In Addis Ababa this month, world leaders gathered to hash out an action plan for financing development, but Organisation for Economic Cooperation and Development (OECD) countries have been accused of railroading developing nations into accepting an agreement that was unambitious and will not meet development needs.
The Addis Ababa Action Agenda details how the global community intends to fund ambitious plans to eradicate poverty and promote sustainable development. It was accepted by member states on Thursday 16 July as the outcome document of the 3rd international Financing for Development (FfD) Conference. The UN has lauded the document as a historic agreement, which contains “a series of bold measures to overhaul global finance practices and generate investments for tackling a range of economic, social and environmental challenges.”
Ban Ki Moon has similarly congratulated member states for the “far-reaching” outcome of the negotiations. This optimism was not shared by everyone, however. In a joint statement, hundreds of civil society organizations and networks from around the world which engaged in the FfD Conference expressed deep concerns and reservations about the Addis Agenda, saying that it had “lost the opportunity to tackle the structural injustices in the current global economic system and ensure that development finance is people-centred and protects the environment.” Proposal for UN tax body rejected This disillusionment was largely fueled by reluctance of richer OECD members to allow developing countries a greater say on UN tax policies.
The G77 and China, a group of developing nations, proposed that the current UN tax committee be upgraded to an intergovernmental UN body on tax matters with universal membership, better funding and more political clout, so that new global rules could be set to tackle problems such as illicit financial flows and corporate tax dodging.
Last year’s High-Level Panel on Illicit Financial Flows from Africa revealed that each year the total capital escaping African countries reaches USD 50 billion — twice the amount of Official Development Assistance (ODA) allocated to Africa. This proposal was rejected as a result of opposition from members of the OECD, which drew up the current tax system. The final outcome introduced only minor changes to the existing UN expert committee.
This means that the OECD will remain the only intergovernmental body that adopts global standards on tax matters. Tove Maria Ryding, Policy and Advocacy Manager for Tax Justice at the European Network on Debt and Development (Eurodad) said: “After three days of bullying, developing countries were finally run over.
The consequence of the Addis Ababa outcome is that more than one hundred developing countries will remain excluded from decision making on global tax standards. “This is not only a tragic day for the world’s developing countries, who will now have to accept that global tax standards will get decided in a closed room where they are not welcome.
It is a tragic day for all of us, because a global tax system where half of the world’s countries are excluded from decision making will never be effective. As long as our governments keep failing to cooperate on tax matters, multinational corporations will be able to dodge taxes.
At the end of the day, the Addis Ababa failure will impact us all.” Funding gap Civil society was also disappointed that developed countries were not willing to put their money where their mouth was when it came to development. The Overseas Development Institute has estimated that the funds that developing countries could potentially raise themselves through tax falls $84 billion short of what is needed to tackle extreme poverty, and the forecast cost of the Sustainable Development Goals runs into the trillions.
This gap will have to be filled by aid. Despite this, no new commitments to provide aid were secured at the conference. The European Union recommitted to the target of 0.7% of each country’s Gross Domestic Product (GDP). However, this target was initially agreed upon 45 years ago, and thus far only a handful of countries have delivered. Beyond aid? In place of ODA, discussions at the Conference centered on the idea of moving ‘beyond aid’, and looking to previously under utilised sources of funding such as South–South cooperation, domestic resource mobilization or the private sector.
The G77, meanwhile, was at pains to make the point that private sector funding could not replace traditional development assistance. Ambassador Kingsley Mamabolo said on behalf of the Group that “public funding should always take precedence over private financing.
The two cannot be put on an equal footing.” Likewise, civil society has cautioned that that the Addis Agenda’s optimism towards private finance to deliver a broad sustainable development agenda is misplaced. The Addis Civil Society Organisation Coordination Group has commented that “the [Addis Agenda] fails to endorse binding commitments to ensure business accountability based on internationally recognized human and labor rights as well as environmental standards. There is therefore a risk that the private sector could undermine rather than support the achievement of the sustainable development goals.”
Future The FfD Conference is only one of three critical gatherings for development this year. Member states are still to adopt the proposed sustainable development goals in New York in September, and to negotiate an agreement at the UN climate change talks in Paris in December. Financing is considered the linchpin for the success of these summits. Intense pressure will therefore be needed to ensure that donor countries deliver on the promises they did make in Addis. Culled from thisisafrica.me