Showdown on development financing in Addis Ababa

Article, 10.07.2015

Article by Ambassador Michael Gerber, «Mehr und «besseres» Geld» (NZZ, 10 July 2015 © NZZ AG)

Michael Gerber
"There is huge potential to leverage funding streams from all possible sources for sustainable development," says Michael Gerber, Switzerland's lead negotiator for the Post-2015 Devel-opment Agenda and development financing. ©

From 13 to 16 July, some 7,000 representatives of governments, political parties, civil society, business and academia from all over the world will meet in the Ethiopian capital. They will be there for the Third International Conference on Financing for Development, the goal of which is nothing less than creating a framework for financing and implementing a new and extremely ambitious agenda for sustainable development in all countries of the world. Switzerland is committed to promoting new and innovative financing models in the interests of achieving this goal.

The location for the conference could not be more symbolic. Ten years ago, Ethiopia was among the poorest countries in the world. It has since made impressive progress and set itself the target of becoming a middle-income country by 2020 – through climate-neutral means. It thus serves as a role model for many developing nations in Africa and beyond. Will Ethiopia live up to this pioneering image and kick-start a global shift towards sustainable development?

The pressure is great, and the task is not an easy one, especially since negotiations in the run-up to the conference have proven tricky. Countries have been attempting to thrash out a consensus at the United Nations in New York for months. Addis Ababa is intended to deliver answers to a number of key questions with a view to giving the countries of the South greater freedom and influence in international competition without demanding excessive concessions from the OECD states. These questions include how to find better ways of mobilising domestic development financing, ensure equal treatment in global trade, prevent corruption, improve collaboration in international tax matters and facilitate technology transfer from industrialised nations to their developing counterparts as well as how much development aid should be paid out. As if this were not enough in itself, the new framework is to define implementation and financing instruments for the UN's new Sustainable Development Goals (SDGs).

The SDGs, which are still being drafted, demand a paradigm shift in international cooperation. Rather than simply combating poverty in the world's poorest countries, the aim will be to encourage social and environmental responsibility in economic affairs in all countries. The universal nature of the new framework thus places obligations on all states, meaning that it is no longer so easy to distinguish between donors and recipients in discussions on how to implement and fund the goals. The time is right for this debate, since the old model of "North funding South" is  outdated. Economic cooperation between the countries of the South is becoming increasingly significant, and development aid now accounts for only a fraction of the money flowing into developing nations. Private investment, transfers from migrants back to their native land and innovative financing instruments are steadily gaining importance.

Switzerland is working to ensure that these financial channels are used more effectively, going forward to promote sustainable development. Bringing about a global shift towards economically, socially and environmentally sustainable development not only requires more money than before, it also has to be "better" money. There is huge potential to leverage funding streams from all possible sources for sustainable development. With this in mind, Switzerland will speak out in Addis Ababa in favour of actually tapping into this potential in the coming years. The SDGs can only be achieved by 2030 if this is done. Whether this course is genuinely set at the Third International Conference on Financing for Development depends in no small measure on the political will of the international community. Addis Ababa will be a test of this will.

Michael Gerber is Switzerland's lead negotiator for the Post-2015 Development Agenda and development financing. This article appeared on 10 July 2015 in the Neue Zürcher Zeitung (NZZ).

Article by Ambassador Michael Gerber, «Mehr und «besseres» Geld» (NZZ, 10 July 2015 © NZZ AG) (PDF, Page 1, 608.2 kB, German)