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Partnerships to finance the post-2015 development agenda
As our financing progress blog series enters the final stretch, the World Bank Group's Mahmoud Mohieldin writes on what is important to focus on as 2015 approaches. He identifies global implementation partnerships, national level strategies and innovative support from the World Bank Group and other development partners as being crucial to achieving successful financing for the post-2015 agenda.
This ODI blog series has highlighted the challenges of financing the post-2015 development agenda. Since the Monterrey Consensus back in 2002, we have agreed to confront the challenge of financing for development as global development partners, and it is critical to do so as we prepare for the implementation of the new framework for sustainable development. Sound policies and adequate financing are both essential if we are to achieve our development goals. This means that both globally and at the country level, we need to tap diverse financing sources and capture every opportunity for partnerships that will spur development. In short, our hopes for the post-2015 goals must be matched with the required financing.
We have learned the hard way that inadequate financing for global public goods – such as the control of disease, measures to address climate change and education for all – has had a disproportionate impact on the world’s poorest people. More than ever, the global community needs to find a way to finance these essentials. We have seen what can be done. The International Finance Facility for Immunization, for example, has received long-term pledges from donors that have underpinned ‘vaccine bonds’ sold in capital markets, generating major funding for immediate use by GAVI programs. Such innovation is going to be crucial.
Overseas development assistance (ODA) will remain an important source of development financing, especially for the poorest countries. While the 6.1% increase in ODA in 2013 is very welcome, there is concern about the recent decline in aid flows to low-income countries. ODA to sub-Saharan Africa has dropped for two years in a row: down by 8% in 2012 and by 4% in 2013. There was also a fall in ODA to the least-developed countries.
We aspire to a further increase in ODA and its reinforcement as a stable source of financing to countries with the least access to private resources. Efforts to ensure aid effectiveness and much more catalytic role for ODA need to continue.
It is at the national level, however, that we need to see far greater mobilization of resources, domestic and external. Developing countries need to take the lead in mobilizing the domestic resources that represent the largest pool of funds available to them. In 2012 alone, $7.7 trillion in domestic resources were mobilized, largely through taxes, customs duties, and natural-resource concessions. There is clearly scope to increase taxation capacity, especially in low-income countries, and increase the efficiency of public spending. Development partners can be a great help here, supporting capacity building for reforms in these areas. Resource-rich countries need to ensure that they derive the best possible development impact from agreements with private investors in extractive industries.
Governments also need to create an investment climate that allows the private and financial sectors to flourish, recognizing that a dynamic private sector is the cornerstone of job creation. Developing financial institutions and markets will facilitate economic growth by mobilizing savings and allocating savings to the most productive uses. Improving financial inclusion enables better access to finance for small firms and to financial and payments services for households. The private and financial sectors can help by behaving as responsible corporate citizens, fostering inclusion and creating equitable opportunities. Countries also need to mobilize more external private financing, including for much-needed infrastructure investments. Over the past decade, many developing countries have increased their ability to access international capital markets, despite some decline after the recent global financial crisis. But more could be done to attract greater resources for investments in developing countries. For example, appropriate regulations and preparations are needed to develop bankable high-quality infrastructure projects. The availability of financial risk-sharing instruments, with the support of multilateral development institutions, can help to catalyze private financing. Finding solutions to attract financial resources from large institutional investors will go a long way to scale up development finance, and is an important challenge for post-2015 development financing.
As 2015 approaches, we must focus on the realities of implementation, where financing will play a key role. At the global level, multi-stakeholder implementation partnerships can help increase mutual accountability on the achievement of the post-2015 goals, including the associated financing. To surmount the finance challenge, countries need to explore policy and financing options that go beyond ‘business as usual’ to deliver an ambitious post-2015 development agenda. Countries need to set their own national development strategies and priorities and then engage the private sector, civil society and others in multi-stakeholder partnerships, with the support of the World Bank Group (WBG) and other development partners. The WBG's current reforms will strengthen our ability to offer the best package of knowledge services and financial support to respond to country needs and to support global efforts with the implementation of the post-2015 development agenda.
Finally, the WBG is committed to work with the rest of the global community to shape the framework for financing development post-2015. We look forward to the forthcoming report of the UN Intergovernmental Committee of Experts on Sustainable Development Financing, which will be a great help in framing the discussions. The next Summit on Financing for Development 2015 will be an important opportunity for discussion on finance among governments, international financial institutions, development partners and the private sectors. To have the greatest combined impact in support of transformative development, we must each play our roles – playing to our respective strengths – and act in partnership to scale up the financing that is so crucial for future development.