Search for common ground on development finance

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Copyright: Inga Vesper

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Ethiopia is the first African country to host a UN Financing for Development (FfD) Conference, and the organisers are certainly trying to make the best impression. At the entrance of the UN Economic Commission for Africa’s conference hall, where the event is taking place from 13 to 16 July, young Ethiopians in national dress are handing out flowers and yellow scarves. Inside, the national costumes and business suits of the nearly 5,000 attendees are united by these yellow stripes.

It is as if the development finance community is trying to convince itself of consensus from the outside in.

The conference aims to emphasise partnership and responsibility, not poverty and need. A draft agreement was issued on 7 July, setting out 134 pledges and points of view. If all had gone to plan, the Addis Ababa conference would now be a mere formality to confirm this deal. But during an informal prenegotiation session in New York, United States, three stumbling blocks remained, so this week’s talks are crucial to hammer out a real deal.

We have to finish the job that the Millennium Development Goals began.

Hailemariam Desalegn, Ethiopia’s prime minister

The first course of action was to create a so-called main committee, chaired by Ethiopia’s prime minister, Hailemariam Desalegn. His task is to take a chisel to the blocks and wear them down to gravel over four long days of negotiations. To do so, Desalegn will have to miraculously change opinions that divide developed and developing countries.

The first issue is that the draft deal goes beyond the Monterrey Consensus, which set out global development spending goals in 2002. In Addis Ababa, rich countries are asking poor nations to put in some of their own money to solve development problems.

But developing countries would rather apply the principle of “common but differentiated responsibilities”. This principle, which is already in use in climate talks, states that poor countries only have to contribute “within their means”. Obviously that leaves a lot of room for interpretation, and could allow poorer nations to wriggle out of financial commitments.

The second stumbling block is international tax. Developed nations want to push poor countries to improve their own tax systems to raise more money to spend on basic services. Developing countries want the UN Committee of Experts on International Cooperation in Tax Matters to be made the main negotiation body. This, they hope, will make OECD countries less dominant when it comes to deciding international tax regimes.

The last issue is about the relationship between the Addis deal and the Sustainable Development Goals (SDGs). Rich countries see Addis as a way to finance the implementation of the SDGs, but developing countries want space for “additional efforts”: they prefer to leave the door open to getting more aid beyond the spending promises for the SDGs. Opinions vary wildly on what these efforts could be, and how they would fit in the deal.

As day one drew to a close, goodwill remained high. “We have to finish the job that the Millennium Development Goals began,” Desalegn told the audience after accepting the chairmanship. Now it’s up to the negotiators, and their lucky yellow scarves, to help him do so.


Third International Conference on Financing for Development Draft outcome document of the Conference (UN, 7 July 2015)