5 ways the post-2015 Financing Committee could change the world. (Seriously.)

by Cordelia Lonsdale

The Expert Financing Committee for post-2015 (ICESDF as it’s known) is nearly done with its task of setting out the strategic framework for sustainable development financing, and civil society gets its last chance to input to their report this week, via a stakeholder dialogue event in New York.

As it stands, the report framework shows a strong narrative about making the best use of all available resources for ending poverty, according to the national context and priorities. And it’s captured the main paradigm shift we need to see: the focus on strong domestic policies being long-term drivers to end poverty and drive sustainable development. The Committee has reviewed most (not quite all) financial resources that can be mobilised in developing countries – and recognised the need for greater transparency and accountability. This is all good news (though it would be much better to have a draft report made public for comment).

That being said, there are a few concrete things the Committee could do in the final week to make the report – and the process that comes afterwards – a true game-changer for financing sustainable development well-beyond 2015.

1.    The Committee could kick-start cross-sector dialogue to build consensus around the end goal: ending poverty

The objective must be clear to all actors involved in financing post-2015: we want to finance the end of extreme poverty and promote sustainable development. This is not the same thing as promoting economic growth; economic growth is necessary, but it’s not enough on its own to end poverty. We need strong, targeted social policies, driven by strong national planning and informed by detailed, sub-national level data on needs and poverty, to make sure the benefits of growth reach everyone and leave no-one behind. This message emerges continually from findings on poverty and allocating resource in East Africa, such as the recent Uganda Chronic Poverty Report.

Not all the financial resources the report covers can have equal impact on poverty, so we need more discussion and alignment about how to target them appropriately, and how this targeting can be managed. This point is not new. But it’s worth re-emphasising this week.

This graphic shows the distribution of different types of international resources against global poverty.

The distribution of FDI and ODA (from all sources) against poverty (2012)

The distribution of FDI and ODA (from all sources) against poverty (2012)

There are two points to make. The first is that, clearly, we can see that FDI – one of the key resources mentioned in the Committee’s report- doesn’t necessarily flow in high amounts into countries where the most poverty and greatest need is, or where poverty will be in future. This means international public finance such as ODA will continue to be essential for certain countries not attracting private investments. ODA also has qualities that make it more appropriate for long-term social investments (it’s counter-cyclical, and not profit-seeking). Therefore, ODA should be re-framed as a resource responding to needs, to target where poverty is greatest. The Committee should ensure the report carries a strong message about the need to target scarce ODA resource at where poverty and need exists.

Secondly, we also need to be much clearer on the end goal, when talking about attracting private investment into sustainable development. The conversation on financing is rightly turning to how to incentivise private investment in sustainable development, often in conversations about ‘bankable projects’. But we also need to remember the why, and ensure buy in from all actors at this level: keeping the discussions focused on the end goal, on meeting the objectives of the sustainable development goals, and on ending poverty by 2030. The differences between the aims of ending poverty and promoting economic growth need to be distinctly understood and managed. Jonathan Glennie’s recent piece in the Guardian notes that the most ‘achievable’ part of this agenda is setting out the steps the public sector can take to ensure that private investments can be pro-development. This is essential, and yes, the public sector has to drive priorities; but I personally hope that the post-2015 agenda can be more ambitious: and seek buy-in from the private sector on the high-level objectives as well.

The Committee is right to say effective government policies are “the linchpin” of sustainable development financing strategies. So it’s important that international actors, both public and private, also get beside this principle, if it’s to hold up in post-2015. We need the Committee to use the report to call for more cross-sector dialogue about objectives, roles and responsibilities in financing for post-2015, as well as how all financing – and its impacts – can be transparent, monitored and accountable to people and communities, especially those living in poverty.

4 more points the Committee should include

…to make the report truly transformative and agenda setting.

  1. Humanitarian financing should be incorporated in a holistic financing framework. These significant financial resources and their impacts on long term development, have so far not been mentioned at all in these discussions. These flows are vital for many fragile and post-conflict states, and for countries facing acute, conflict-related or protracted crises. The report should clearly recognise the scale of humanitarian flows and set out a pathway to help decision-makers build on the scale, nature and impact of these resources to drive long-term development and resilience. The findings of our latest GHA report on humanitarian assistance demonstrates the need to build humanitarian resources into longer-term planning.
  2. The report could call on donors to do more to support policies at the national level, which can curb illicit flows from developing countries. As well as international actions, the share of technical assistance in complex policy areas such as tax, customs and financial crime is extremely low. Given the level of specialised knowledge needed in these areas, donors must make sure their policies are driven by domestic needs and international priorities, and appropriate for developing countries and their administrations- not focusing on one-off projects, but on building skills and capacity within national governments. This should be coherent with the global actions also needed for tackling illicit flows.
  3. The report should call for mandatory corporate reporting on social and environmental impacts. To ensure they can be recognised for their role in post-2015, private actors should be transparent about the investments they make and the impact this has. As called for by the High Level Panel report, by 2030 all major corporations (with a market capitalisation above $100 million equivalent) should report on social and environmental audits by 2030 on a mandatory ‘comply or explain’ basis. Currently, around one-quarter of all large corporations do so.
  4. The Committee should recommend that all actors providing all financial resources for development explore publishing to the International Aid Transparency Initiative (IATI). IATI is a common open data publishing standard that can be used by any actor, large or small, NGO or private company It has huge potential to increase transparency and accountability of financing for development, since it allows all financing actors to report detailed data on their development activities in a timely, forward-looking manner. IATI is already being used by major donors, multilateral actors and private companies: 260 publishers globally to date. There is also potential for IATI and other transparency initiatives to work together and build ‘joined up data’ which could enable more comparable data, coordinated systems and useful information.

Here’s hoping the Committee feels like changing the world this week. We hope they set out a vision for a single, holistic financing framework that uses all available resources and targets them to best effect for ending poverty, in a way that is transparent and accountable to people and communities everywhere. The five points I put forward in this blog can help to make this happen.