In July, Addis Ababa will host a crucial summit on financing for development. If September’s summit on sustainable development goals (SDGs) in New York is when governments will decide what they want to achieve on poverty and sustainability by 2030, Addis is where they must set out how they will do so.
There’s much to do, with a bewildering array of potential issues on the table – aid, trade, tax, the private sector, climate, sustainability and technology transfer are all possible focus areas – and too little clarity on what success would look like on each. Politicians are not yet feeling pressure to make serious offers.
Yet, if Addis disappoints, the fallout could be extensive. Prospects for achieving the SDGs – such as ending poverty by 2030 – would dim significantly. Frustration among developing countries could feed in to the September summit and the December climate summit, threatening a cascading failure that could damage prospects for international cooperation on defining global issues for a decade.
How can we avoid this scenario and ensure that Addis is a landmark?
First, there needs to be a clearer narrative on what the summit is for, that focuses on three or four core areas. At least one of these needs to be about politicalimpact, with a big story that leads the next day’s news agenda. In practice, this probably has to be about aid – even though it now accounts for only around a 10th of development finance.
Timetables for countries to give 0.7% of national income to aid are unlikely to work, given past promises: in 2005, 16 countries pledged to meet 0.7% by 2015, but only five have delivered. A pledge to give at least half of all aid to least developed countries, on the other hand, may cut more ice – but the politics look tough.
Other contenders could include a major push on addressing the “financing gap” faced by many middle-income countries, through scaling up official financing other than aid. And a strong focus on financing highly effective cash transfer schemes in lower income countries would go a long way towards ending poverty.
The Addis outcome could also help key “work in progress” agendas with longer term development impact.
One area where there’s plenty of buzz is the contribution the private sector can make – for instance, through scaling up foreign direct investment (the single biggest source of development finance), new public-private partnerships, or in key sectors like infrastructure. Less clear, though, is exactly how Addis may contribute.
Instead, a better candidate may be international tax cooperation – the most important thing that rich countries can do to help developing countries mobilise their own resources.
One step would be to spend more aid on developing countries’ tax administration efforts – an area with breathtaking rates of return. Faster progress on recovery of stolen assets from abroad is another priority for many developing countries, as is access to the automatic exchange of tax information that G8 and G20 countries have already agreed among themselves.
Above all, Addis could help close tax loopholes that allow multinational companies to report profits in tax havens – rather than where their workforces, assets or sales are. Country by country reporting requirements would be one important step; a unitary tax system would be even better.
Addis could put emerging issues on the development map by including these in the outcome document – even if the time is not yet ripe for agreeing concrete actions. It could put down a marker on the need to do more to tackle inequality, echoing the SDGs’ emphasis on the issue. Or, it could flag up the potential wins that would result from fair shares for developing countries in any future global emissions budget.
Most of all, Addis needs more agenda-setters to help its Norwegian and Guyananco-facilitators, and Ethiopian hosts, to champion its potential. UN secretary general Ban Ki-moon and World Bank president Jim Yong Kim could both do more. Germany and Turkey, hosts of this year’s G7 and G20 summits, could be key players too.
Addis needs more voices to make the moral case for why countries need to raise their game. Civil society has a crucial role here. And it may be that Pope Francis emerges as a leader, given his commitment to justice – and the fact that a papal encyclical on climate and development is expected soon.
Perhaps most of all, the summit will depend on commitments from finance ministers to attend (as IMF head Christine Lagarde has already done). They, far more than development ministers, have the power to unlock real progress.