all of the ground still to be covered and we must be cognizant of the gaps and challenges that remain