Addis Ababa FFD3 Conference Must Deliver Financing for Development Justice

July 15, 2015

This week, leaders from governments, development institutions, civil society representatives, and other stakeholders are meeting in Addis Ababa for the 3rd International Conference on Financing for Development (FFD3) to come up with an agreement for a sound global financing framework for the post-2015 agenda. This conference is being held in the midst of the global multiple crises that beset the people and planet, and amidst calls for thoroughgoing reforms in the world financial, aid, and trade architecture, among others, to deliver a just and transformative development agenda.

Asia Pacific Research Network (APRN) expresses its grave concern on the content of the draft Addis Ababa Action Agenda of the 3rd International Conference on Financing for Development. This outcome document, released before the negotiations, gives a preview on the likeliness of a final outcome document that lacks ambition and falls seriously short of delivering a financing framework that will respond to need for development justice.

The draft outcome document acknowledged the persisting challenges of inequality, the economic and environmental crises, and conflict, and how these affect vulnerable groups, particularly women and children. However, the document fails to root these challenges to the current development framework where production and consumption reinforces colonial relations, puts the primacy of profits over people’s rights, and ignores the limits to the earth’s carrying capacity.

Thus, solutions to these challenges are more of the same proposals that outsource development into the hands of the private sector. Private business activity and finance are being promoted as the major drivers of productivity, growth, as well as job creation. The role of the private sector is so highlighted in the document that incentives for the private sector are highly encouraged, without clear, binding mechanisms for accountability. Although the UN Guiding Principles on Business and Human Rights were acknowledged, voluntary mechanisms, which do not guarantee accountability beyond shareholders, are more encouraged.

The resounding lack of accountability for the private sector, while providing them with numerous incentives is expressed in various means, including using ODA for private sector development, as well as in the recognition of the Committee on World Food Security’s voluntary Principles for Responsible Investment in Agriculture and Food Systems, and the Voluntary Guidelines on Responsible Land Tenure. Hand in hand, these two documents allow the increased corporate investment in agriculture, without providing smallholder farmers protection and redress against landgrabbing and other resource grabs related to corporate agricultural investments. The promotion of Public-Private Partnerships (PPPs) model uses public money to attract private funding while services produced are often expensive and not affordable to poor people. PPPs in infrastructure building in developing countries are notorious for violating the human rights of populations affected by the projects.

This lack of accountability is further aggravated by removing the clause mandating “”the proper review of investor-state dispute settlement (ISDS) clauses to ensure the right to regulate is retained in areas critical for sustainable development” and replacing it with vague language on crafting trade agreements with appropriate safeguards and transparent manner.

While the promotion of decent work and micro, small and medium enterprises (MSMEs) is welcome, the document does not reconcile the contradictions presented by the negative impacts of transnational private sector investments through trade and investment liberalization, on the decline of MSMEs and the erosion of decent work, and how women and children and other marginalized sectors are impacted. More so, MSMEs will not contribute to productive employment and national economic development if they are integrated in the global value chains as mere sources of sources of cheap, subcontracted labor.

The role of the Bretton Woods Institutions (IMF, World Bank, and the WTO) needs to be seriously reviewed given the negative impacts of their policies to developing countries. Increased voice and participation of developing countries will be rendered meaningless if the undemocratic, untransparent and completely unaccountable character of these institutions, despite the great power that they wield, is not transformed into genuine democratic decision making, transparency, and clear measures to hold these institutions accountable for their actions.

The ODA commitment of developed countries of 0.7% of their GNI has not been met since Monterrey. Additionally, clear timelines on achieving this commitment, as well as clear follow up mechanisms are lacking. Similarly, language and commitments to climate finance as new and additional to ODA remain missing. The principle of common but differentiated responsibilities is in danger of being diluted if removed from the context of historical responsibility developed states in contributing to unsustainable development practices that lead to the current multiple crises.

The document reiterates commitments to building peaceful and inclusive societies, and creating funding and investment mechanisms for conflict affected countries and peace-building processes. However, sources are vague, but with clear reference once again to private sector funding, including FDI. There is completely no mention of rechanneling military spending which comprise a significant portion of national budgets worldwide, diverts resources away from critical people’s needs such as education and health services, and negatively impacts human rights and the environment. It is disappointing to find out that a lot of developed countries are allocating excessive amount of their national budgets to military spending while at the same time, continuously fall short of their ODA and climate finance commitments.

Language on migration remains weak and can lead to the instrumentalization of migrant remittances as motor for development. This clearly ignores that most migrants were forced to migrate because of violence, poverty, and underdevelopment in countries of origin. While the document talks about reducing transaction costs and respecting human rights of migrants, it is completely silent on addressing the roots of forced migration.

 Recommendations for Financing Development Justice

  • Private sector participation, especially for corporations and transnational companies should be accompanied by clear, binding measures for accountability. The UN Guiding Principles on Business and Human Rights must be supplemented with binding enforcement measures, including legislation, court adjudication and penalties for violations.
  • Corporations involved in extraction of resources must be effectively taxed, while those involved in polluting practices must be penalized. These measures will serve as regulatory mechanisms, as well as using the revenue generated to finance public services.
  • All PPPs and trade agreements must be deliberated in a democratic transparent manner, involving civil society and the public; especially those from most affected communities, and must comply with human rights, environmental, and labor standards.
  • Restore the ISDS review clause in the FFD3 document, as ISDS has been proven to negatively impact human rights as well as government policy space.
  • Review military spending of developed countries, including their military assistance to developing countries, and its contribution to fueling conflict, environmental degradation, and human rights violations. Rechannel atleast 10% of military spending to development needs such as but note limited to ensuring public education and universal access to health including for sexual and reproductive health.
  • Set clear timelines of ODA and climate finance commitments. Uphold the principle of CBDR, with the recognition of the past actions of developed countries that contributed to the current unsustainable development outcomes and multiple crises. Climate finance must not be debt-creating and should not be used to leverage private sector investment.
  • Set clear accountability frameworks that will ensure government accountability to their commitments, as well as promote active and meaningful participation of civil society in the process.