High-level dialogue on financing for development is crucial
On Sept. 26, the UN General Assembly will convene for the first High-Level Dialogue on Financing for Development (HLDFD), which will focus on addressing the multitrillion-dollar financing gap slowing the pace of reforms outlined in the UN’s 2015 Sustainable Development Goals (SDGs).
It runs concurrently with other high-level meetings focusing on climate action, universal health coverage, and a review of the sustainable development of small island states. The HLDFD will build on conclusions from the ECOSOC Financing for Development Forum, held in April, to identify actionable policies and viable paths to trigger the release of funding via public and private investments, debt sustainability, taxation and addressing illicit financial flows.
This dialogue is crucial in a world flirting with insularity and unilateralism, a far cry from the kind of enthusiasm for international cooperation that birthed the SDGs. These goals are ambitious, and in our present climate, more idealistic than practical, but there has been some progress. Extreme poverty has been reduced to 10 percent of the world’s population, child mortality rates have dropped significantly, and access to electricity has improved.
However, statistics on the lack of access to clean water and sanitation, inequality, undernourishment, under-education and youth unemployment are appalling. Next year, 21 SDG targets that affect more than 3 billion people and generate over $2 trillion a year are due for completion, but there are concerns that the world will likely miss 12 of them.
Should they be missed, the 2030 Agenda will be struck by a serious credibility and accountability issue that would exacerbate the lack of cooperation and indirectly pardon insufficient political will. Thus, the HLDFD presents an opportunity to have the difficult conversations on how the international community can remedy these deficiencies beyond 2020, and hopefully set the world firmly on a path to sustainable development by 2030.
Furthermore, the HLDFD will need to address the apparent disconnect between international consensus, national government priorities, and the ground-level authorities ultimately tasked with implementing these policies.
SDGs are major transformational ideals that require unprecedented effort and serious engagement from a wide array of disconnected interests and reluctant stakeholders. Unfortunately, they remain difficult to localize given inherent peculiarities that require countries to craft unique solutions at the ground level, while simultaneously trying to meet overarching SDG targets.
There can be little political will to adopt such SDG-oriented changes, especially if doing so will subvert economic fundamentals. For instance, economies with large agricultural sectors (most of sub-Saharan Africa) will find it contradictory to try and preserve life on land (Goal 15), while Goal 8 seeks sustainable economic growth of at least 7 percent.
Goal 8 will necessitate the growth of more cash crops over food crops (on shrinking arable land), which then runs counter to Goal 2, achieving zero hunger. Oil exporters will also need to innovate or transform away from fossil fuels to honor climate action ideals (Goal 13), but it will require sacrificing growth (Goal 8) and readily available sources of funding necessary to meet the other SDGs.
The HLDFD will need to address the apparent disconnect between international consensus, national government priorities, and the ground-level authorities ultimately tasked with implementing these policies.
Even if funding was abundant and easily accessible, recipient countries must still create compelling environments that attract more inflows for projects within their borders. As a rule of thumb, governments must implement a mix of incentives, solid national finance and clever macroeconomic policy aimed at encouraging locals to deposit savings into banks (or leave them there).
It will drive up local consumption (Goal 12) and improve liquidity (Goal 8), which makes funding readily available to private sectors primed to absorb the excess capacity shed from public sectors undergoing reform. Outside of that, there is little chance of attracting sustainable long-term risk-averse financing, wary of weak economic fundamentals, capital controls, political instability and societies crippled by corruption, nepotism and cronyism.
In other words, deficiencies alone should not be sufficient grounds to release funding. Recipient countries must demonstrate political will and follow through on actions, prioritizing greater cooperation in pursuit of development funding conditioned on achieving SDG priorities (Goal 17).
Attendees must also address growing frustrations among youth and young adults, given their importance to achieving SDGs — and the perils of dismissive and out-of-touch governments. Regardless of the continent, the youth are exhausted by climate inaction, mounting debt, underemployment and dimming future prospects.
There is no telling how events will develop when the youth decide to take action, as already seen with the Yellow Vests in France seeking “economic justice” and the Greta Thunberg-inspired Global Youth Climate Strike. These expressions of outrage should also factor into other high-level discussions because younger generations remain a largely untapped force for change, especially in low-income countries.
The risk lies in attempts to remedy these frustrations. They could elect leaders or representatives that focus on domestic priorities and shun global cooperation altogether. Or they could take to the streets and demand fast-paced reforms that could seize up entire societies, fomenting long periods of unrest and instability, which would harm progress toward achieving SDGs and reverse hard-won gains.
There are many other considerations to be made, and it is commendable that the UN has tweaked the HLDFD’s format to focus on action-oriented interactions instead of long speeches.
But for the forum to come off as a success, participant nations will need more than verbal nods of the gaping chasm between immediate realities and the 2030 ideals. The HLDFD is a first-of-its-kind convention that comes at a critical time when global uncertainty is high and prospects of international cooperation grow dim by the day.
For the time being, the SDGs remain an important guidepost, not a destination; an influencing agent for transforming our world that is transitioning to a “smart” age, fraught with new challenges and opportunities.
We are still years away from a Damascene moment, where inequalities are a relic of the past, negative emissions are feasible, all violent conflict ceases, and high rates of growth and strong fundamentals recession-proof economies, to list a few. Nonetheless, the world will be watching in eager anticipation for a green light to faster implementation of policies in pursuit of internationally agreed development principles.
- Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advance International Studies. He is also senior adviser at the international economic consultancy Maxwell Stamp and at the geopolitical risk advisory firm Oxford Analytica, a member of the Strategic Advisory Solutions International Group in Washington DC and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell