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In Addis Ababa, it’s crunch time for the future of international development

Matti Multiplex building (R), Ethiopia's first three screen movie theatre complex is pictured on 03 March, 2015 in Addis Ababa, Ethiopia. EPA/MIKKO PIHAVAARA


By Simon Allison
Thursday, July 9, 2015

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ADDIS ABABA - With the Third International Conference on Financing for Development just days away, Ethiopia’s capital is desperately trying to make itself look the part. Country flags hang from every lamppost, billboards are given over to pithy slogans and the streets around the conference venue are being spruced up before the arrival of hundreds of VIPs. These include 30 heads of state, 110 ministers, bigwigs from assorted international institutions and heavyweight NGOs, and their extensive entourages. There is not a vacant hotel room left in the city.

The conference is the pinnacle of months of work by 200 government representatives in New York, who have been trying to put together a new global financial framework that will better serve the world’s poorest (in theory, at least).

Over the last few weeks, swarms of labourers outside the United Nations Economic Commission for Africa building have been ripping up and replacing cracked tarmac, while others have been carefully laying paving stones so that the distinguished delegates don’t have to trudge through the rainy season mud. The metamorphosis is remarkable: when it’s finished – and, this being Addis, it will be – the area will accommodate those delicate First World sensibilities.


Photo: Workers rush to finish the new pavements outside the conference venue. (Simon Allison)

The effort that’s gone into this transformation is telling. Addis Ababa, also Africa’s diplomatic capital, hosts plenty of major summits and conferences, but this one is different. This one is special. This one should, in theory, determine the future of global development – and, more importantly, who’s going to pay for it.

“The Third International Conference on Financing for Development next week will be the first of three major global events this year, followed by the September summit in New York for the adoption of a new set of sustainable development goals and a conference in Paris in December to reach a universal climate change agreement. These events… will shape international co-operation for years to come,” said Wu Hongbo, the UN under-secretary-general for economic and social affairs, who’s chairing the conference.

Photo: Banners and billboards emphasise the importance of the conference. (Simon Allison)

Holding the conference in Addis Ababa is a symbolic choice. For one thing, having an African venue recognises that Africa is still, and by some distance, the least-developed continent, and the choices made here will have a disproportionate influence on its future. For another, it acknowledges that Ethiopia has been a case study in the effective use of development aid. Over the past couple of decades, the country has lifted millions of people out of poverty, and invested hugely in health, education and infrastructure. Despite being the de facto one-party state, and its deeply troubling human rights record, there are lessons to be learned from Ethiopia when it comes to development.

So what’s on the conference agenda?

A major theme is tax and illicit financial flows, the idea being that capturing the billions of dollars lost through tax evasion could finance poverty eradication. After all, developing countries lose more money to tax than they receive in aid. Talks here will centre both on helping developing countries to develop better tax collection systems, and on closing global tax loopholes. One idea gaining traction is for the creation of some kind of global, representative tax watchdog which can create and enforce global tax standards. Currently, these are decided behind closed doors at the Organisation for Economic Co-operation and Development (OECD); developing countries are excluded from these conversations.

“The result is a set of standards that disadvantage developing countries financially, and a broken tax system, riddled with loopholes for tax dodgers,” said Tove Maria Ryding, policy and advocacy manager at the European Network on Debt and Development.

Another important conversation will be had on the role of the Bretton Woods Institutions, namely the International Monetary Fund (IMF) and the World Bank. Many developing countries feel that they have little or no say in the decisions of these institutions, and they’re right. The US, for example, enjoys a 16% share of votes in the World Bank because of its investment.

“A longstanding hope of civil society organisations in the Financing for Development process has been to recover a more democratic and open space for consensus-building on certain matters such as debt or reform of the monetary system, on which decision-making rested solely with the Bretton Woods Institutions, where their capital-laden voting structure denies the poorest countries a fair say,” explained Aldo Caliari for the Bretton Woods Project. The reason this is so important is because the IMF and the World Bank will have to take the lead on major development projects; in many ways, the practical future of development initiatives are defined by their policies.

Photo: This bakkie goes from lamppost to lamppost attaching flags of participating countries. (Simon Allison)

Perhaps the most contentious agenda item will be the discussions around the role of Overseas Development Aid (ODA). The role of ODA in development has always been controversial, and has become even more so in the aftermath of the 2008 financial crisis as richer countries find themselves with less disposable income.

“Worryingly though, it appears that aid to the least developed countries is decreasing despite the clear need and urgent imperative. In September, world leaders will be signing up to the new Sustainable Development Goals. These 17 goals and targets have the ambitious aim to end extreme poverty by 2030, as well as ending hunger, achieving gender equality and halting climate change, among 13 other areas. Achieving these goals in the least developed countries, where government revenues on average are less than $300 per capita, will be impossible without targeted external support. It’s a matter of political will, and countries can prioritise their aid portfolio to focus 50% on least developed countries over the next five years, while still using the other half of aid spending to support other countries,” argued Sara Harcourt, the ONE Campaign’s policy director for development finance.

While ambitions for the conference remain high, these hopes are tempered by the reality of multilateral negotiations on this scale; inevitably, not everyone can get what they want. There will be winners and losers. Too often, however, the world’s least developed countries have counted themselves among the losers in these types of negotiations. If the Addis conference can change that, then it will have been a success. And if it doesn’t, well – at least the good denizens of Addis Ababa can enjoy their new pavements.


 





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