In the name of the members of the NGO Committee on Financing for Development, I thank you Mr. President for the chance to add some thoughts on the topic of financing sustainable development.
As we face an ongoing financial and economic crisis, the deepening crises of climate change, and ever-widening inequality; as we look to Rio +20, it is time to learn from the past. We must move into the future in a more integrated and coherent fashion. In 2002, two big Development Conferences of the United Nations happened within a few months of each other – the Financing for Development conference in Monterrey, Mexico and the World Summit on Sustainable Development in Johannesburg. But those most actively involved in preparing for the 2 meetings seemed largely ignorant of the other process. We cannot afford to perpetuate false distinctions and separationsIn preparing for Rio +20, the global community must urgently take a fresh look at the entire system of financing for development and redirect it to a clearer focus on sustainable development. We need to look at the institutions that are entrusted with the FfD agenda. An expanded institutional framework that includes intermediary and local NGOs (by providing them access and investing in their capacities) will be absolutely critical if the goal of sustainable development is to be taken seriously. Such institutions (at all levels) will need a different set of performance metrics to gauge their ability to deliver on their developmental goals rather than focus only on financial accounting,
The transition to a green economy may provide impetus to finally bring all the pieces together, to integrate the three pillars of a sustainable world that goes beyond mere rhetoric. Financing sustainable development calls for levels of cooperation between us never seen before. We must move beyond an environment vs. development divide.
Irrespective of whatever other differences one may or may not have with international financial institutions (IFIs), it becomes increasingly clear they operate at a very different scale from where the problem happens and where change is likely to happen.
The hurdle is less an ideological one, than one of capacity. Those responsible for financing development are more comfortable as managers of money than facilitators of development. So the means (financing) is decoupled from the end (sustainable development), not only in how claims are made for financing but how the institutional efficacy is accounted for. This has contributed to the deepening crisis of legitimacy of development finance The institutions best suited to raise large amounts of international finance are least suited to disbursing these resources at the level and in a manner that gives sustainable development on the ground, in the village as well as in the urban setting the best chance of really happening.
None of the institutional players – the UN system as a whole, the BWI, IFIs , the G20 - can hope to achieve the sort of development that speaks to the threefold demand – environmental, economic and human/social – without effective partnership that can bring the financing resources to the places where most impact and most change can be achieved. So NGOs and the private sector must be constantly involved in the chain that delivers these resources.
Reactions to the financial crisis suggest that the problem is not lack of capital. There is big money out there! The problem is that most of the people who hold the cash are not interested in long term investment to build strong and effective enterprises. A significant proportion of trades made each day in the financial markets are made by high-speed computers in securities that are only held for a fraction of a second. That is not the sort of investing that is likely to create jobs that offer decent employment and build sustainable economies. As the majority of financing will come from private sources, much more debate is needed on regulation. Without significant regulation of the financial markets, it’s unlikely that a new paradigm of productive investment will become possible.
Some points we wish to emphasize:
- Failure to meet ODA commitments by most developed countries is a continuing scandal. This underlines the need for a renewal of the multilateralism, upon which the United Nations is built, that reaches beyond sectional interests to search for common solutions that serve the needs of all countries.
- With Mexico chairing the G20, it is important that a Financial Transactions Tax as an innovative source to finance sustainable development, so strongly promoted by France, be not pushed aside.
- Resources from taxation are vital for countries trying to advance their national development. It is past time for an intergovernmental body, housed within the UN, to promote greater communication and international cooperation in tax matters.
- Heiner Flassbeck suggests that UNCTAD be given control for setting stock prices for agricultural raw materials. Only producers, traders and users of these materials could work the futures markets. This would remove from speculation those commodities that people need to survive. It would halt the dangerous financialization of food markets.
Analysis, cooperation and delivery pitched to the most appropriate local level of life and need: these are the things that will give us a fighting chance of meeting the Millennium Development Goals.
Kevin Dance, Passionists International and Chair of NGO Committee on Financing for Development.
- “The reform of the international monetary and financial system and its implications for development”(passionistsinternational.org)