The UN conference on Financing for Development was held in the Ethiopian capital Addis Ababa. It was attended by 7,000 delegates from around the world.
Funding agreed for new development goals
Increased tax revenues, sustainable investments from the business sector as well as a reduction of corruption and tax evasion. This is how the new UN sustainable development goals should be financed. The agreement was reached by world leaders at the UN conference on Financing for Development in the Ethiopian capital Addis Ababa.
In September, the United Nations is set to adopt the new sustainable development goals that will replace the Millennium Development Goals at a New York summit. The new goals include the complete eradication of extreme poverty by 2030, while making sure that the world's population live within the boundaries of the planet. While the Millennium Development Goals were focused on developing countries, the new sustainability goals apply to all countries of the world.
According to UN estimates this ambitious development agenda will require almost 30 times as much money as the world's total development aid. New forms of financing and more actors sharing the cost are essential for fulfilling the goals.
Aid alone cannot finance development goals
On July 13-16 Sida participated in the UN conference on Financing for Development in Addis Ababa. The conference resulted in the Addis Ababa Action Agenda, which defines how the new UN development agenda will be financed.
"Uptil now, development cooperation has been tasked with financing the world's development goals which has been unrealistic. It takes vastly more money to achieve these objectives. Now the United Nations has adopted a broader approach that also involves the business community and aims to prevent money disappearing from Africa through tax evasion and corruption", said Torbjörn Pettersson, head of Sida's Department for Africa and part of Sida's delegation to Addis Ababa.
While global development cooperation only accounts for a fraction of the money needed, it will play a strategically important role. In addition to funding social services in the world's poorest countries it is needed to strengthen tax authorities and other institutions in low income countries and to fund continued anti-corruption initiatives. In addition, aid money plays a catalytic role and could, for example, contribute to channeling private pension capital to countries where the risk of investment is high, by assuming some of the risk.
Private capital needed for sustainable development
Development funding can only be secured by leveraging private capital. In addition to ensuring that pension funds increase their investments in developing countries, private businesses should participate in sustainability projects through public-private partnerships. The private sector must also, together with states and civil society, ensure that new technologies are made available to the world's poor in a quick and inexpensive way. The Addis Ababa agreement also emphasizes the need for businesses to pay taxes in the country where they produce their goods and that new guidelines should prevent tax evasion.
The agreement also concludes that increased tax revenues in developing countries is of crucial importance.
"No country is able to achieve a high level of education and quality health care in the long term without also expanding its capacity to collect taxes", said Torbjörn Pettersson.
Pushing for gender equality, climate and taxes
The Addis Ababa conference was attended by some 7,000 delegates from all over the world. Sweden was represented by Prime Minister Stefan Löfven, Minister for Financial Markets Per Bolund and Minister for International Development Cooperation Isabella Lövin. Sida was represented by the Director General Charlotte Petri Gornitzka, Torbjörn Pettersson and chief economist Annika Sundén.
"Sweden and Sida have drawn attention and gotten appreciation in Addis Ababa, for pushing for maintained development cooperation levels at 0.7 percent of gross national income and since Sweden also maintains that we contribute 1.0 percent. But also because we have consistently pushed gender equality, climate and taxation issues. We have also seen a great interest in our good practices for innovative financing for development", said Sida's Director General Charlotte Petri Gornitzka.
Charlotte Petri Gornitzka was invited to speak at a high-level luncheon, attended by UN Secretary General Ban Ki-moon and Prime Minister Stefan Löfven, on the value of private sector cooperation, exemplified by the business network Swedish Leadership for Sustainable Development. The conference also saw the launch of the Sustainable Development Investment Partnership, an initiative to catalyze institutional capital with Sweden as one of the initiators.