Financing for Development and the 2030 Agenda for Sustainable Development: Synergetic but distinct

The Third International Conference on Financing for Development was held on 13-16 July in Addis Ababa. This Financing for Development process, which has as its primary goal the task of mobilising finance for the sustainable development of developing countries, was initiated in 2002 by the United Nations with a landmark conference in Monterrey, followed by a subsequent conference in 2008 in Doha. In this background analysis, Ranja Sengupta explains how at Addis Ababa, the rich countries, in their desperate attempts to evade their financial commitments, sought to denude and ultimately destroy the integrity of this whole process.

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THE Financing for Development (FfD) process was launched in 2002 after the recognition that global development challenges cannot be met without an effective implementation plan that harnesses financial resources from various sources and is built on cooperation among, and led by, governments, supported by different actors such as global institutions, the private sector, civil society and UN agencies. What had energised the process was the financial and economic crisis that East Asia faced in 1997 and the realisation that the impact could and did reach far and wide.

The first International Conference on Financing for Development was held in Monterrey, Mexico, in March 2002 and resulted in the historic Monterrey Consensus. The Monterrey Consensus provides a framework for a global development partnership in which the developed and developing countries agreed to take joint actions for poverty reduction. While developing countries agreed to take responsibility for their own poverty reduction and help garner revenues for it, this was premised on the acknowledgement by developed countries that they have to share in the responsibility and meet unfulfilled promises as well as make new commitments. This included the old promise, made in the 1960s, to provide 0.7% of gross national income as official development assistance (ODA). The developed countries also promised to provide access to trade, technology and debt restructuring, and address global governance issues and policy coherence, better known as systemic issues, so that those do not obstruct development objectives.

The Consensus spanned six key areas: the mobilisation of domestic financial resources; international private resources; international trade; international financial cooperation (mainly ODA); external debt; and systemic issues with emphasis on enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development.

The FfD process set in motion at Monterrey was followed up with the Doha Declaration of 2008, and has recently added to its league the Addis Ababa Action Agenda (popularly referred to as the AAAA) agreed during the Third International Conference on Financing for Development, held in Addis Ababa on 13-16 July this year. The recent adoption of the Agenda by the UN General Assembly in end July is to be followed closely by the adoption of the 2030 Agenda for Sustainable Development or, as it was known until recently, the Post-2015 Development Agenda. This Agenda will replace the Millennium Development Goals (MDGs), which expire in 2015, and includes the Sustainable Development Goals (SDGs), a set of ambitious 17 goals and 169 targets.

This close synchronisation in terms of timing seems to have led to a belief that the AAAA exists simply to cater to the SDGs, as the Monterrey Consensus did for the MDGs. In truth, neither is correct. While both these processes are closely linked, they are distinct and have their individual mandates. In the current context, in spite of strong efforts by the developed countries to replace means-of-implementation (MOI) targets agreed in the SDGs with the AAAA, it is finally agreed that the 2030 Agenda will be 'supported' by the AAAA, which is 'an integral part' of the former. The last was a concession extracted by the developed countries. 

Financing development but not only Millennium Development Goals

The 2002 Monterrey conference came in the wake of the adoption of the MDGs in 2000. The MDGs provided some specificity and the modicum of a global development framework. However, while one of the mandates of the FfD process was to help address and achieve the MDGs, it was clearly not limited only to the MDGs. The mandate was much larger and could span other development objectives determined nationally by governments.

In its opening paragraphs, the Monterrey Consensus says, 'Our goal is to eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable global economic system' (paragraph 1, Chapter 1). The MDGs clearly did not fully cater to the much more ambitious perspective in this paragraph.

Paragraph 3, Chapter 1, goes on to articulate the objective of the Consensus: 'Mobilising and increasing the effective use of financial resources and achieving the national and international economic conditions needed to fulfil internationally agreed development goals, including those contained in the Millennium Declaration, to eliminate poverty, improve social conditions and raise living standards, and protect our environment, will be our first step to ensuring that the twenty-first century becomes the century of development for all' (emphasis added).

The FfD process was focused on poverty eradication, the same as the primary focus of the MDGs, but it was looking at a much bigger picture of institutional intervention and exploring a framework to pool all sources of finance. The MDG Goal 8, which provided the so-called MOI for achieving MDGs 1-7, was reflected in Monterrey. But MDG 8 was itself limited and did not cover the range and depth of the coverage of FfD. So there is synergy and coherence between the Monterrey Consensus and the MDGs but only a partial overlap.

The Addis Ababa Action Agenda supports, not replaces, SDG MOI

The December 2013 UN General Assembly resolution that called for the Third FfD Conference states the objectives of the Conference pretty clearly. It says, 'assess the progress made in the implementation of the Monterrey Consensus and the Doha Declaration, reinvigorate and strengthen the financing for development follow-up process, identify obstacles and constraints encountered in the achievement of the goals and objectives agreed therein, as well as actions and initiatives to overcome these constraints, address new and emerging issues, including in the context of the recent multilateral efforts to promote international development cooperation, taking into account the current evolving development cooperation landscape, the interrelationship of all sources of development finance, the synergies among financing objectives across the three dimensions of sustainable development, as well as the need to support the United Nations development agenda beyond 2015' (emphasis added).

It is clear that supporting the 2030 Agenda for Sustainable Development (earlier referred to as the Post-2015 Development Agenda) was one of the objectives, but not the only or the primary objective, of the Addis Conference.

Thirteen years down the line from Monterrey, the AAAA will potentially help implement the SDGs but not only the SDGs. There are issues that the AAAA covers (e.g., more in-depth treatment of systemic issues) which the 2030 Agenda for Sustainable Development does not cover or is very weak on. On the other hand, while MDG MOI were more or less subsumed by the Monterrey Consensus, there are SDG targets that are not covered very well in FfD, for example those related to social protection and policy space. Another important fact is that the FfD mandate is not just for the next 15 years, as is the case for the 2030 Agenda on Sustainable Development.

Gradual weakening of FfD and strengthening of Post-2015 MOI

This time the SDGs are much more comprehensive than the MDGs. This increasing coverage and comprehensiveness of the SDGs has led many, in particular the developed countries, to argue that the AAAA will target only the implementation of the ambitious SDGs. However, this reasoning is only surface-deep.

Far more important is that the developed countries had managed to achieve a steady deterioration in the quality of the Addis FfD outcome document since the beginning of negotiations on the document this year by keeping out an increasing number of key demands by developing countries. In fact what was agreed to in the end did not include, among others, an intergovernmental tax body or provisions on investor-state dispute settlement (ISDS). While the AAAA still offers some good provisions, for example a Technology Facilitation Mechanism (TFM), much of it is vague and several provisions are weaker compared to the Monterrey Consensus.

On the other hand, the SDGs are target-oriented and therefore much more specific in a way. In particular, the goal-specific MOI were fought hard for by developing countries and, though far from optimal, still represent very specific MOI. Moreover, given the specificity, they are easier to measure and progress thereon more easily accounted for.

There are also differences between the two frameworks in the treatment of financial and non-financial MOI. Only the first is mainly covered in FfD and this was pointed out by developing countries as a reason for not allowing the FfD outcome document to subsume Post-2015 MOI. However, in order to bridge this, there was  a  hotchpotch  attempt  to  incorporate non-financial MOI into FfD so that  this  could  not  be  advanced  as an argument against superimposing the AAAA on top of the Post-2015 MOI.

The weakening of the FfD outcome document coupled with the strengthening and increasing specificities of the MOI targets led the developed countries, which are desperately looking for a way out of MOI commitments, to suggest that FfD should fully replace the MOI in the Post-2015 Development Agenda. The US stuck to this demand till the very last days of the final Post-2015 negotiations. If it had been agreed to, it would have effectively killed off the independence of both the FfD process as well as the Post-2015 MOIs, especially the latter's specific nature. It would have also limited the mandate of the FfD process to the next 15 years.

This is the reason why developing countries fought till the end to keep the AAAA out of the Post-2015 Development Agenda text, and refused to attach it even as an annex. The end result was a compromise, with the AAAA not being annexed to the Post-2015 text but still being referred to as an 'integral part' of the 2030 Agenda for Sustainable Development. However, the US demand to replace the SDG MOI with the AAAA was completely rejected.

A joint forum for review and follow-up

In spite of the best efforts of the developing countries to keep the two processes separate, which they pulled off to a large extent, the two processes are joined at the hip now by a joint forum for follow-up and review of both the FfD process (starting from Monterrey) and the Post-2015 MOI. This forum will report to the High-Level Political Forum (HLPF), the UN body entrusted with the review of the 2030 Agenda.

The demand for an independent review body for FfD was strongly resisted by the developed countries and fell through during the negotiations. The reporting of the forum to the HLPF also places FfD review completely under the Post-2015 review mechanism. However, in the absence of an independent review body dedicated to FfD, the setting up of a dedicated forum is better than several other options. From the Post-2015 MOI perspective, it is clearly a gain as, unlike MDG 8, these MOI will get dedicated and additional attention (compared to Goals 1-16) in terms of their implementation. However, how this forum actually works and how the integrity of the FfD review process is maintained remain to be seen.

In conclusion, the FfD process, started in Monterrey and continued through the recent Addis Conference, is to work hand in hand with specific development goals included in the MDGs and the SDGs, as contained in the current 2030 Agenda for Sustainable Development. These overlap and must synergise if we are to realise our development goals, but each process has its own mandate and has something to deliver that is not limited to or by the other.            

Ranja Sengupta is a senior researcher with the Third World Network.

*Third World Resurgence No. 300, August 2015, pp 5-7