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Harnessing all resources to acheive SDG's
- 1. Harnessing all resources to achieve SDG’s FINANCING FOR DEVELOPMENT
- 3. What Will It Take to Achieve Development Outcomes?
- 4. Addis Agenda - 2015
- 5. From Billions to Trillions In 2015, the international community agreed on a new set of comprehensive and universal sustainable development goals (SDGs) that bring together economic, social and environmental priorities. These goals are ambitious, and they demand equal ambition in using the “billions” in ODA and in available development resources to attract, leverage, and mobilize “trillions” in investments of all kinds: public and private, national and global, in both capital and capacity. This will require making the best possible use of each dollar from every source, drawing in and increasing available public resources as well as private sector finance and investment. In every country, regionally and at the global level, we must work together to generate the resources needed to realize the transformative vision of the proposed SDGs.
- 7. Resources Domestic Resource flows International Resource Flows
- 9. International Flows International flows can be grouped into two broad types – social impact flows and profit-seeking flows – and it is important to note that different resources perform different functions. They have different characteristics, affect people living in poverty through different channels and mechanisms, and should not be thought of as displacing one another.
- 10. Profit-seeking resource flows to developing countries exceed social impact flows Developing countries receive larger volumes of profit-seeking resource flows than social impact flows. The social impact flows to developing countries captured in this paper totaled US$ 670.9 billion in 2010, while profit-seeking flows totaled US$ 997.3 billion. It is important to note, however, that the distribution of flows and the balance of social impact to profit-seeking flows vary significantly across countries. Total volumes of resource flows are only one component of the picture and different flows should not be thought of as being direct substitutes for one another.
- 11. Different flows – different characteristics Each resource flow affects people living in poverty in different ways, through different channels and mechanisms. Resource flows also have very different characteristics at the aggregate level, and the effects on countries vary by flow. The differing nature of each transaction means that the characteristics, impacts and effects of expenditure vary significantly across countries and flows. The figure presents an example of this, highlighting how two key characteristics – volatility and concentration – vary across international resource flows. FDI is the most volatile international flow and remittances are the most stable. ODA is the least concentrated flow amongst recipient countries.
- 12. Resource flows leaving developing countries (2010)
- 13. Changing nature of bilateral relationships
- 14. Mobilizing Domestic Resources Developing countries need to take the lead in mobilizing the financing necessary for their development. Nevertheless, increasing domestic revenue mobilization (DRM) remains a challenge for many governments, particularly in low-income countries. Broadening the tax base, improving tax administration, and closing loopholes could make a significant difference in lower-income countries. Tax revenue as a % of GDP 1994 -09
- 15. LICs have the lowest tax-to-GDP ratio, although there has been some improvement over the last two decades. For this group, the average ratio of taxes to GDP increased from 10 percent in 1998 to 13.6 percent in 2009. The share of taxes as a percentage of GDP is almost 6 percentage points higher and rising for MICs. High-income countries have the highest tax-to-GDP ratio, collecting two to three times more taxes as a share of GDP than LICs
- 16. Improving Expenditure Efficiency • Considerable resources could be realized from public sector efficiency gains and reallocated towards development objectives. • Subsidy reform is one of the main areas in which public resources can be redirected to more effective uses. • Another area for potential savings is procurement. • Curbing Illicit Financial Flows
- 17. Private Finance for Development Achieving Post-2015 development goals will require the mobilization of resources from private sources including FDI, bank loans, bond issuance, institutional investors and private transfers (notably remittances, estimated to be approximately US$400 billion in 2012). The good news is that globally, there are ample savings, amounting to US$17 trillion, and liquidity is at historical highs. The challenge will be to direct savings to support the achievement of global development objectives.
- 18. Emerging, Inclusive, and Innovative Sources of Finance Given the scarcity of bank lending for infrastructure, the development of non-bank financing for infrastructure is now emerging as the new imperative. International financial markets present a largely untapped pool of capital to finance infrastructure; and institutional investors have the potential to provide an additional source of long term finance.
- 20. 21 Thank you for watching. The challenge for individual developing countries is to make themselves more attractive destinations for resource from the private-sector and donors. This can be accomplished by improving the effectiveness with which existing resources are used, enhancing domestic resource mobilization and by making strides to develop and access new sources of financing.
Editor's Notes
- In July 2015, world leaders came together in Addis Ababa, Ethiopia, to adopt the Addis Ababa Action Agenda (the Addis Agenda) at the Third International Conference on Financing for Development (FfD). 1 The Addis Agenda created a holistic and coherent framework for financing sustainable development.
- Domestic resources are the largest pool of funds available to most developing countries, and international resources have an important role to play in supporting domestic efforts to end poverty. Both domestic and international flows have grown rapidly and the mix of resources available to many developing countries now is fundamentally different to that of ten or 20 years ago.
- Data quality Currently, bilateral data does not exist for any of these flows, making it impossible to know what proportion of such flows from developing countries are received by other developing countries. Further information is required; however, it is likely that a significant proportion of these outflows goes to developed countries and that many developing countries may in fact be creditors to the rest of the world, rather than debtors as is often assumed. Significant additional research in this important area is required.
- The relationship between many ‘developing’ and ‘donor’ countries has evolved over time, from a position where the relationship is dominated by social impact flows to one in which profit-seeking flows dominate.
- Low-income countries differ from their high-income counterparts in their formal tax structures and tax collection capacity. LIC tax bases tend to be quite narrow, reflecting the smaller share of the formal sector in employment and business activity. Large informal economies and agricultural sectors are rarely taxed.
- An extensive body of research has demonstrated that food and fuel subsidies are often poorly targeted and end up disproportionately benefiting the wealthy and middle class. The IEA has noted, for example, that only an estimated eight percent of the fossil fuel subsidies throughout the developing world in 2010 went to the poorest 20 percent of the population.26 Earlier analysis noted that the bottom 40 percent of the income distribution received on average no more that 15–20 percent of the total value of these subsidies