DEVELOPMENT AND COOPERATION D+C

ENTWICKLUNG UND ZUSAMMENARBEIT E+Z

International Journal

ISSN 2366-7257 D +C MONTHLY E-PAPER July 2019

DIGITALISATION BIODIVERSITY WEST AFRICA WBGU assesses Scientific community Why democracy is global risks and has sounded global in trouble in Benin, opportunities alarm Senegal and Nigeria

SDG finance Title: Medical consultation in Ethiopian highlands. Photo: Antoine Boureau/Biosphoto/Lineair D+C July 2019 In German in E+Z Entwicklung und Zusammenarbeit. Both language versions FOCUS at www.DandC.eu SDG finance Monitor Still underfunded WBGU assesses the pros and cons of digitalisation | UN panel reports dramatic Unless the agenda of the Sustainable Develop- loss of biodiversty | Investing in Africa | Nowadays: Children suffer in Syria’s civil war | ment Goals (SDGs) is properly funded, it will fail, warns Belay Begashaw of the Kigali-based SDG Imprint 4 Center for Africa. According to Stephan Klingebiel of the German Development Institute, high- income countries must move beyond official Debate development assistance (ODA). PAGES 16, 17 Comments on why western governments currently struggle to promote democracy, the implications of EU migration policies and recent parliamentary elections in India and South Africa 9 Improving African tax revenues In an interdependent world within a globalised economy, no single country can be the autono- mous “master of its own destiny”. To improve Tribune public finance in Africa, national governments KARIM OKANLA must assume responsibility – but they need a In Senegal, Benin and Nigeria, recent elections have revealed serious problems of facilitating international environment, writes democratic governance 13 Dereje Alemayehu of the Global Alliance for Tax Justice. PAGE 20 Focus: SDG finance BELAY BEGASHAW Business opportunities The private sector has much to gain from the To achieve global goals, low-income countries need adequate funding 16 SDGs, says Homi Kharas of the Brookings Institu- tion. Investors should pay attention. PAGE 22 STEPHAN KLINGEBIEL In order to rise to daunting international challenges, established donors must move far beyond ODA 17 Ambiguity instead of accountability The international community still lacks clear DEREJE ALEMAYEHU rules for what counts as climate finance. This For African governments to assume responsibility for increasing tax question must be resolved, demands Liane Scha- revenues, they need a facilitating international environment 20 latek, a civil-society active observer in Green Climate Fund proceedings. PAGE 24 INTERVIEW WITH HOMI KHARAS The private sector will benefit from considering SDGs in the design of its business models 22 Future cooperation All nations must cooperate on SDG achievement. LIANE SCHALATEK All have something to contribute, and all must The international community urgently needs a clear definition of what prove able to learn. South-south cooperation can counts as climate finance 24 help to mobilise funding, and new financial insti- tutions are of increasing relevance, as GIZ experts Luiz Ramalho, Rita Walraf and Ulrich Müller LUIZ RAMALHO, RITA WALRAF AND ULRICH MÜLLER argue. According to Doris Fischer of Würzburg South-south and triangular cooperation will have to play a crucial role in University, China is willing to cooperate at multi- SDG achievement 26 lateral and bilateral levels, but the trade war started by the USA is a serious issue. PAGES 26, 28 INTERVIEW WITH DORIS FISCHER China endorses the SDG agenda, but has ideas of its own 28 ODA graduation MICHAEL KREMPIN In the next 10 years, many emerging markets As fewer countries will be ODA eligible in the future, policymakers must which are currently classified as middle-income adopt policies to plug emerging funding gaps 30 countries are set to become high-income coun- tries. Once they graduate into the high-income HANS DEMBOWSKI category, however, they will no longer be eligible Relevant reading: To keep track of SDG finance, the OECD calls for for ODA, so new financing options need to be clearer definitions and better monitoring 32 found. Michael Krempin, a freelance consultant, assesses the matter. PAGE 30

D+C e-Paper July 2019 OUR VIEW Failure is unaffordable Trib(SW-Thema)une

The Sustainable Development Goals (SDGs) add up to a complex agenda which covers all of humanity’s urgent issues – from food security to institution build- ing, from primary education to peace, from economic growth to environmental protection. Financing this agenda is a complex challenge in itself. The international community is grappling with the intricacies. Several aspects are clear. High-income countries must live up to their pledges con- cerning official development assistance (ODA). But even if they do, more money will be needed. Accordingly, developing countries must shore up their domestic revenue services and collect more taxes. Moreover, middle-income countries must contribute to enhancing capacities and opportunities in poor- er countries. And yet more funding will be required. Ultimately, private-sector investments will prove decisive. The SDGs must drive transformation how- ever. Business cannot go on as usual but must be reoriented towards sustain- ability. Generating profits is not enough. Not only the owners’ welfare matters, everyone’s does. Environmental side effects must be controlled. Public goods Democracy in West Africa – including good education and health care for everyone – must be provided. In procedural terms, recent elections in Senegal, It is a fallacy to believe that state and market are two alternative ways Benin and Nigeria left a lot to be desired. That to handle things. They are not opposites, but actually complement one an- shows that democracy rests on rather shaky foun- other. To flourish, markets need prudent regulation. And to pass and enforce dations in all three countries, as Karim Okanla, a media scholar from Benin, writes. PAGE 13 prudent regulation, governments need the tax revenues that only flourishing markets deliver. Yes, the logic is circular. Governments cannot and must not micromanage economic decisions, but they can and must define the frame- works that guide those decisions in the right directions. Given that the world Debate market transcends national borders, we need multilateral regulations today, and that makes things even more complex. As the Organisation for Economic Co-operation and Development (OECD) argues in a recent report on SDG finance (see review, p. 32 in this D+C/ E+Z e-Paper), the global community must set in motion a virtuous circle, in which intelligent public spending triggers responsible private investments, with clean technologies and good governance reducing the daunting chal- lenges our species faces and opportunities improving for everyone. In regard to SDG finance, many questions remain to be answered. We lack precise definitions what “south-south cooperation” or “climate finance” mean. ODA is a well-defined category, but its overlaps with climate finance are unacceptably blurry. Some ODA, moreover, is used for environmentally unsustainable purposes. Migrants’ remittances and private investments must contribute to funding the SDGs – but nobody is systematically keeping track of the environmental and social impacts. To achieve the SDGs, we will need more clarity and better reporting. Only serious conceptual work and competent policymaking can bring both Problematic EU policy about. The bad news is that multilateral settings are currently under attack. The EU is cooperating with dubious partners in its The good news is that conceptual work can be done everywhere, and policy- attempts to stem migration. This approach may making can begin at every level, starting at the grassroots. work in the short term, as Nassir Djafari, an econo- Some people wonder whether the SDG agenda is affordable. The truth is mist, points out but in the longer term, it is likely that failure is unaffordable: the costs would include fast accelerating environ- to compound the problems that make people flee. mental destruction, further disintegration of global relations and ever more That trend is already becoming evident in Sudan, fragile peace. If humanity fails to rise to global challenges, all nations will suf- according to Hans Dembowski of D+C/E+Z. fer and none will be great. PAGES 9, 10

You’ll find all contributions of our focus section plus HANS DEMBOWSKI Did India win? related ones on is editor in chief of D+C Development Prime Minister Narendra Modi’s BJP won India’s our website – they’ll be and Cooperation / E+Z Entwicklung und recent elections in a landslide. Our India corre- compiled in next month’s Zusammenarbeit. spondent Aditi Roy Ghatak doubts that people otos: Jane Hane/picture-alliance/AP Photo; picture-alliance/photoshoot Jane Hane/picture-alliance/AP otos: will be satisfied for long. PAGE 11 briefing section. [email protected] Ph

D+C e-Paper July 2019 MONITOR: CONFERENCES AND STUDIES

EXPERT ADVICE easier and accelerated thanks to digital in- novations. At the same time, digitalisation itself En route to a digital future can cause harm. The risks include: ●● digitally driven economic growth that breaches planetary boundaries, ●● digital authoritarianism that disem- In a comprehensive study, the German Advi- economy and individual people, the au- powers individuals, sory Council on Global Change (WBGU – thors state. ●● automated decision-making that un- Wissenschaftlicher Beirat der Bundesre- The need for such a transformation dermines democracy, gierung Globale Umweltveränderungen) has is undeniable. International agreements ●● excessive power of private-sector com- assessed the pros and cons of digitalisation. point the way. They include the UN 2030 panies that escape government control, It proposes policy options, both at the Agenda with the 17 Sustainable Develop- ●● loss of jobs, national and international level. The execu- ment Goals (SDGs), the Paris Agreement ●● unequal access to digital technology, tive summary was published a few weeks on climate change as well as the so-called resulting in deeper social divides around ago. In the eyes of the WBGU, protecting the Aichi goals, which were adopted in the con- the world. natural foundations of life and the digital text of the UN Convention on Biodiversity In this context, the WBGU considers revolution are intricately linked. in 2010. governments’ role to do two things at once. Digitalisation has massive impacts ●● On the one hand, they must tap the By Sabine Balk on all 17 SDGs, the WBGU argues. The goals enormous potential of modern information cannot not be achieved unless the upsides and communication technologies. According to the WBGU, which was ap- and downsides of digitalisation are consid- ●● On the other hand, they must prevent pointed by Germany’s Federal Govern- ered properly. Given that environmental abusive behaviour and controls the risks. ment, digitalisation must be designed in degradation is happening fast, the WBGU The WBGU wants the EU to assume a way that promotes the “transformation insists on urgent action. So far, policymak- a role of leadership. The experts make sev- to sustainability”. Fundamental change is ers have been acting far too slow to save the eral tangible policy proposals (see box next needed in all spheres of life and work. It will planet, they write, but digitalisation can page). The crucial challenge, in their view, is affect infrastructure, modes of production, help to speed up things. Decarbonisation, to enable people to understand what is go- investments, legislation and lifestyles in eco-friendly agriculture, resource efficiency ing on and to actively shape change. general. Success will hinge on an innova- and recycling, emissions reductions and The key is education, according to the tive interaction of politics, society, science, the protection of ecosystems can be made WBGU. Scientists must generate the knowl-

Education matters – secondary school students in Rwanda. oto: Böthling Photography Ph

D+C e-Paper July 2019 4 MONITOR: CONFERENCES AND STUDIES

edge concerning both “digital sustainabili- ●● Digitalisation must serve to protect regulations are needed. Once again, the ty” and “sustainable digitalisation”. Govern- the planetary system and safeguard so- scholars see the EU as a potential leader. ments themselves must become digitally cial cohesion, with the SDGs providing the They demand that the EU develop a digi- informed and build the capacities required needed guidance. talisation model of its own that is different for shaping digitalisation. The authors add ●● Digitalisation must empower a new from the existing models in the USA and that digitalisation will have an impact on culture of humanism, preventing digital to- China. the prospects of low income and middle in- talitarianism. The fundamental change that come countries. They see a role for interna- the digitalisation is bringing about must be LINK tional development agencies to act accord- shaped in a humane way. WBGU, 2019: Towards our common digital ingly. For humanity to rise to the challeng- future (summary). The WBGU identifies two fundamen- es, better global governance is indispensa- https://www.wbgu.de/en/publications/ tal dynamics of the digital era: ble, the WBGU warns. Shared policies and publication/towards-our-common-digital-future

and privileged countries must clusion should be encouraged, WBGU proposals be closed. Developmental and and that applies to relevant vol- humanitarian efforts should unteering as well. benefit from digital technology, The WBGU study empha- A UN summit should dis- for a long time. The scholars however, for example in disease sises the relevance of educa- cuss the global implications point out that this would serve control in times of epidemics. tion, which should be geared of digitalisation. This is one the principal of recycling. In Municipal governance towards digital citizenship. The of many tangible proposals agriculture, digital applications matters very much in the eyes authors propose adopting a new the German Advisory Council could reduce the use of pesti- of the WBGU. Local govern- social contract. According to on Global Change (WBGU – cides and fertilisers. Other apps ments must be in the driver’s them, spending on education Wissenschaftlicher Beirat der could serve awareness raising seat, for instance, to ensure must count as a serious invest- Bundesregierung Globale Um- for environmental issues, the sustainable transportation. ment. In practical terms, they weltveränderungen) has for study recommends. The future of work and want schools and universities policymakers at national as Another WBGU proposal the reduction of inequality are to become better funded, teach- well as international levels. is to apply digital technology to further issues that the experts ers to become better trained The WBGU’s starting fighting poverty and boosting tackle. They predict that work- and curricula better geared to points are that human dignity inclusiveness. Development places and labour markets will tackling digital topics. must not be violated and that policies should be geared to change dramatically, and they The authors spell out that the common good must be safe- building digital sustainability. want action to be taken in re- big data and privacy deserve at- guarded. According to its latest Once more, climate protection sponse. It would make sense tention. Governments should study (see main story), the top and resource efficiency are to reform tax systems. Income ensure that citizens’ data is priority must be to protect the priorities. Capacities must be and payroll taxes could be re- not abused. The WBGU study natural foundations of life. In built to fully tap the potential duced, if resource use and en- proposes negotiating a UN this context, digital technology of technology, and the WBGU vironmental harm were taxed convention on data protec- should serve to charge prices is in favour of close cooperation properly, they argue. More gen- tion. Such a convention should for the use of natural resourc- with emerging markets. Goals erally, the WBGU insists that cover algorithms that benefit es and ecosystem services. In would include better dialogue, workers’ social protection and from huge databases (big data). the eyes of the government- increasing research coopera- occupational safety remain in- Regulations are needed to pre- appointed Council, those who tion and more effective global dispensable in the digital era. vent crime, manipulation and damage or deplete the environ- governance. The authors appreciate misuse moreover. ment must pay commensurate The WBGU points out innovative approaches to redis- Given that the current set- taxes and fees. that digital change requires an tributing incomes and profits ting of global governance does The WBGU also sees adequate analog foundation. in ways that reduce inequality. not offer a platform to negoti- scope for digitalisation driving In developing countries, they The universal basic income for ate these matters, the WBGU decarbonisation and climate see the need to strengthen that all citizens is mentioned fa- suggests that a UN summit on protection in the energy sec- foundation. Relevant issues vourably, and so is giving staff sustainability in the digital tor. Resource efficiency and include the expansion of infra- a direct share of company prof- age should be convened soon. the transition to renewables are structure in general and educa- its. The challenge is to draft Goals would include adopting considered essential. Electron- tion in particular. The WBGU good policies, the WBGU states. a charter and mainstreaming ic devices, moreover, must be demands that the digital di- Activities that protect the en- digitalisation issues within the easy to repair and should last vide between disadvantaged vironment and boost social in- UN system. (sb)

D+C e-Paper July 2019 5 MONITOR: CONFERENCES AND STUDIES

BIODIVERSITY says Sir Robert Watson, the IPBES chair, but he insists that “transformative” measures are needed. A million species at risk The authors of the study describe how countermeasures can still be taken. Change will require international cooperation be- tween states as well as decisive political The UN World Biodiversity Council has pre- ●● Climate change: If global tempera- action to enforce strict environmental pro- sented its first global report. The findings are tures increase by the two degrees Celsius tection (see Stephan Opitz, Focus section, alarming. Humanity is destroying nature to threshold, about five percent of species will D+C/E+Z e-Paper 2019/02). For instance, the such an extent that our own survival is in disappear; 16 % will vanish if temperatures scholars state that environmentally harmful jeopardy. increase by 4.3 degrees. subsidies must be abolished worldwide. ●● Pollution, and in particular the pol- The report also delivers non-binding By Theresa Krinninger lution of the seas: plastic pollution has in- recommendations for governments, con- creased tenfold in the oceans since 1980. cerning issues such as agriculture, fishing, Plant and animal species are rapidly dying ●● Invasive species that have supplant- marine and freshwater systems and urban out. That is the conclusion of the Global As- ed native plants and animals. The number planning. The authors believe that the inter- sessment Report, the first comprehensive of invasive species has increased by 70 % national community urgently needs to back assessment from the World Biodiversity worldwide. off from the goal of economic growth. Council. The Council was founded at the Indirect factors matter too. They in- The entire report is over 1,500 pages UN level in 2012 and has 132 member states. clude human behaviour (production and long. Only a summarised version has been Its official name is the Intergovernmental consumption habits) which is driving the made available so far. The entire docu- Science-Policy Platform on Biodiversity negative trends. Humanity has already ex- ment will be published later this year. It and Ecosystem Services (IPBES). The report ploited natural resources to such a profound will form one of the bases for the 2020 UN analyses the status of the UN Convention on extent that it is putting itself at risk, the re- Biodiversity Conference in China, where Biological Diversity and the goals that were port argues. cornerstones will be laid for future species’ adopted at a summit in Aichi, Japan, in 2010 The analyses show that ecosystems conservation. (see Günter Mitlacher, Debate section, D+C/ and people in South America, Africa and the E+Z e-Paper 2019/01). Asia-Pacific region will be most affected by LINK Contributors to the report were 145 the negative consequences of species loss. IPBES, 2019: Global assessment report experts and researchers from over 50 coun- on biodiversity and ecosystem services – tries. They evaluated thousands of scientific DECISIVE COUNTERMEASURES Summary for policymakers. studies on how biodiversity has evolved in https://www.ipbes.net/system/tdf/ the past five decades. The big question is whether it is still possi- spm_global_unedited_advance. The evidence is overwhelming. Ac- ble to halt species loss. “It’s not too late yet,” pdf?file=1&type=node&id=35245 cording to the report, approximately 1 mil- lion of an estimated total of 8 million plant and animal species are at risk of extinction. Unless decisive action is taken, many could disappear forever in coming decades. According to the report, biodiversity has shrunk by about 20 % in most land- based habitats. Over 40 % of amphibian species, almost 33 % of reef-building corals and over a third of all marine mammals are currently at risk of extinction. The number of domesticated animal species is declining too. By 2016, over nine percent of all domes- ticated species had died out. The authors identify the five main fac- tors that are driving species loss: ●● The overuse of the land and sea. Three quarters of all land areas and two thirds of the ocean have been drastically altered by human beings. ●● The direct exploitation of plants and oto: Reinhard Dirscherl/Lineair

animals in agriculture, forestry and fishing. Dead coral reef near the Maldives in the Indian Ocean. Ph

D+C e-Paper July 2019 6 MONITOR: CONFERENCES AND STUDIES

INVESTING geria aims “to guarantee the safety of people who come to add value to our environment”. A need to fight corruption and make Remembering the “forgotten laws and regulations fair and transparent is a top priority. “We need to see policy reform and improvements in the tax environment continent” for the digital economy,” says Eme Essien of the International Finance Corporation (IFC), which is part of the World Bank Group and supports private-sector development. Africa has a youthful work force, plentiful The reasons are many and varied. Another complaint of private inves- natural resources and huge growth potential. Weizsäcker himself puts part of the blame tors is that public institutions often offer Nonetheless, European private investors are on European governments for failing to co- African borrowers better terms than private staying away for several reasons. ordinate their efforts. He cites Tunisia as an institutions can. Paul Wade of the Norwe- example: “Instead of teaming up and talking gian Agency for Development Cooperation By Aviva Freudmann with one voice to the government, we still notes that direct investments financed by have three national ministers from Europe multilateral banks can crowd out private Africa, once called the “forgotten conti- going to Tunisia every week, promoting commercial financing. nent”, is sharply in Europe’s sights again. pet national projects.” But he pins most of The response of Olga Sclovscaia, who European political and business leaders the blame on African leaders and the busi- works for the World Bank, is that multilat- alike are calling on private investors to bet ness environment there. There are paral- eral institutions want to bring in just enough on Africa’s future, citing its robust growth rate, young population and abundant natu- ral resources. Food processing has “Africa is the continent of the future,” de- great potential in clares Jakob von Weizsäcker, chief economist Africa: inside at Germany’s Federal Ministry of Finance. “It a Kenyan juice- has enormous human and economic potential production facility. and faces big challenges. It is in dire need of investment both public and private.” He spoke in Frankfurt at the “Africa Europe Week” conference in late May, spon- sored by the Maleki Group, the World Bank and the Frankfurt Chamber of Commerce and Industry. Speakers emphasised the complementary interests of European in- vestors and African enterprises, the need to counter China’s growing influence in Africa and the urgency of giving potential African migrants incentives to stay home. The news on the ground is not very encouraging however. For now, the vision of Europe’s money funding Africa’s growth lels to Africa’s problems in Germany’s own public financing to catalyse private invest- needs has not come true. Private-sector in- history, Weizsäcker points out. “If you take ment. According to Sclovscaia, the “holy vestors in particular are hesitating. the scenic train ride between Frankfurt and grail” is to determine “how much public fi- According to the UN Conference on Cologne, you will see the ruins of beautiful nance is needed”. Trade and Development (UNCTAD), foreign castles. They are monuments to corruption It is difficult to raise financing within direct investment (FDI) into Africa fell to and extortion.” After all, the castle owners Africa itself. Even if foreign private invest- $ 42 billion in 2017, 21 % below the previous were “robber barons” who collected fees from ment were to increase, Africans would still year. Of the ten top investor economies in people transporting goods on the Rhine. need to raise local long-term money, argues Africa between 2011 and 2016, only four are Ike Chioke of Afrinvest, an investment Jaloul Ayed, chairman of the Vega Group, European: the UK, France, Italy and Switzer- banking firm, sees things in a similar light. a Tunisian company. “We have a $ 60 bil- land; the rest are in North America, Asia and “A term I use to describe the business environ- lion to $ 100 billion infrastructure gap, Ayed Africa itself. In Weizsäcker’s eyes, the key ment in Nigeria is VUCA – volatile, uncertain, said. He sees no way that the private sector question is: “Why is it so difficult to bring complex and ambiguous.” Nigeria’s Consul- can address all these needs. “We have to en- the enormous potential of Africa and the General in Germany, Suleiman Dauda Umar, courage African countries to develop bond

savings of Europeans together?” acknowledges the problem, but says that Ni- markets in local currencies,” he concludes. Ph oto: dem

D+C e-Paper July 2019 7 NOWADAYS D+C correspondents write about daily life in developing countries

al-Zour or al-Raqqa that lack medical Scars on young services. In Damascus, Ahmad finally IMPRINT received treatment and was given an arti- D+C DEVELOPMENT AND COOPERATION bodies ficial limb. He is still learning to walk. Vol. 46, 2019 Psychological trauma has wiped D+C is the identical twin of the German edition E+Z Internet: www.DandC.eu out Ahmad’s memory. The doctor says D 12 107 ISSN 0721-2178 Young children in Syria have never that the little boy is in a “denial phase”. D+C Development and Cooperation is funded by Germany´s Federal experienced peace. The on-going civil Ahmad’s mother worries because the be- Ministry for Economic Cooperation and Development and commis- war poses many dangers to kids – bombs, haviour of her child changed: “He keeps sioned by ENGAGEMENT GLOBAL. D+C does not serve as a shootings, stepping on mines and other himself isolated and he hardly talks more governmental mouthpiece. Our mission is to provide a credible forum of debate, involving governments, civil society, the private sector and explosives. Making matters worse, the than a word or two.” academia at an international level. D+C is the identical twin of E+Z medical system has largely collapsed. According to the UN Children’s Entwicklung und Zusammenarbeit, the German edition.

Injured people often do not get adequate Fund (UNICEF), about 3.3 million ENGAGEMENT GLOBAL gGmbH treatment. The number of casualties and Syrian children face war hazards, like Service für Entwicklungsinitiativen Tulpenfeld 7 injuries amongst children is enormous. improvised explosive devices (IEDs) and D-53113 Bonn Seven-year-old Ahmad Alkhateb explosive remnants of war (ERW). Most Phone: +49 (0) 2 28 2 07 17-0 Fax: +49 (0) 2 28 2 07 17-150 was playing with his friends in the street injured children don’t receive the medical www.engagement-global.de near his house in al-Raqqa in northeast attention they need. UNICEF claims that ADVISORY BOARD: Syria, when a mortar shell suddenly 1.5 million people in Syria live with long- Thomas Loster, Prof. Dr. Katharina Michaelowa, exploded near them. Shrapnel hit Ahmad term disabilities related to war injuries. Prof. Dr. Dirk Messner, Petra Pinzler, Hugh Williamson in the face and left a big scar on his Mine explosions are now the lead- PUBLISHER: cheek. Even worse, his right leg had to be ing cause of child casualties across the FAZIT Communication GmbH amputated, although the doctors in the country, with unexploded ordnance Executive directors: Peter Hintereder and Hannes Ludwig local hospital did everything they could. accounting for 434 deaths and injuries ADDRESS OF THE PUBLISHER AND EDITORIAL OFFICE: He only got a prosthesis once the road to last year. Frankenallee 71–81, D-60327 Frankfurt am Main, Germany

Damascus was safe to travel again. Henrietta Fore, UNICEF executive This is also the legally relevant address of all indicated as responsible Doneaa, the resident doctor of director, points out that in 2018 alone, or entitled to represent them in this imprint. the Children’s Hospital in Damascus, 1,106 Syrian children were killed in the EDITORIAL TEAM: says that she has many injured children fighting. This was the “highest ever num- Dr. Hans Dembowski (chief), Sabine Balk, Katja Dombrowski, Monika Hellstern, Sheila Mysorekar, Dagmar Wolf (assistant) coming from the eastern areas like Deir ber of children killed in a single year” Phone: +49 (0) 69 75 91-31 10 since the start of the war. Fore assumes [email protected] that the true figures are likely to be much Art direction: Sebastian Schöpsdau Layout: Jan Walter Hofmann higher. Translators: Malcom Bell, Claire Davis Millions of children have spent Disclaimer according to § 5,2 Hessian Law on the Freedom their entire lives in war zones. Many and Rights of the Press: The shareholders of the company are suffer deep psychological trauma. There Frankfurter Allgemeine Zeitung GmbH (40 %) and Frankfurter Societät GmbH (60 %). is only limited access to basic social services. There is no specialised institu- ADVERTISING AND SUBSCRIPTION SERVICE: FAZIT Communication GmbH tion for psychological support for those c/o InTime Media Services GmbH children. PO Box 1363 D-82034 Deisenhofen, Germany Eleven-year-old Rima has a long Phone: +49 (0) 89 8 58 53-8 32 scar on her leg. “When she was 3 years Fax: +49 (0) 89 8 58 53-6 28 32 [email protected] old, our house was bombed at night”, her SYRIA mother reports. “Rima suffered third- PRINTING: degree burns. It took her eight months Westdeutsche Verlags- und Druckerei GmbH Kurhessenstraße 46 to recover.” Because of her scar, Rima D-64546 Mörfelden-Walldorf, Germany Damascus always wears long pants. But whenever Opinions expressed by authors indicated in bylines do not necessarily she sees a girl with a short dress, she tells reflect the views of ENGAGEMENT GLOBAL, the publisher or the her mother: “I wish I could wear a short editor and his team. Provided that they indicate the original source, third parties have the permission to republish in complete or abridged dress like that.” versions the manuscripts published by D+C Development and Cooperaton and E+Z Entwicklung und Zusammenarbeit. However, those who do so are requested to send the editorial office two hard copies and/or the links to the respective webpages. This general NAWAR ALMIR ALI permission does not apply to illustrations, maps and other items with explicitly and separately marked copyright disclaimers. is a journalist and lives in Damascus, Syria. PRICES (INCL. MAILING CHARGES): single issue: € 2.20

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D+C e-Paper July 2019 8 DEBATE: OPINIONS

PERPETRATORS OF VIOLENCE on the ground. It has served to embolden security actors and caused them to adopt new objectives that have little to do with When border-security forces the protection of those migrating through their territory.” Western governments’ cur- rent wavering must irritate pro-democracy become a cause of flight protestors, whether in Sudan, Algeria, Hong Kong or Russia. It is true, of course, that a country’s governance ultimately depends on the interaction of its domestic political On 3 June, Sudan’s security forces started to the article, Sudanese police officers were forces. But while democracy cannot be im- clamping down on pro-democracy protests even deployed in Europe, for example Italy. posed from outside, the international en­ and killed many dozens of people. The para- Moreover, it is understood that the RSF are vironment does have a bearing on domestic military Rapid Support Forces (RSF) were involved in African border control. forces’ interaction. reported to have acted with particular brutal- The European public may not be fully European leaders like to say that they ity. For several reasons, western countries’ aware of these developments, but African are fighting “causes of flight” and that bor- response was unimpressive. policymakers have seen their EU counter- der controls serve that purpose. The Su- parts, who normally demand good govern- danese experience shows that this can be By Hans Dembowski ance and human rights, prioritise border quite short-sighted. The RSF are themselves security. African civil-society activists are a cause of flight. Sudan may now be head- The RSF are historically rooted in the infuriated (see interview with Ibrahim ing for renewed dictatorship or civil war. In Janjaweed militias that perpetrated horrific Manzo Diallo in Focus section of D+C/E+Z ­either case, more people will want to flee. crimes in Sudan’s Darfur region one and a half decades ago. Because of their govern- ment-backed atrocities, the International Criminal Court issued an arrest warrant for then-President Omar al-Bashir in 2007. Sub- sequently, western governments did their best to isolate his regime. Nonetheless, he stayed in power until his military removed him in April this year in view of the demo- cratic uprising. The sad truth is that the EU and the USA currently lack the credibility they need to forcefully promote democracy and hu- man rights. US President Donald Trump shows no interest in doing so anyway. At this point, his authoritarian leanings need no detailed elaboration. Britain’s government is incapacitated by the Brexit drama. The EU, however, has serious problems beyond this important member planning to leave. As right-wing Sudan’s Rapid Support Forces marching in Khartoum in May 2017. populists became stronger in recent years, many EU policymakers began to focus on limiting immigration. They want African e-Paper 2019/04).The reputation of Sudan’s After World War II, great European governments to do more to control people’s regime has benefited from the Khartoum leaders started the integration process that movement across borders. The “Khartoum Process, and so have, at least indirectly, its brought us the European Union. Their vision Process” serves that purpose. No, not all finances. The EU insists that its funding has was a supranational alliance that would do African governments involved have demo- only served humanitarian purposes, but more than safeguard human rights, democ- cratic legitimacy, and yes, even formerly that gives the government breathing space, racy and peace in Europe. They wanted it to ostracised al-Bashir has played a central role and inner-Sudanese transactions are plainly assume a leading role in global affairs. If cur- in it. That is the reason the process carries not transparent. rent EU leaders want to play such a role, they the name of Sudan’s capital. Martin Plaut, the prominent Africa should back off from opportunistic collabora- “By stifling migration, Sudan’s feared expert, has stated: “Whether the EU has, tion with dubious leaders (see comment next secret police aid Europe”, was a headline in or has not, funded the RSF does not mean page). That applies to the EU as a whole – and oto: picture-alliance/photoshoot

the New York Times in April 2018. According that EU support has not had a direct impact all member countries, including Germany. Ph

D+C e-Paper July 2019 9 DEBATE: OPINIONS

EUROPEAN MIGRATION POLICY in Egypt cannot count on receiving humane and lawful treatment, migrants intercepted in Libya are potentially exposed to abuse Risks and side-effects and forced labour. Under internal political pressure and in light of the growing strength of nationalist parties in nearly all member states as well as in the European Parliament, Migration and asylum were among the most place, the numbers of migrants arriving in the EU has ceased to apply good governance prominent issues in the European elections. Greece through Turkey have dropped. The as a criterion for cooperating with African Whoever heads the European Commission in EU-Turkey agreement is part of a strategy partners; it looks only for effectiveness in the future and whatever alliances are forged to halt migratory movements in countries of containing migration. The EU thus also sup- in the European Parliament, the search for origin or transit. The EU has already estab- ports regimes that do not attach much im- joint solutions in this policy area will be right lished “migration partnerships” with a num- portance to national development and are at the top of the EU’s to-do list. ber of countries in Africa. Its aim in doing so more likely to aggravate the causes of migra- is to reduce the causes of migration, ensure tion rather than reduce them. By Nassir Djafari that refugees can stay near their country of By equipping border guards – and thus origin and facilitate the return of illegal im- parts of the police and armed services – of The disagreement within the EU over asy- migrants and rejected asylum seekers. “failed states” like Libya, Sudan or Soma- lum and migration policy is deeper and The EU uses a range of instruments for lia, the EU not only makes itself a party to wider than in any other policy area. Real this purpose. They include, for example: internal armed conflicts; it also risks weap- or feared immigration shapes the political ●● financial assistance to help strengthen ons falling into the hands of terrorists. The agenda in member states. The only con- border security and combat human traffick- renewed outbreak of fighting between rival sensus that currently exists in the EU is the ing, forces in Libya in March 2019 showed how desire to limit the flows of refugees. The EU ●● trade benefits and development coop- shaky such partnerships are. Cooperation is trying to staunch those flows as close to eration and with failed states is not just a matter of hu- their source as possible. And it is prepared ●● readmission treaties. man rights; it can also present an indirect to cooperate with questionable partners in Funding for these measures is avail- risk to European security. the process. That strategy may work in the able from the EU Trust Fund for Africa Creating a cross-sectoral fund to pro- short term but the medium and long-term launched in 2015. The main beneficiaries are mote Africa’s economic and social develop- impacts could deepen the root causes of mi- the Sahel and Lake Chad region, the Horn of ment was a good move and one that is long gration. Africa and North Africa. The EU also cooper- overdue. But the fund can only achieve The EU’s deal with Turkey in 2016 ates with countries such as Egypt, Libya and sustainable impacts if it works exclusively marked a major turning point in refugee- Sudan, where massive human-rights viola- with development-oriented partner govern- flow control. Since the accord has been in tions are a daily occurrence. While refugees ments. In countries where that requirement is not met, it should support only civil-soci- ety projects, not government ones. However, the € 4.5 billion Trust Fund can only be a first step. Significantly more money is needed to help bring about a long- term improvement in living conditions in Europe’s neighbouring continent. And no one should expect the support programmes to stem the tide of migrants heading for Eu- rope in the near or medium term. Research findings show that, initially, migration at- tempts actually increase with economic growth. In the long term, however, as em- ployment and income opportunities are created for broad sections of the popula- tion, people seek a future in their own home country.

NASSIR DJAFARI is an economist and freelance writer. African refugees in one of the controversial reception centres in Libya for would-be migrants to oto: picture-alliance/AP Photo oto: picture-alliance/AP

Europe. [email protected] Ph

D+C e-Paper July 2019 10 DEBATE: OPINIONS

RIGHT-WING POPULISM Meanwhile, the controversial Rafale jet deal suggests that crony capitalism is in full bloom in the country. Will other things Modi won – but did India? change under Modi 2.0? Hopefully, because surely India’s masses of unemployed, who were betrayed but still voted him to power, will not be patient over the next five years. Our India correspondent assesses the recent On the one hand the killer of Mahatma The people can only hope that governance elections results. Gandhi is resurrected as a hero, and on the from 2019 will include: other fantasies based loosely on ancient ●● putting a check on provocative and By Aditi Roy Ghatak mythology now trump scientific insights as fake news on social media, bigotry, xenophobia and misogyny run wild. ●● stopping the emasculation of institu- Soon after winning the general elections The Narendra Modi victory is in keep- tions of democratic governance, in India, Narendra Modi promised that he ing with the international trend of victori- ●● giving minorities a sense of security, would be prime minister of all Indians; not ous right-wing populists. They thrive on and only of those who voted for him. Minorities, divisive action while insisting on organised ●● prioritising issues of economy, ecol- he said, need not fear. The international me- unity. His policies sound good in theory ogy and growth; not giving precedence to dia praised this new rhetoric as a welcome but have failed the grassroots test thus far. obscurantism. sign of moderation. The crying shame of the first five years of Modi, with his unmatched eloquence, India’s minorities, including almost the Modi government is the collapse of the manipulated the political discourse away 200 million Muslims along with Dalits, Adi- economy. Growth rates are down; inflation from economic misery and focused atten- vasis, Christians and others, however, hope that their worst fears will not come true. They have been familiar with the Hindu ex- T-shirt seen at BJP tremist speak for decades, and statements victory celebrations of some elected leaders induce fear. The in New Delhi. unstated message is that minorities have nothing to fear as long as they accept Hin- du dominance, but this rule does not apply consistently, as recent hate crimes and their handling confirm. Indians remember the Gujarat riots in 2002, when Modi, then the chief minister of the western Indian state, failed to stop the massacre of Muslims. According to the constitution, India is a secular nation and accepts all religions – a position increasingly being questioned. Worse, those who disagree are labelled “en- emy of the people”. Amongst others, five human-rights activists and academics ar- rested in August last year still rot in jail for having stood up for rights of the oppressed. Independent journalists, civic leaders and is inching up, and the promised jobs mira- tion on supposed enemies. He managed to intellectuals are harassed, attacked and cle never happened. Unemployment and hold large sections of the country in thrall even killed. Journalist Gauri Lankesh was underemployment are worse, and little was as jingoism carried the day. A weak and frac- probably the most prominent victim. done to trigger rural development. tured opposition running its campaign on Video-taped murders of Muslims go Worse, Modi’s ill executed tax reform inclusivity and justice for all got swept away, viral, and vigilante groups carry out attacks was overly bureaucratic, crippling small except in some southern states and the over beef eating and inter-caste marriages. and mid-sized enterprises. His “demoneti- northern state of Punjab. The ruling NDA Alleged terrorists are even rewarded with sation” (banning certain denominations of secured 45 % of the votes polled. Modi won; political positions. Pragya Singh Thakur, ac- currency), meant to break the back of ter- but did India? cused of conspiracy in the 2006 Malegaon rorism and corruption by eliminating black blast case, is a member of parliament. Yogi money from the system, ended in a fiasco: ADITI ROY GHATAK Adityanath, chief minister of Uttar Pradesh, new banknotes promptly replaced the old is a freelance journalist based India’s most populous state, has seen no rea- ones, while masses of informal and small in Kolkata. son to apologise for his alleged hate speech- scale businesses and farmers took a beat- oto: Javed Sultan/picture-alliance/AA

es. ing. [email protected] Ph

D+C e-Paper July 2019 11 DEBATE: OPINIONS

SOUTH AFRICA misery and overcome its devastating social impacts. Voters now want Ramaphosa to tackle ANC gets away with minor dents the corruption and cronyism that permeate large sections of the ANC and the state. Until Ramaphosa replaced Zuma, trust was ebb- ing away from the ANC. The new president South Africa held national as well as provin- dom Party (IFP), which has a regional/eth- has slowed down that trend. It is well un- cial elections on 8 May. President Cyril nic base in KwaZulu-Natal, became the 4th derstood that the problems go well beyond Ramaphosa and his African National Con- strongest party with 3.4 %. The right wing, Zuma personally however. Zuma’s friends gress (ANC) got away with minor dents. The exclusively white Freedom Front Plus (FF+) and allies are still in positions of power, both electorate could have taught them a harder gained almost 2.4 % nationally. As South in the ANC as well as in government offices. lesson. Ramaphosa must now prove that he Africa has a proportional system that assigns The new leader has been shying away from truly deserves the voters’ trust. the parties’ seats in parliament according to directly challenging them. The risk of the their share of the vote, 43,000 votes were party disintegrating and political tensions By Henning Melber sufficient for representation in the national triggering violence seems too big. legislature. Nine smaller parties will thus The minor changes in parties’ vote The ruling party won 57.5 % of the national join the five major parties in parliament. shares probably matter less than recurring vote. That was its worst result in history so All summed up, however, voter mi- protests by mostly young people. Voter far. In 2014, its share was 62.2 %. However, gration from big to small parties was un- turnout was officially reported to have been the elections did not shift the balance of derwhelming. The election results show 66 % (2014: 73,5 %). That figure is worse than power. The Western Cape Province contin- that people are actually keen on stability. it looks. In order to vote, citizens must reg- ues to be run by the Democratic Alliance Ramaphosa, who succeeded Jacob Zuma ister with the election commission. This (DA), the major opposition party, while the in office, benefited from that desire. There time about 1 million fewer voters actually ANC remains in power elsewhere. plainly was no convincing alternative to cast their ballots than did four years ear- Indeed, the election results are a cause him. It did not matter in the campaign that, lier, while only about 75 % of those eligible of concern for the DA too. Its 20.8 % was after the introduction of majority rule in to vote were registered at all. If one consid- not only less than aspired, but less than the 1995, this former trade-union leader man- ers that an estimated 10 million people did 22.4 % it achieved in 2014. By contrast, the aged as business man to amass a fortune not care to get registered, voter turnout was Economic Freedom Fighters (EFF) managed worth an estimated $ 400 million. His dubi- actually below 50 %. to increase their share of the vote from 6.4 % ous role in the Marikana massacre of strik- Abstention was particularly pro- to 10.8 %, taking a radically populist ap- ing miners in 2012 was hardly discussed nounced in the age group under 30. In the proach and adopting pseudo-revolutionary either. It is true that the initially euphoric eyes of many members of the „born free“ rhetoric. Most likely, however, the EEF had response to his rise to the ANC leadership generation, that was a deliberate act of pro- hoped for even more. has subsided. Nonetheless, many people test. They had campaigned for staying away Several smaller parties managed to still pin their hopes on him, thinking that on social media. Their attitude suggests that strengthen their hand. The Inkatha Free- he will be able to lead them out of economic the ANC is losing its appeal as the former liberation movement. In the long run, vot- ers will not base their electoral choice on the Supporters of legacy of the anti-apartheid struggle, and President Cyril young people no longer feel loyalty to the Ramaphosa and his ANC. In an era marked by market-orthodox- ANC, governing party ies, they want social justice. They want the of South Africa. structural apartheid, which results from the alliance of the old and new elites, to finally end. Ramaphosa and the ANC will be judged by to what extent they manage to make that transition happen in the next four years.

HENNING MELBER is a senior research associate at the Nordic Africa Institute in Uppsala and an extraordinary professor at the South African Universities of Pretoria and the Free State in Bloemfontein. oto: picture-alliance/AA

[email protected] Ph

D+C e-Paper July 2019 12 TRIBUNE: IN-DEPTH ANALYSIS

A polling station in Dakar, Senegal’s capital.

ELECTIONS summed up the situation in an interview with a local newspaper: “Our major failure is when presidential contenders of the op- Democracy in West Africa position parties refuse to concede defeat be- cause of alleged vote rigging.” He bemoaned that opponents refused to recognise the president as the clear winner of the contest. Recent elections in Senegal, Benin and Nige- from France in 1960, is widely regarded as “We are in a stalemate here,” he said, “we ria have revealed serious problems. The Africa’s poster child for democratic rule. It must end this.” The controversy has not trend is worrisome. has a history of peaceful elections and trans- died down however. parent government. Democracy in Senegal In May, the Senegalese parliament By Karim Okanla also has strong support from the voters: ac- upheld a presidential decree abolishing the cording to the BBC, 66 % of eligible voters post of prime minister. Opposition parties West Africa’s democratic tradition has an cast their ballots in the 24 February election. called the move unconstitutional and ac- uneven history – and, judging by recent They returned incumbent President Macky cused the president of amassing too much elections, similarly uneven prospects. The Sall to office, with 58 % of the vote in the first power in his own hands. three West African nations that held na- round. Political analysts warn that the con- tional elections in recent months – Senegal, Yet there are flaws in this democracy, troversy could escalate from an inter-party Benin and Nigeria – began their paths to de- as the recent election shows. Two leading rivalry to a tribal dispute. They note that the mocracy at different times: nearly 60 years opponents of President Sall, Khalifa Sall president won by a landslide in his strong- ago in Senegal, 30 years ago in Benin and 20 (no relation to the president) and Karim hold in northern and central Senegal, home years ago in Nigeria. Wade, the son of a former president, were to the Pulaar and the Serere people, but Perhaps unsurprisingly, the country barred from running after having been had a weaker showing elsewhere, where with the longest democratic tradition, Sen- charged with corruption. The result of their other ethnic communities predominate. egal, has made the most progress, and the exclusion was that two major political par- For Senegal, they say, it would be a distinct country with the shortest democratic expe- ties, the Socialist Party and the Senegalese step backwards if tribal resentment became rience, Nigeria, appears to face the biggest Democratic Party, did not field candidates politically relevant. Meanwhile, President challenges. In all three countries, however, in this election. The two excluded candi- Macky Sall has called for national dialogue, considerable work remains to be done for dates say the charges were politically mo- but some opposition leaders remain uncon- democracy to fully take hold. tivated. vinced. After the election, former Prime Min- SENEGAL ister Idrissa Seck and other leading oppo- BENIN sition politicians accused the president of To begin with, the good news: Senegal, manipulating the results. Benin is officially a representative demo- which has developed its democratic tradi- A former regional representative cratic republic and was in the forefront oto: Jane Hane/picture-alliance/AP Photo oto: Jane Hane/picture-alliance/AP

tion since shortly after its independence of Amnesty International, Alioune Tine, of Africa’s democratic revival in the early Ph

D+C e-Paper July 2019 13 TRIBUNE: IN-DEPTH ANALYSIS

1990s. Its politics are pluralistic to a fault: the opposition parties from the April elec- decades of brutal military coups, counter- according to estimates, Benin had some 200 tion. The two major opposition parties, the coups and even civil war. political parties in 2018. Union Sociale Libérale (USL) and the Forces Nigeria has held six presidential elec- But pluralism suffered a reversal in Cauris pour un Bénin Emergent (FCBE) say tions since 1999. In the most recent election, the parliamentary elections that took place the 83 new members of parliament are “il- incumbent President Muhammadu Buhari on 28 April. Major opposition parties were legitimate and illegal representatives of the of the All Progressives Congress (APC) was barred for failing to follow new and cum- people of Benin”. re-elected for another four years. bersome electoral laws. Under the new laws But this election was far from a perfect that had been passed in July 2018, parties example of democracy at work. To begin must meet an electoral threshold of 10 % of with, the Independent National Electoral the national vote to enter parliament. More- Commission (INEC) postponed the voting, over, they must pay a deposit of 249 million which was originally set for 16 February, by CFA francs (€ 380,000) to be listed on the one week on short notice, arguing it faced ballot, up from 8.3 million CFA francs. As logistical problems. One implication of that a result, all the newly elected 83 members step was that many people were denied their SENEGAL of parliament are now aligned with Patrice chance to vote. To take part, they had trav- NIGERIA Talon, the incumbent head of state. Dakar elled home to their constituencies for the In protest to the restrictive rules, vot- weekend, but could not afford to make the ers shunned the election in large numbers. BENIN Abuja same trip twice. Offices of the INEC were hit The National Electoral Commission said Porto-Novo by arson attacks. that only 23 % of the 5 million eligible vot- The election was marked by a depress- ers went to the polls, but the Constitutional ingly low turnout: according to the BBC, Court put the figure at a little more than only a third of the 73 million eligible voters 27 %. Whatever the official turnout, it is appeared at the polls. That was the lowest considered extremely low. In fact, it is the Addressing the nation on 20 May, rate in 20 years. Apparently, masses of peo- lowest ever recorded since December 1990, Talon said that he deeply regretted the ple no longer believed that voting would when Benin adopted its new Constitution in scenes of violence that led to several deaths make a difference. The election was also a referendum. and injuries. He asked the newly installed marred by violence. Afterwards, opposi- The election itself was marred by parliament to amend the controversial elec- tion parties filed legal challenges, but to no problems. Benin was totally disconnected toral law so that opposition parties could avail. from the internet on election day. This contest next year’s local and municipal In the Economist Intelligence Unit’s meant that communication via social net- elections. The president has also called for Democracy Index for 2018, Nigeria ranks works, among other channels, was not pos- national dialogue to sort out the country’s 108th out of 167 countries, compared to 81 sible. Riots broke out after former President problems, but key party leaders like Eric for Benin and 73 for Senegal. Nigeria faces Thomas Boni Yayi called for an election Houndete and Candide Azannai have flatly many challenges simultaneously, along boycott. People suspected of violent ac- turned down the offer. with the task of strengthening its democ- tion were detained without a warrant. An- This situation leaves open the ques- racy. Islamist extremism is a problem, and gry mobs set property ablaze, and security tion of how effectively a parliament that is security is fragile. Poverty and massive mi- forces responded with deadly force. Several beholden to the president can check and gration are facts of daily life. young men and women were killed during balance presidential powers. It is common Corruption in politics remains a bar- anti-government demonstrations. Moreo- practice in Benin for a sitting president to rier to solving these problems. Politicians ver, press freedom is increasingly being try to amend the 1990 constitution to amass have turned public offices into cash cows restricted, and at least one journalist was more power. Previous attempts failed due to enrich themselves. Public spending has detained for several days for an article that to opposition in parliament. Now, however, soared; in 2018, for example, the Senate he wrote about Benin’s ballooning foreign there is no strong opposition party in par- spent close to 40 billion Naira (approxi- debt. According to Reporters without Bor- liament, and the president has sweeping mately € 100 million). The budget of this ders, an international non-governmental power. He has virtual veto power over poli- legislative body is larger than those of some organisation based in France, Benin’s rank- cymaking, can deny an institution funding of Nigeria’s 36 states. This fact shows that ing for press freedom has dropped from 84th and can appoint the heads of state institu- power is concentrated at the federal level. to 96th in just a matter of months. As for tions. This does not bode well for true demo- Democracy would benefit from stronger and former president Boni Yayi, security forces cratic rule. better funded states. have sealed off his residence in Cotonou. Some say he has been virtually placed un- NIGERIA KARIM OKANLA der house arrest. is a media scholar and President Patrice Talon and the main Nigeria has officially been a democracy for freelance author based in opposition parties are now locked in a con- 20 years. The country became independent Benin. stitutional showdown over the exclusion of from Britain in 1960, but what followed were [email protected]

D+C e-Paper July 2019 14 Seychelles wind farm.

SDG finance

Humanity’s future hinges on include the tax revenues of developing achieving the Sustainable countries and emerging markets, Development Goals. The private-sector investments, south-south agenda must be funded properly. Official cooperation and international climate development assistance is needed, but finance. Ultimately, all economic activity will not suffice. Other relevant sources will have to be geared to sustainability. oto: J.W.Alker/Lineair Ph SDG FINANCE

need an additional annual $ 21 billion for ed- Unprecedented – but underfunded ucation, an additional annual $ 20 billion for health care and an additional $ 12 billion for environmentally sound water supply. It bears repetition that developed economies must increase ODA. Since the It was a paradigm shift when the UN General that year. The AAAA outlined the relevant 1970s, they have not lived up to their prom- Assembly adopted the Sustainable Develop- sources of potential SDG finance. The most ise of spending 0.7 % of gross national ment Goals (SDGs) in September 2015. The important strategic options are probably: income on ODA. According to the Organ- SDGs go far beyond inspirational slogans ●● to generate higher tax revenues in de- isation for Economic Co-operation and De- and moral imperatives, setting clear targets veloping countries, velopment (OECD), a club of high-income for the years up to 2030. Unless the agenda ●● to increase official development assis- and almost-high-income countries, ODA is properly financed in low-income countries, tance (ODA) and only amounted to $ 147 billion or 0.31 % of 29 however, the SDGs cannot be achieved. ●● to unleash private investments (both donor governments combined GNI in 2017. foreign and domestic). The shortfall was $ 185 billion. By Belay Begashaw The SDGs were preceded by the Mil- Compounding the problems, ODA lennium Development Goals (MDGs). Two flows to Africa have not only been volatile The SDGs are the international communi- essential lessons of the MDGs are that co- in recent years. In view of fast population ties’ response to urgent challenges. Among ordinated global efforts can indeed bring growth, they are actually dwindling per cap- other things, they are designed to: about progress, but that financing must not ita. The resources provided to low-income ●● ensure economies growth and poverty fall short of the need. Both happened in Af- countries in the past 20 years were never alleviation, rica. The achievements made were useful, commensurate with the depth and the ur- ●● bring about mitigation of, and adapta- but due to lack of funding, not all aspira- gency of the challenges. That must change, tion to, climate change, tions came true. but more money will still be needed. ●● reduce inequality, including gender The outlook for improving devel- disparities, HIGHER AMBITIONS THAN BEFORE oping countries’ tax revenues – which is ●● safeguard peace and called “domestic resource mobilisation” in ●● foster international cooperation. The current SDG agenda is more ambitious, the technical jargon – is not encouraging The principle is to leave no one be- than the MDG agenda was. Even more than (see essay by Dereje Alemayehu on p. 20 in hind. The agenda is truly global. The 17 goals before, implementation and acceleration de- this e-Paper).­ In more than a dozen African and 169 targets are expected to be delivered pend on substantial financial flows from var- countries, according to SDGC/A assements, by all countries, despite their different lev- ious stakeholders. The SDG Center for Africa the ratio of tax to gross domestic product is els of socio-economic development. The (SDGC/A) has made the following estimates: still below 15 %, which is generally consid- starting points are indeed very different. low-income countries south of the Sahara ered to be the minimum level needed for More than half of Africa’s 54 nations are 0.6 low-income countries. These countries have very low baselines. Fragile statehood adds to the problems in many places. The aspi- 0.5 ration, nonetheless, is to achieve the SDGs everywhere. The challenges are huge. They range 0.4 from fundamental livelihood issues such as poverty, basic health and education ser- vices, to unemployment and inequalities 0.3 to stemming global trends such as global warming and the loss of biodiversity. The plain truth is that most low-income coun- 0.2 tries are not in a position to rise to all rel- evant duties on their own. Typically, they struggle to tackle merely the most basic do- 0.1 mestic challenges. This is the backdrop of the Addis Ababa Action Agenda (AAAA), which was adopted 0 6 4 2 0 8 6 4 2 0 8 6 4 2 0 8 6 4 2 0 8 6 4 2 0 8 6 4 2 0 1 1 1 1 0 0 0 0 0 9 9 9 9 9 8 8 8 8 8 7 7 7 7 7 6 6 6 6 6 0 0 0 0 0 0 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 by the UN conference on financing for devel- 9 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 opment in Ethiopia’s capital city in July 2015. It resulted from a long diplomatic process This graphs shows the ratio of the OECD donors’ total official development assistance to their

that also led to the adoption of the SDGs later combined gross international income. Screenshot: https://data.oecd.org/oda/net-oda.htm

D+C e-Paper July 2019 16 SDG FINANCE

functional statehood. While the tax to GDP change must be considered more impor- commitments have been growing, but more ratio actually rose to an average of 17.5 % in tant than fending off inflation in the long needs to happen. Africa in 2012, it decreased again to only run. Inflation is painful, but policymakers It is worth noting that, almost four about 16 % in 2017. Too many countries are can get a grip on it, when and if it arises. years afer the SDGs were adopted, too below the average, and the unsatisfying Global warming is irreversible. The current little has been accomplished in terms of truth is that tax revenues did not keep up financial-stability framework means that SDG finance. Next year, one third of the en- with economic growth. low-income countries’ cumulative debt is tire programme time will have passed. At To deliver on the SDG agenda, the av- considered unsustainable once it exceeds the current pace, the vision will not become erage additional spending needed in low-in- a certain level. At that point, they are at risk reality. Further slippage would be a guaran- come countries represents 15 % of their GDP, of being cut off not only from loans, but even tee of failure. Failure, however, is not an op- according to an International Monetary from grants. International financial institu- tion humanity can afford. Fund (IMF) staff paper of September 2018. tions and the OECD countries should grant Substantial investments are needed in edu- them more policy space. LINKS cation, health, water supply and sanitation, Low-income countries’ own develop- International Monetary Fund (IMF), 2019: Fiscal roads and electricity. Given that many of the ment banks are especially important in this policy and development: human, social, and countries concerned do not even generate context. To date, there are about 65 national physical investment for the SDGs. 15 % as government revenues, the gaps are and regional development banks in Africa. https://www.imf.org/en/Publications/Staff- obviously huge. Some are owned by public and private share- Discussion-Notes/Issues/2019/01/18/Fiscal- At the same time, unemployment and holders, moreover. Generally speaking, they Policy-and-Development-Human-Social-and- underemployment remain serious prob- remain small and undercapitalised. They Physical-Investments-for-the-SDGs-46444 lems. Commodity prices have been declin- should be strengthened technically and fi- SDG Center for Africa (SDGC/A), 2019: ing, moreover, which is bad news for the nancially in a way that empowers them to Sustainable Development Goals three year low-income economies that export these contribute to achieving the SDGs. Sustain- reality check. goods. In this setting, it is naïve to expect ability and inclusion must be high on their https://sdgcafrica.org/wp-content/ them to see dramatically increasing tax agenda. uploads/2019/06/AFRICA-2030-SDGs-THREE- revenues. Instead, public debt is growing Private capital must play its role as YEAR-REALITY-CHECK-REPORT.pdf once again, and experts from the IMF and well. Making that happen is easier said than 2019 Africa index and dashboard report: the World Bank have been warning of debt- done. By definition, private investment is https://sdgcafrica.org/wp-content/ stress risks for quite some time (see Jürgen not steered by policymakers. The impor- uploads/2019/06/SDGS_INDEX_ Zattler in Focus section of D+C/E+Z e-Paper tant thing is to set the right incentives. Re- REPORT_2019WEB.pdf 2018/09). warding financial investors in SDG-relevant In this context, the current multilat- projects with negative interest rates could BELAY BEGASHAW eral policy framework in regard to macro- mobilise private money, but public money is the Director General of the economic stability is far too rigged. The fo- is needed to pay for that kind of subsidy. Sustainable Development cus is only on debt levels, regardless of what Impact investments, which are geared to Goals Center for Africa loans are used for. Internationally, interest social and environmental results on top of (SDGC/A) in Kigali, Rwanda. rates are quite low and mitigating climate merely financial ones, are needed. Relevant [email protected]

2. the Addis Ababa Action Agenda The end of certainties (AAAA) on financing for development, 3. the Sendai Framework on Disaster Risk Reduction and 4. the Paris Climate Agreement. The committee had a point. Yes, it Due to the ever-changing policy environ- By Stephan Klingebiel does make sense to focus on these agree- ment, the rules that apply to official develop- ments and consider them the basis for de- ment assistance (ODA) have always required In 2017, a high-level panel of the Develop- velopmental action. However, one must also periodic reassessments. It is a constant chal- ment Assistance Committee (DAC) of the take into account recent trends that are not lenge to reconcile conflicting demands and OECD (Organisation for Economic Co-oper- necessarily conducive to such a consensus. goals. Greater aid effectiveness, for example, ation and Development), claimed that four Even among OECD donor countries, priori- is one such goal, but pressure has grown to international agreements had established ties and goals differ widely. align ODA with security policies. Reaching a “new consensus development agenda“: Last October, Federica Mogherini, the consensus on issues of global sustainable 1. the 2030 Agenda with its 17 Sus- EU’s foreign affairs chief, and Bill Gates, the development and ODA is not easy. tainable Development Goals (SDGs), American billionaire, whose foundation is

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a major player in aid affairs, both addressed ●● operational approaches (How do pro- development cooperation (DC). Changes the European Parliament on the future of Eu- jects and programmes need to be designed inside and outside the international policy ropean ODA. It became clear that their visions to be effective?). arena relate to fundamental challenges. are worlds apart. While Mogherini stressed Discussions of these matter tend to They go significantly further than they did that ODA resources had helped to ease the run side by side in a largely unconnected in the past. Five trends are noteworthy: pressure of recent migration, Gates pointed and often contradictory manner. At the out the massive potential of technological in- operational level, for instance, it is impor- 1. DC OBJECTIVES / NEW EMPHASIS ON novation for addressing global health issues. tant to sharpen further locally based pro- NATIONAL INTERESTS A new analysis (Gonsior/Klingebiel grammes and improve project design with 2019) confirms that visions differ widely an eye to involving local target groups and For years, it was regarded an indication of among policymakers in regard to global de- clearly defining the roles of participating in- lacking development orientation when a do- velopment. Affected are: stitutions. Such concerns, however, hardly nor government geared DC to its immediate ●● policy narratives (What goals should matter in donors’ evolving broader narra- interests. Accordingly, untying aid (not re- be pursued?), tives, which were largely dominated by mi- quiring goods and services to be purchased ●● strategic discourse (How can those gration concerns in recent years. from the donor country) and promoting goals be achieved? Which groups of coun- It is therefore quite a challenge to prop- good governance were benchmarks for good tries should be prioritised?) and erly assess the current state of international development policy. oto: Nicolas Economou/picture-alliance/NurPhoto

Spending on refugees in OECD countries counts as ODA: Moria refugee camp on the Greek island of Lesbos. Ph

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The most dramatic change in recent China and Turkey will follow suit in the not approaches. In Germany, this applies to the years was that migration targets became so distant future. It needs to be considered special initiatives taken by the Federal Min- important in DC. Instruments such as carefully what impacts this trend will have istry for Economic Cooperation and Devel- the EU Emergency Trust Fund for Africa on development cooperation as a policy opment (BMZ), for example. These changes (EUTF) have made a difference. Increas- area and what form cooperation should take rarely figure in current international debate, ingly, ODA of European donors and the with countries that are no longer ODA eligi- but they concern fundamental issues. USA is being used in support of countries ble (see article by Michael Krempin on p. 30 The fact that the number of develop- that are considered relevant for stemming of this D+C/E+Z e-Paper). ing countries is declining does not mean migration. that cross-border cooperation is no longer At the same time, other donor inter- 4. DECLINE IN RELATIVE IMPORTANCE needed. On the contrary, cooperation is ests are increasingly re-emerging in policy more important than ever if sustainable discourse. This applies rather generally. For ODA is only one part of development fi- development is to be achieved. Such coop- example, terms and conditions of DC are nance. Even in the least-developed coun- eration must include ODA, but it must go used as levers in international economic tries, taxation matters very much. Accord- far beyond conventional development ef- competition. Emerging market govern- ing to OECD data, 43 % of their development forts. ments notably do this in south-south co- finance depends on such domestic resourc- Whether a donor government should operation, and Britain is attempting to use es. In upper middle-income countries, the prioritise strengthening democracy or pro- DC to limit the negative impacts of Brexit. respective share is 78 %. National revenue moting renewable power generation in It also matters that addressing global public services are thus the main source of devel- a partner country depends partly, but not goods such as health care or climate protec- opment funding worldwide (see article by entirely on a country’s income status. At tion does not fit easily into categories of na- Dereje Alemayehu on p. 20 of this D+C/E+Z present, donor governments are only mak- tional interests. e-Paper). It generally makes sense to rely ing tentative attempts to promote sustain- on more diversified sources since doing so able development outside the “developing 2. DICHOTOMY OF APPROACHES means that more money becomes available country” category. They should tap the huge and ODA dependence is reduced. The chal- potential for supporting multi-actor pro- The past 15 years were marked by an in- lenge, however, is that financing conditions grammes, for example in regard to reducing crease in south-south cooperation. How- may well be worse and/or non-transparent carbon emissions at subnational levels. A ever, there is still no common understand- than those that apply to ODA. All too often, fundamentally new understanding of cross- ing of what precisely south-south coopera- moreover, policymakers do not prioritise border cooperation is needed, and it will tion is and how it should be monitored. The SDGs. prove useful in many fields of policymaking, UN Conference on South-South Coopera- ODA can serve to boost development including ODA. tion (BAPA+40) in Buenos Aires in March and bridge funding gaps, especially in (see article by Luiz Ramalho et al. on p. 26 countries with limited domestic resources REFERENCES of this D+C/E+Z e-Paper) failed to find new because of a poor tax base, low private in- High-Level Panel of the OECD Development ways forward. There is no common platform vestment or low remittances from migrants. Assistance Committee, 2017: A New DAC in on which OECD donors and the financi- Another challenge is that it is very difficult a Changing World. ers of south-south cooperation could agree to harness all relevant financial flows for de- https://www.oecd.org/dac/Report-High-Level- on fundamentals, norms and standards. velopment purposes. Panel-on-the-DAC-2017.pdf Existing forums are either not accepted by Gonsior, V., and Klingebiel, S., 2019: The all players or do not lend themselves to ne- 5. AFTER THE AID EFFECTIVENESS DEBATE development policy system under pressure. gotiations. ODA and south-south coopera- Acknowledging limitations, sourcing tion are running on parallel tracks, with no Multilateral principles for improving aid advantages and moving towards a broader relevant exchange taking place. effectiveness were spelled out in the Paris perspective. Declaration in 2005 and the Busan Declara- https://www.die-gdi.de/uploads/media/ 3. SHRINKING NUMBER OF DEVELOPING tion in 2011. They still apply. Unfortunately, DP_6.2019.pdf COUNTRIES the momentum this effectiveness debate once had has largely given way to more STEPHAN KLINGEBIEL Owing to economic progress in recent years, hard-nosed approaches among donor gov- is a research programme the number of countries that the OECD clas- ernments. The political will to work on re- director at the German sifies as “developing” is declining. Since forms has largely subsided. Britain, a promi- Development Institute / 1970, only eleven countries were added to nent long standing protagonist of increasing Deutsches Institut für the list (predominantly former republics effectiveness, is now distracted by other Entwicklungspolitik (DIE) and a regular visiting of the Soviet Union), but 60 countries were issues. Many donors seem to have largely professor at Stanford University. This article taken off. The latest countries to graduate abandoned former priorities, such as pro- was written before he took leave from DIE in into the high-income category were Chile, gramme-based approaches. Instead, ad hoc mid-June to head the UN Development the Seychelles and Uruguay in early 2018. contributions to multilateral donors and Programme’s Global Policy Centre in Seoul. Major ODA recipient countries such as thematic allocation have given rise to new [email protected]

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●● they must stem wasteful public spend- ing and resource leakages, and Improving African tax revenues ●● they must improve the integrity and effectiveness of their revenue services. So far, African governments have basi- cally improved their ratios of tax to GDP by Each country is responsible for its own governments as well as their international increasing indirect taxes such as sales taxes development. However, in an interdependent partners. It showed that the responsibility or the value added tax (VAT). The share of world within a globalised economy, no single of high-income countries goes far beyond VAT in the overall tax take is estimated to country can be the autonomous “master of official development assistance (ODA). Of be around 60 % of the total tax revenue, and its own destiny”. To improve public finance in course, ODA can help to develop capacities that is alarmingly high. The problem is that Africa, national governments must assume in developing countries’ revenue services, consumers ultimately pay the VAT, and poor responsibility – but they also need a facilitat- but that is not the most important duty of people who must spend a large share of their ing international environment. advanced nations. incomes for consumption are burdened in A recent multilateral report indicates particular (see my essay in Focus section of By Dereje Alemayehu that too little progress has been made in re- D+C/E+Z e-Paper 2018/01). gard to DRM. The Inter-Agency Task Force By contrast, it would make sense to in- World-market integration is asymmetric, and on Financing for Development (IATF), troduce taxes on property and wealth. They the benefits are not shared equally. What pol- which was set up to monitor the implemen- hardly exist in Africa, but they would bol- icy space a government has depends on many tation of the AAAA, published it in March. It ster public budgets and, at the same time, things including the level of its country’s de- deserves to be taken seriously. Over 50 ma- reduce social inequality. velopment, size of the economy, endowment jor international institutions are taking part Moreover, African governments must with natural resources, geostrategic position, in the IAFT, including various UN bodies, widen the tax base by bringing in additional environmental conditions et cetera. the International Monetary Fund (IMF), the sectors. The most important issue is to tax To achieve development goals, gov- World Bank and the World Trade Organiza- the informal sector. This is certainly a dif- ernments must tackle domestic as well as in- tion (WTO). ficult and complicated undertaking, but for ternational challenges. In low income coun- From the African perspective, enhanc- the sake of healthy public finances, it must tries, even tax collection, which is normally ing DRM involves national homework as not be postponed. a crucial area of national policymaking, is well as multilateral duties. Both are essen- So far, masses of people in the infor- interlinked with international matters. “Do- tial for SDG attainment. mal sector and smallholder agriculture are mestic resource mobilisation” (DRM) is the African governments are in charge of part of the “fiscal contract” according to technical term used in international debate achieving three things: which they would pay direct taxes to their when it comes to increasing tax revenues. ●● they must expand and deepen the tax government and get meaningful physical The international consensus is that African base, and social infrastructures in return. For tax countries must do more in this field in or- der to achieve the sustainable development goals (SDGs). However, their efforts in this field cannot succeed without committed and consistent international support. In regard to DRM, international coop- eration must achieve several things. A stable and fair international finance architecture is a global public good, which the internation- al community must deliver and safeguard. Two relevant challenges are: ●● to agree a multilateral mechanism to resolve sovereign debt problems and ●● to curb illicit financial flows (IFFs) and tax dodging by multinational corporations. The international community ac- knowledged as much in the Addis Ababa Action Agenda (AAAA), which was unani- mously adopted by the UN conference on financing for development in the Ethiopian capital in 2015. The AAAA assessed the challenges and

elaborated the responsibilities of national Informal retail businesses are typical of African cities like Addis Ababa. Ph oto: dem

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munity to act. So far, the debate has not led to convincing results. Indeed, IFFs are “significant” and a “persistent drag on developing countries”, according to the Washington-based think tank Global Financial Integrity (2019). None- theless, adequate measures are not being taken. The lack of consensus on an “IFF defi- nition” serves as a pretext. The core dispute is absurd. Some parties argue that tax avoid- ance should not count as an IFF. In practice, however, tax avoidance is not simply one of several IFFs. It is actually the main driver of other IFFs which typically depend on the in- stitutions, enablers and mechanisms set up by the tax-avoidance industry. A developing country cannot curb IFFs on its own. Relevant measures would have to apply to cross-border transactions, To make taxes acceptable, governments must provide better infrastructure and services. so more than one government is involved. Tax dodging by multinationals and wealthy individuals is obviously a global problem. It reforms to succeed, governments must do makes it harder for them to enhance DRM. is often – and correctly said – that African more than squeeze money from the infor- The point is that the share of public budg- problems require African solutions. In the mal sector. In return, they must build roads, ets that they must commit to this purpose same sense, global problems require global provide electric power, ensure health care et is growing at the expense of resources avail- solutions. cetera. Good infrastructure is the basis on able for essential services and developmen- The Group of 77, which is actually a co- which an economy can thrive and social de- tal initiatives. Unless people see that paying alition of 134 African, Asian and Latin Amer- velopment occurs. taxes ultimately brings benefits, they will ican countries in UN settings, has been de- The UN Economic Commission for not accept higher taxation. manding intergovernmental negotiations Africa (UNECA, 2019) recently stated: “Tax- It is important to remember the two to tackle IFFs. Civil-society organisations ing hard-to-reach sectors, improving gov- decades characterised by the crippling around the world endorse that demand. By ernance in revenue collection and bolster- debt crises of the 1980s and 1990s are gen- finally engaging in negotiations on a sover- ing accountability would greatly reduce erally remembered as “the lost decades” in eign-debt mechanism and measures to con- inefficiencies and mobilise up to $ 99 billion which development stalled in many places trol IFFs, donor governments could prove a year over the next five years.” or even went into reverse. For good reason, that they are serious about promoting DRM The Commission warned, moreover, the AAAA demanded that problems of this in developing countries. that tax breaks for foreign investors reduce nature must be addressed. government revenues by an average of 20 % Governments of high income coun- LINKS in Africa, but they only increase invest- tries have so far refused to start negotiations Global Financial Integrity, 2019: Press release. ments by one percent. If DRM is to improve, on a multilateral mechanism that would al- https://gfintegrity.org/press-release/2019-iff- such and other kinds of giveaways must to low the international community to resolve update-press-release/ stop. future debt problems systematically. Such Inter-Agency Task Force on Financing for a mechanism is needed. It would increase Development (IATF), 2019: Financing for DUTIES OF HIGH-INCOME COUNTRIES African government’s scope for DRM. sustainable development report 2019. Another important issue is that na- https://developmentfinance.un.org/fsdr2019 DRM is moving forward too slowly, accord- tional governments cannot successfully UN Economic Commission for Africa (UNECA), ing to the above-mentioned IATF report. tackle IFFs on their own. Once more, the 2019: Fiscal policy space for financing Moreover, the report warns that a serious established economic powers are dragging sustainable development in Africa. financial crisis is becoming ever more likely their feet. https://www.uneca.org/sites/default/files/ if current trends in the global economy con- On behalf of the African Union and PublicationFiles/era-en-final-web.pdf tinue unchecked. The greatest concern is UNECA, a high-level panel of African lead- the growth of sovereign debt and the rising ers published a report on IFFs in early 2015. DEREJE ALEMAYEHU costs of servicing it. The topic has since stayed high on the agen- is the executive coordinator In this grim scenario, the policy space da of international discourse. The SDGs in- of the Global Alliance for Tax of African governments is actually shrink- clude a target devoted to reducing IFFs, and Justice.

ing. Growing debt-related expenditure the AAAA called on the international com- [email protected] Ph oto: dem

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also successful. But we have to understand SDGs offer business opportunities that infrastructure projects, by their nature, can be risky. Some will succeed while oth- ers will fail. We have to be careful to move beyond anecdotes of success and failure in judging the benefits of this type of coopera- Achieving the sustainable development ODA. Concessionality means that recipients tion. goals (SDGs) is a global effort, and many dif- do not pay the full market prices, including, ferent sources are funding. The private sec- in the case of loans, interest rates. By defini- What can and must the private sector con- tor has much to gain from paying attention to tion, south-south cooperation is not about tribute to achieving the SDGs? this agenda, according to Homi Kharas from “aid” from a richer to a poorer country, but The private sector can benefit enormously the Brookings Institution. Impact investing, about a spirit of solidarity and mutual ben- by aligning activities with the SDGs. By one which is meant to generate a measurable, efit that can be obtained through several dif- estimate there is a potential market of $ 12 beneficial social or environmental impact ferent modalities, not just ODA. trillion in sustainable activities. Research apart from financial returns, is of great rele- increasingly suggests that if the private sec- vance. Yes, that is the way emerging-market gov- tor focuses explicitly on sustainability it can ernments see it. Ultimately, they count any improve its long-run profitability as well. Homi Kharas interviewed by Hans kind of exchange among developing coun- Thus, it is important for private-sector com- Dembowski tries and emerging markets as south-south panies to think about which SDG targets are cooperation. But is this view still justified most relevant for their operations and to For decades, OECD nations have mostly failed to live up to their pledge of spend- ing 0.7 % of gross national income (GNI) on official development assistance (ODA). What can and must their ODA contribute to achieving the SDGs? ODA is an important catalytic source of funds. The focus on 0.7 % is important as a target, but not all OECD members have signed up to this. ODA should not be judged on the basis of the volume alone; it is impor- tant that ODA is targeted to the poorest and most fragile countries, that it helps mobilise other sources of funding, including private capital, and that it helps providing core re- sources for development agencies and al- lows them to deliver global public goods.

What can and must the governments of emerging markets such as the BRICS con- tribute? The new metro line in the Indian metropolis of Nagpur is being built with support from German Emerging market economies have a philoso- ODA via KfW Development Bank. phy of mutual cooperation, and many have specific areas of expertise, like infrastruc- ture in the case of China, or tropical agri- when an increasing number of developing include these targets into their operational, culture in the case of Brazil. Other emerging countries are struggling to pay back Chi- financial and human-resource plans. economies have focused on aiding their re- nese loans, many of which relate to ODA- gional neighbourhood. They are also start- like infrastructure investments? In what sense are there different obligations ing to contribute more resources to multi- This is a very important point. Ultimately, for northern-based and southern-based pri- lateral development agencies. These are all ODA or any other source of finance is not vate companies? welcome initiatives. the core benefit that developing countries All companies face the same markets, so receive from others. The benefit comes from there are no differences between northern- How do you define south-south cooperation the projects that that can be implemented as based and southern-based companies. in this context – or does the ODA definition a result of the financing. As long as the in- basically apply? frastructure projects undertaken by Chinese Who can press private-sector companies South-south cooperation does not always companies are successful, one can conclude into actually considering other goals than

have the same degree of concessionality as that this type of south-south cooperation is maximising profits – and by what means? Ph oto: sb

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Because the SDG targets are interlinked, and urgency of the challenge. In these cases, The biggest part of climate finance today there is no long-term trade-off between international cooperation is essential. Mid- is the private sector. About $ 168 billion in profits and environmental and social goals. dle-income countries also face high costs for green bonds were issued in 2018, a large Profits are unlikely to be sustainable in the putting in place sustainable infrastructure, absolute number but still a very small frac- long-run if they affect SDG achievement in particular. So they too require interna- tion of the total corporate bond market that negatively. What is needed is simplification tional cooperation, from development agen- issued $ 1.34 trillion. Much of this falls un- of reporting and adherence to core stand- cies and the private sector, each of which der the heading of “impact investing”. This ards, so all companies face a common level would contribute funding and risk sharing is a broader asset class that includes both playing field. The International Finance to blend with domestic resources in a suit- climate and social investments. The IFC Corporation (IFC), the World Bank sub- able financing package. estimates the size of the impact investing sidiary that specifically supports private- market as up to $ 26 trillion. This potential sector development, for example, has just Apart from ODA, rich nations have pledged can be realised if the financial sector as introduced a new set of impact investing to provide an annual $ 100 billion in private a whole starts to consider climate change, principles that it hopes all companies will and public funding for climate action in de- along the lines recommended by the task follow. veloping countries and emerging markets. force on climate-related financial disclo- To what extent is climate finance a separate sures. It was set up by the multilateral Fi- SDG achievement ultimately depends on agenda? nancial Stability Board, which in turn was governments’ ability to provide public ser- Climate finance is sustainable development established by the G20 summit in London vices and safeguard public goods. To what finance, but it has emerged on a separate in 2009. extent is raising sufficient domestic reve- institutional track for a number of reasons, nues the core challenge and more important in just the same way as many sectors have than international cooperation? earmarked financing. The $ 100 billion com- HOMI KHARAS Most spending on the SDGs comes from do- mitment, however, is only one part of the works for the Brookings mestic tax revenues. Sound public finances required climate finance. Institution in Washington and are a prerequisite for achieving the SDGs. specialises in global But many low-income countries simply do What are the others, and who is responsible development. not have the resources to match the scale for making them available? [email protected]

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D+C e-Paper July 2019 23 SDG FINANCE

The 24 board members of the Green Climate Fund.

are useful, but the information they provide Ambiguity instead of does not add up to an entirely conclusive picture. The good news is that both reports accountability give some evidence of climate finance in- creasing, potentially even fast enough to reach the sum of $ 100 billion next year. At the same time, they show that the flows nonetheless fall woefully short of what was The international community still lacks through a new Green Climate Fund (GCF), promised, let alone what is needed. a clear definition of what kind of funding the governance structure of which would The UNFCCC report was drafted as the counts as climate finance. Future climate provide for equal representation of devel- latest in a series of biannual assessments summits must resolve this issue. Global oped and developing countries. One year of public climate-finance flows from devel- action hinges on it. shy of the 2020 deadline, two questions oped to developing countries. It covered the arise: years 2015 and 2016, stating that such flows By Liane Schalatek ●● What progress have developed coun- increased 30 % in those two year, reaching tries made in fulfilling their promise? $ 55.7 billion in 2016. The OECD report as- In 2009, the UN climate summit in Copen- ●● What role does the GCF play in chan- sessed public climate-finance flows from hagen famously failed to agree on a compre- nelling those financial flows? 2013 to 2017. According to it, there was hensive agreement. Instead, a rudimentary There is no straightforward answer to a 44 % increase in that period, with funding Copenhagen Accord was adopted. It includ- the first question. Ten years after Copen- rising to $ 56.7 billion in 2017. ed a commitment of the industrialised na- hagen, we still do not have a commonly Both reports show that donor govern- tions to jointly mobilise “100 billion dollar agreed definition of what counts as climate ments still overwhelmingly prioritise fund- per year by 2020 to address the needs of finance. Nor is there an agreement on how ing the reduction of emissions over building developing countries”. This funding was to much of the $ 100 billion per year should resilience in recipient countries. A mere come from a “wide variety of sources, public come from public sources rather than pri- quarter of public flows serve adaptation and private, bilateral and multilateral, in- vate ones. purposes. cluding alternative sources of finance.” Ob- The latest climate summit in Katowice Unfortunately, the reports do not tell viously, the provision of adequate climate fi- in December 2018 discussed two climate the full story because they shy away from nance is also a pillar of the Paris Agreement, finance reports. One was prepared by the many relevant issues: the conclusive contract concluded in 2015 to Standing Committee on Finance of the UN ●● They do not assess to what extent cli- keep global warming below two degrees at Framework Convention on Climate Change mate finance is provided on top of official most and preferably below 1.5 degrees. (UNFCCC), the other was prepared by the development assistance (ODA). Such “addi- Moreover, the Copenhagen summit Organisation for Economic Co-operation tionality” was promised in Copenhagen. decided that a significant share of adapta- and Development (OECD), an organisation ●● The reports do not deal with the pre-

tion funding was supposed to be delivered of high-income countries. Both documents dictability of funding. Predictability is es- Ph oto: GCF

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sential for facilitating the policy ownership By 2025, moreover, a new target for ship, however, is a core principle of the of developing countries. global climate finance is to be set, and the GCF. On the upside, GCF cooperation with ●● While they do show whether public consensus is that it must exceed $ 100 bil- national-level institutions has been prom- funding was delivered in the form of loans lion. Developing countries insist on a new ising. The crucial element is that national or grants and that loans are still the lion collective goal, based on joint deliberation agencies must approve all projects, can sub- share of the money delivered, neither report and in tune with their needs. No doubt, the mit proposals and elaborate country pro- lists the (lower) grant equivalent value. international community needs a clear defi- grammes. ●● The reports do not elaborate what nition of what climate finance is – and how From the perspective of developing kind of climate finance is adequate. Should much money developed country govern- countries, the GCF has several other advan- adaptation support occur in the form of ments must make available. Since Copen- tages: grants or loans? Should adaptation fund- hagen, ambiguity has clouded accountabil- ●● Developed and developing countries ing be even more prioritised for least de- ity – and that must change. Future climate have equal representation on the 24 mem- veloped countries (LDCs) and small island summits must resolve this issue. ber board, and seats are reserved for LDCs developing states (SIDS)? They have done and SIDS. the least to bring about climate change, but PRIORITISE THE GREEN CLIMATE FUND ●● The GCF is unambiguously committed suffer the worst impacts. Is it legitimate to to sustainability. include as public climate finance money The second major climate-finance contro- ●● It recognises that its funding must from export credit agencies, even though versy concerns the role of the Green Climate serve multiple purposes beyond climate it is geared to generating income in donor Fund. It is technically the largest multilat- action – such as poverty alleviation, broad- countries? The OECD report does so. And eral climate fund and the newest addition er environmental protection and gender what about the gender dimensions of cli- to the global climate-finance architecture. equity, for example. mate finance? Only the UNFCCC has be- It was established in the context of the ●● It commits 50 % of funding (in grant gun to consider this matter in its climate- UNFCCC and reports directly to UNFCCC equivalent terms) for climate adaptation finance reporting. summits. Developing countries overwhelm- and also reserves half of its adaptation fund- At the Katowice summit last year, de- ingly regard the GCF as the primary multi- ing for SIDS, African states and LDCs. veloping countries wanted a comprehensive lateral channel for supporting climate ac- ●● Contributors to the fund cannot ear- climate-finance accountability package to tion under the Paris Agreement. mark funding, which is how governments be adopted. It would have obligated rich So far, governments of high-income of high-income countries are increasingly nations to state in advance what funding countries have pledged $ 10.3 billion to the remote-controlling multilateral agencies. they would make available. It would also GCF. The sum includes $ 3 billion from the The GCF has an important role to play, have introduced a clear reporting proce- USA, of which $ 1 billion was already paid, so it is frustrating that its long-term future is dure to check to what extent they lived up while nobody expects the administration not guaranteed. It urgently needs more mon- to the advance pledges. However, the de- of President Donald Trump to transfer the ey. Not least in view of US obstruction, it is veloped countries rejected any attempts to remaining $ 2 billion. It is far from certain unlikely that the first formal replenishment define climate finance more precisely. They that other high-income countries are will- round will be generous. The GCF will hold even refused to use common reporting time ing to make up the shortfall as developing a pledging conference in early November, frames. countries demand. But even if the money shortly before the next UN climate summit The reporting guidelines approved in was contributed, the GCF’s financial clout in Santiago de Chile. Norway and Germany Katowice are thus too vague. They allow de- would obviously remain quite modest. After have set a good example by announcing that veloped countries to count an almost unlim- all, trillions of dollars are needed to achieve they will double their contributions. Indeed, ited list of financial flows as climate finance. the goals of the Paris Agreement. if contributor country governments want to They can even include non-financial efforts, The GCF is important nonetheless. By prove to developing countries and emerg- in the fields of capacity building and tech- March 2019, it had 84 implementing part- ing markets that they are serious about cli- nology transfer, for example. ners, including multilateral development mate action, they must ensure that the GCF The current scenario is exasperating. banks, UN agencies, bilateral institutions as gets at least twice the $ 10.3 billion that they It is impossible to precisely assess whether well as multinational private sector banks. pledged in the first round. the $ 100 billion pledge will be fulfilled The majority of implementing partners (49) next year. Moreover, 2020 is also the year are regional and national institutions from LIANE SCHALATEK by which parties to the Paris Agreement developing countries, but, so far, the mul- works for the Washington are supposed to increase the ambition of tilateral development banks received the office of the Heinrich Böll their nationally determined contributions lion’s share. The GCF has so far approved Stiftung, which is close to (NDCs) to climate protection. Commitments 102 projects worth $ 5 million, of which the Germany’s Green Party. She must be stepped up considerably to achieve so-called “international access entities” got also currently serves as one of two Civil the goals. However, many developing coun- 84 %. Society Active Observers in representing the tries have stated that more ambitious action Quite obviously, that share is much views of civil society in Green Climate Fund on their part will depend on increased sup- too big for promoting the policy ownership proceedings. port from developed ones. of developing countries. Country owner- [email protected]

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An example of new forms of coopera- tion: a joint Paraguayan, Indonesian and German side event at the BAPA+40 conference.

of cooperation. She stressed that coop- Cooperation of the future eration should make use of each country’s strengths. This also corresponds with the experiences of north-south cooperation and is a precondition for knowledge sharing and mutual learning. Achieving global development goals will and numerous organisations shared experi- require the combined effort of the interna- ences at the UN Conference on South-South RELEVANT BANKS tional community. All countries have some- Cooperation (BAPA+40) at the end of March thing to contribute, and all have something to in Buenos Aires. Participants also discussed Building infrastructure and financing rel- learn. To mobilise the funding needed, it is how their experience in this field can serve evant projects is of crucial developmental necessary to form the kind of global partner- the implementation of the SDGs. relevance. The rise of south-south and tri- ship that the UN outlines in the 17th Sustain- The existing controversies about angular cooperation means that funding able Development Goal (SDG). New financial south-south and north-south cooperation requirements are growing too. In addition institutions are playing an important role in have diminished but still prevail. This be- to bilateral development banks such as Bra- south-south cooperation. came clear in the resistance some countries zil’s BNDES (founded in 1952, headquarters articulated against mentioning – as it was in Rio de Janeiro) or South Africa’s DBSA By Luiz Ramalho, Rita Walraf and Ulrich finally agreed – development effectiveness (founded in 1983, headquarters in Midrand), Müller and triangular cooperation in the confer- other financial institutions were founded in ence’s final statement. Other controversies emerging markets at national, regional and The global south is making increasingly that came up in the final debate had no in- global levels, not only in recent years. significant contributions to global develop- fluence on the text of the statement. Some One example is the China Develop- ment. The economic and geopolitical rel- countries questioned the legitimacy of the ment Bank, which was established in 1994 evance of many countries has grown. In the current Venezuelan government, which (headquarters in Beijing) and is increas- past, south-south cooperation focused on caused others to reiterate the principle of ingly involved in financing projects in the sharing knowledge and building capacities, non-interference in domestic affairs. On the global south. The BRICS countries (Brazil, but the countries of the global south and other hand, the USA claimed its right to go Russia, India, China and South Africa) cre- new financial institutions have recently also its own way in regard to climate issues and ated another financial institution four years become increasingly active in development international trade. ago: the New Development Bank, which has finance. Triangular cooperation, which in It is a good sign, by contrast, that the its headquarters in Shanghai. Initially this many cases involves a developing country, principle of national policy ownership is bank was exclusively active in the BRICS an emerging market and a traditional donor now generally accepted. In Buenos Aires, countries, but this year it announced that it country, is becoming more common as well. Maria Fernanda Espinosa, the president of would expand operations to non-members. In order to improve conditions for the UN General Assembly, called for over- Another milestone was the creation of oto: Felipe Rossi Schmechel oto: Felipe

success, representatives from 160 countries coming paternalistic and vertical models the Asian Infrastructure Investment Bank Ph

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(AIIB) in Beijing (see Kathrin Berensmann, Saudi Arabia) gives an example of how to Many governments are proud of what Focus section, D+C/E+Z e-Paper 2016/04). It connect development finance and trian- their countries have achieved. At the same was a Chinese initiative; other nations were gular cooperation. Its “Reversed Linkages” time, they consider out-dated the current invited to participate. The AIIB is a new programme is designed to find funding for criteria for what countries are ODA eligible. multilateral institution that is relevant be- policy measures that applicant countries They would like to base international coop- yond Asia. It has even begun to lend to Euro- consider essential. In the future, the IsDB eration on new foundations. For countries pean countries. It is expected to contribute wants to cooperate in this programme more in the process of ODA graduation, the focus considerably to financing projects related with rich nations like Germany. typically shifts towards technical coopera- to China’s enormous infrastructure invest- Japan pioneered triangular coopera- tion and knowledge sharing. South-south ment programme, the Belt and Road Initia- tion. Nowadays, Germany is playing a promi- and triangular cooperation are now ac- tive, or the “New Silk Road” (see interview nent role as well. According to OECD data, cepted components of international coop- with Doris Fischer, p. 28). Germany is involved in more than 100 such eration, effectively complementing other In 2015, Britain, Germany and France projects. In Buenos Aires, speakers empha- means of achieving global goals. They merit were among the countries that decided – sised the strategic advantage of triangular co- greater attention. against the urging of the United States – to operation: it builds trust and better relation- become shareholders in the bank. The AIIB ships between governments and other actors. began operations in early 2016; it now has 97 Speakers also stressed that private-sector LUIZ RAMALHO members. As of the middle of last year, it had companies, think tanks and civil-society or- is an independent invested $ 5 billion in 28 projects in 13 coun- ganisations should be involved in planning in development consultant and tries, with a focus on infrastructure. Initially order to “ground” projects. It is generally ac- former GIZ senior manager. the AIIB co-financed projects with the estab- cepted that mutual accountability of all par- lished multilateral development banks, but ties and joint action are the founding princi- [email protected] it is now gradually adopting projects of its ples of successful triangular cooperation. own. Experts criticise, among other things, A core message of the conference is RITA WALRAF its lack of transparency with regard to lend- that south-south and triangular coopera- is responsible for emerging ing, its failure to properly monitor the effec- tion are important for achieving the SDGs. countries and triangular tiveness of its own standards and the limited They should be enhanced and applied more cooperation at Germany’s influence of the non-Chinese shareholders frequently. For the system of official de- Federal Ministry for Economic (see Cema Tork in Monitor section of D+C/ velopment assistance (ODA), this provides Cooperation and Development (BMZ). E+Z e-Paper 2019/06). Today Germany is the opportunities and challenges. One serious [email protected] fourth-most important shareholder. challenge is to overcome the often as unilat- eral criticised paradigm of aid towards a co- ULRICH MÜLLER STRATEGIC ADVANTAGE operation on equal terms. Thus, triangular works for GIZ and specialises cooperation could become the development in matters relating to Among the established development banks, cooperation of the future, in which coun- south-south and triangular the Islamic Development Bank (IsDB, tries participate that have graduated from cooperation. founded in 1975, headquarters in Jeddah, ODA eligibility. [email protected]

At the UN conference ●● SSTC databases, “New” cooperation agencies on South-South Cooperation ●● entities that are able to in March in Buenos Aires (see handle both incoming and out- main text), the Islamic Devel- going funds, The rise of south-south and tri- cases, these agencies have opment Bank (IsDB) and others ●● agencies committed spe- angular cooperation represents a dual function for outgoing presented a study which the cifically to SSTC, a major challenge for the co- and incoming funding. This re- South Centre had carried out on ●● financing mechanisms, ordination of development ef- flects the insight that all coun- their behalf. The study identi- and forts. Accordingly, many coun- tries have something to con- fied the seven core elements for ●● performance management. tries have strengthened their tribute and something to learn. the ecosystem of south-south In the future, south-south institutional structures. For Nonetheless, structures still and triangular cooperation: and triangular cooperation can instance, they have improved must become more efficient. ●● political will, – and should – play a greater coordination between different Processes need to be further de- ●● national strategies con- role in piloting new solutions to ministries or established new veloped, and additional compe- cerning south-south and trian- be scaled up by financial coop-

cooperation agencies. In many tences have to be fostered. gular cooperation (SSTC), eration. (lr, rw, um) Ph oto: xxx

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Nairobi Terminus: China is financing major infrastructure projects in many developing countries.

saying today actually resembles how Ger- Pecking order of nations man business leaders responded a few dec- ades ago when asked whether they were not bypassing European environmental and social standards by investing in China. No, not entirely, they would claim, insisting that China is interested in sustainable develop- Yes, the Chinese government endorses this their own corporate standards were superior ment and willing to cooperate at multilateral agenda, and not only rhetorically. But we to what was otherwise the norm in China. and bilateral levels. The Communist Party must bear in mind that the agenda is quite sees fighting poverty, not environmental pro- complex. There are some conflicting goals. China’s approach seems cynical nonethe- tection, as the top priority initially. In Chinese In the eyes of the Communist Party, fight- less. The leadership knows that the use eyes, however, the US administration is cur- ing poverty must initially have top priority of fossil fuels will have to be discontinued rently making unacceptable demands for as people first of all need sufficient food, soon, and its foreign partners will end up unconditional surrender, as China scholar clothes and housing. For a long time, this with new, but no longer viable infrastructure. Doris Fischer elaborated in an interview. was the reason why China kept postponing No, I don’t think that Beijing is cynically environmental protection domestically; but trying to sell partners outdated technology. Doris Fischer interviewed by Hans that has changed. Europeans, by contrast, From the Chinese perspective, south-south Dembowski typically associate sustainability with envi- cooperation involves countries that suffered ronmental protection and climate-change under imperialism and colonialism and are What is China contributing to funding the UN mitigation. now pursuing common interests on an equal sustainable development goals (SDGs)? footing. The Chinese government assumes That is hard to say, not least because we But isn’t China guilty of double standards, that all parties involved know what they are don’t have any clear definitions of what for example, when it finances new coal- doing, assess risks diligently and are keenly counts as SDG finance. Government spend- power stations in less-developed countries aware of their countries’ interests. ing is relevant, and so are private transac- while striving to phase out fossil fuels at tions. Investments made domestically may home? The Chinese government considers the play a role, and so may investments made Well, the people I am in touch with in China People’s Republic to be one of many devel- abroad. would tell you that those partner countries oping countries. Does that still make sense urgently need energy and that the idea is to in view of its growing clout, not only in world But do the SDGs serve as guidelines for help them to use fossil resources in ways that trade, but as an international financier as

Chinese policymaking? minimise the climate impact. What they are well? Ph oto: dem

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Well, arguably China’s rise over the past four would otherwise have to cut overcapacities. But multilateralism is currently under at- decades was the most spectacular develop- What is being built, moreover, is infrastruc- tack – especially from US President Donald ment success of all times. Accordingly, the ture that partner countries want and often Trump. Chinese leadership is extremely self-con- desperately need. Yes, and the way he is operating in the fident. They know what worked, and they trade war is most unwise. Initially, many want to make it work again elsewhere in Some BRI loans have led to over-indebted- Chinese economists thought he might cooperation with partners. It also matters ness. When Sri Lanka was unable to service be putting pressure on China in a way that some regions in the People’s Republic credits, China claimed a newly built harbour that would lead to meaningful reforms. have developed much less so far. Moreover, and took control of this facility for 99 years. That had been the case when China had the nation’s per-capita income is lagging Kenyans fear that their government may to adopt to the rules of the World Trade far behind the USA, Japan and Western Eu- have offered the port of Mombasa as col- Organization (WTO) in order to become rope. On the other hand, it is obvious that lateral for loans taken to build railway infra- a member. In the meantime, however, the self-description as a developing country structure. Does Beijing see these matters? Trump’s demands sound like ultimatums is no longer entirely convincing. In Africa, The people in charge understand full well for unconditional surrender, and not only for example, people increasingly disagree that the Sri Lankan case has badly hurt their the Chinese government finds that unac- with it. reputation. They will do their best to prevent ceptable. Apparently, the USA is not in- something like that from happening again. terested in defining sensible shared rules, Chinese agencies are funding major infra- They probably did not foresee how things but wants to establish a pecking order of structure projects abroad in the context of would develop in Sri Lanka and certainly nations. Accordingly, multilateral issues the Belt and Road Initiative (BRI). Is this did not want their public image to suffer. – including SDG achievement – are be- policy sustainable in every sense: environ- coming secondary. That is the way many mental, economic and social? Please explain. Chinese see it even if they happen to have That is certainly China’s aspiration, but let The Chinese tend to try out things without strong liberal leanings. Since the global fi- me repeat that it is debatable which dimen- premeditating every detail that might go nancial crisis, the west’s standing as a role sion of sustainability is the most important wrong. The contract with Sri Lanka gave model has suffered considerably. Today, in any specific place at any given time. It China the right to seize the port, so that is those who have always said that democ- would be wrong, moreover, to see the BRI as what they did. It does not mean that they racy means instability feel reconfirmed by a conclusive and coherent strategy. It really wanted it to happen right from the start. The Trump’s erratic action – but also by United is a rather general doctrine for policies relat- government knows that it needs partners Kingdom’s increasingly bizarre Brexit sce- ing to foreign affairs and international trade. internationally, and that partnerships hinge nario. The BRI label can be used for a great variety on successful cooperation. It has certainly of things. It is striking, moreover, that the understood by now that the assumption Could Trump achieve more if he teamed up strategy cannot fail because no criteria for that all partners would always fully consider with the EU and Japan to put pressure on success have been defined. The Chinese their countries’ interests was naïve. Chinese China within WTO settings? leadership sees the BRI as an offer to the colleagues tell me that they find it mind- Such an approach would at least comply world to apply what worked in China else- boggling how dysfunctional governments with international rules, and China would where to drive development there. The ar- have wrecked entire countries – for example appear to be an equal member with equal gument is that China first built roads, ports in Venezuela and Zimbabwe. rights. The current developments are de- and other kinds of infrastructure, and what pressing. Many Chinese trade experts followed was industrialisation with masses China is not corruption free itself. know that compromises are necessary, and of new jobs. Beijing wants to replicate that No, of course not, but ever since Deng that they would actually serve their coun- model, and the new multilateral Asian In- Xiaoping, the Communist Party has always try’s interests – for example, in regard to frastructure Investment Bank (AIIB) serves focused on developing the country. Its rule intellectual property or foreign investors’ that purpose too. is authoritarian, but it closely observes the rights. For good reason, the administra- mood of the nation. As it normally does, it tion of US President George Bush wanted But isn’t it obvious that the BRI and the AIIB is experimenting in the BRI context, test- China to become a responsible partner in are vehicles for the pursuit of Chinese in- ing what works and what the implications multilateral affairs in the nought decade. terests? are. The regime is a learning system. The Today, the US itself is no longer acting re- Yes, of course, but that is absolutely nor- government is now trying to find solutions sponsibly. mal. Western governments’ self-interest is to over-indebtedness and certainly wants to obvious when they engage in bilateral or prevent such problems from arising in the multilateral cooperation. From the Chinese future, not least for the sake of its own repu- DORIS FISCHER perspective, the infrastructure programmes tation. The willingness to cooperate with is a professor of Würzburg are beneficial in many ways. They facilitate the International Monetary Fund and west- University and specialises in trade. They enhance China’s geostrategic ern governments in this context is growing. China’s economy. influence. In many cases, they contribute Ultimately, the multilateral system must to keeping Chinese companies busy, which also prove it is able to learn. [email protected]

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the reach and relevance of ODA will decline On the threshold – including in the context of SDG finance. FINANCING GLOBAL SUSTAINABLE DEVELOPMENT

In the next 10 years, many emerging markets The OECD forecast is based on per Emerging markets like China, Brazil and which are currently classified as middle- capita income projections. They show that Mexico matter very much in the provision income countries are set to become high- the 28 countries will join the group of high- and preservation of global public goods income countries. This change implies income countries (HICs) by 2030. In the (such as, for example, environmental and a challenge for financing the Sustainable past 40 years, more than 50 nations were climate protection). They are most relevant Development Goals (SDGs). The reason is removed from the ODA recipient list. Exam- actors in the implementation of global UN that official development assistance (ODA) ples include South Korea and Singapore. agendas such as the SDGs and the Paris cli- has so far contributed most funding for SDG A country ceases to be ODA eligible mate agreement. The SDGs add up to a uni- relevant action in the countries concerned. once it has exceeded the ceiling of the upper versal compass, pointing the way as much Once they graduate into the high-income middle income category for three consecu- for the industrialised world as for develop- category, however, they will no longer be eli- tive years. According to the OECD, that ceil- ing countries and emerging markets. This gible for ODA. New financing options need to ing is currently a per capita GNI (gross na- agenda cannot be implemented successful- be found. tional income) of $ 12,235. The country list is ly unless all nations cooperate in a spirit of only revised every three years, so it can actu- global partnership. By Michael Krempin ally take a country up to six years to formally That many emerging markets are lose its ODA recipient status. about to graduate from ODA eligibility pre- According to estimates that the Organisa- The OECD projections are not neces- sents a risk to that global partnership. The tion for Economic Co-operation and Devel- sarily accurate, but the trend is clear. In UN has passed resolutions to mobilise fund- opment (OECD) made in 2014, 28 countries 2018, Chile and Uruguay were removed from ing from other sources (including state, with an aggregate population of around the list of ODA-eligible countries. The per- non-state, international and UN sources), 2 billion people will cease to be ODA eligi- manent loss of ODA eligibility, moreover, is but ODA still plays an important “catalytic” ble by 2030. They include emerging markets generally preceded by a sharp reduction in role in achieving global development goals. such as China, Brazil, Mexico, Argentina, ODA appropriations. With resources flowing Both donors and the emerging mar- Malaysia, Thailand and Turkey. to an ever-declining number of countries, kets concerned lack concepts for plugging

Rainforest in Brazil: emerging markets are very important for providing and safeguarding global public goods. oto: Óscar Díez Martínez/Biosphoto/Lineair Ph

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the gaps that will open up in SDG finance concern countries that are set to lose their cooperation). It must then be clarified what because of ODA graduation. They need ODA eligibility by 2030 (Mexico and a yet to resources and funds other departments of to develop a vision of international coop- be identified African country). Germany’s federal government could con- eration “beyond ODA” – and they will need The research focuses on the transition tribute to international cooperation. a toolbox for financing it. They must rise to from DC to IC as well as the design of future The BMZ is not the only government the challenge by drafting shared strategies IC. Relevant questions include: How can department to disburse ODA money. So far, for the transition from transfer-based devel- the transition be managed successfully? To the Federal Environment Ministry, the Fed- opment cooperation (DC) to a different kind what extent will IC build on DC experience eral Foreign Office and other departments of international cooperation (IC). and previous DC relationships? At present, are keen on a large share of their spending On the upside, the OECD did decide in there are very few examples of these chal- being counted as ODA. This is likely to pose 2017 to pay more attention than in the past to lenges being dealt with well. When DC with problems for SDG finance once emerging ODA graduation and its impacts. So far, ODA Malaysia was phased out, for example, dis- economies graduate from middle-income is based only on average per capita income, cussions on harnessing the DC legacy were status. They will still require the funding, and that will hardly change. It is unlikely organised by Germany’s Federal Ministry but it can then no longer be ODA. A rethink that ODA will be redefined to take account for Economic Cooperation and Develop- is needed. Germany’s Federal Government of matters such as social inequality, envi- ment (BMZ). However, that was done too must reassess its policy and make more ronmental hazards and climate challenges. late to deliver a workable concept. money available for IC beyond ODA. The The international “beyond ODA” debate on In a study published at the end of definition of both a new category of SDG fi- financing global sustainable development is 2017, Chile’s bilateral development agency nance and ways to measure it would support still at a fairly early stage. Agencia de Cooperación Internacional such efforts (see box below). de Chile (AGCI) and the UN Development Policy coherence must improve, ADDRESSING ODA GRADUATION Programme (UNDP) proposed to establish moreover, so international cooperation for a graduation fund that might help newly sustainable development can be enhanced. With GIZ support, the London-based Over- graduating countries to finance SDG re- A “whole of government approach” is indis- seas Development Institute (ODI) is cur- lated efforts. Such a fund would certainly pensable. This is already evident in settings rently assessing how donor governments help to manage the transition from DC to such as the inter-ministerial Sino-German and their partners should address the chal- IC. government consultations, that Chancellor lenges of ODA graduation and how to make As for the German response to the im- Angela Merkel leads. the transition from DC to IC. At the heart of pending mass graduation of emerging mar- related ODI research are four country stud- kets, it must first be clarified whether the MICHAEL KREMPIN ies: one concerns a country that has suc- BMZ could still play a role in cooperation was a senior policy advisor at cessfully completed the transition (South with the no-longer ODA eligible govern- GIZ until January 2019 and Korea), another concerns a country current- ments (whether in regional, global and sec- now works as a consultant. ly facing ODA graduation (Chile) and two toral projects or in formats such as triangular [email protected]

private partnerships as well as most of the resources they A measure of SDG finance funding from private compa- invest in international SDG nies and non-governmental or- achievement count as ODA. ganisations leveraged by public If TOSSD was established One challenge of financing then, the OECD assumed the agencies and, finally, humani- as a second official and equally the Sustainable Development task to develop a new category tarian aid. On the other hand, important finance category Goals (SDGs) is that a growing of international finance and TOSSD is also designed to cover alongside ODA, ODA eligibility number of countries are set to ways to measure it. The result finance flows beyond ODA if would become less important. lose their eligibility to receive is a concept called Total Of- they address global challenges The new finance category would the official development assis- ficial Support for Sustainable at regional and global levels or create a major incentive for in- tance (ODA) on which they have Development (TOSSD). On the promote sustainable develop- ternational cooperation “beyond so far based relevant action (see one hand, TOSSD is meant to ment, for example, by provid- ODA” and promote the interna- main article). New approaches encompass all kinds of mon- ing or preserving global public tional activities of a whole range are required. Additional funds etary contributions made to goods. of government departments be- must be mobilised urgently. drive sustainable development OECD donors have com- cause the allocation of resources Major progress in this de- in ODA-eligible countries, in- mitted to spend 0.7 % of their could be reported internation- bate was made at the Financing cluding grants, concessional respective gross national in- ally as TOSSD. It is therefore im- for Development conference and non-concessional loans, comes on ODA. Therefore, they portant to adopt TOSSD official- in Addis Ababa in 2015. Back guarantees and equity, public- are doing their best to make ly as soon as possible. (mk)

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All impacts must be considered: people protesting in Nairobi last year against plans for a new power station and coal mining in Kenya.

ever less attractive, while global problems Time to face the challenge such as environmental degradation, popula- tion growth and poverty would become ever more difficult to tackle. SDG attainment would seem ever farther out of reach. As the OECD report argues, it is essen- The landscape of SDG finance is bewilder- velopment goals (SDG). Indeed, SDG spend- tial to set the vicious cycle in motion now. ingly complex. According to the OECD, sys- ing actually seems to be declining. The international community must not let temic change is needed to give financial According to the authors, the inter- things get worse, but has to create the right actors adequate policy guidance. The idea is national community will now either set in dynamics for global progress. Though the not only to map the landscape better and to motion a virtuous cycle or a vicious one. In annual SDG financing gaps are estimated track various categories of financial flows. the first case, adequate spending on SDGs to amount to $ 2.5 trillion (which is 17 times There is a need to define those categories in rich countries will trigger appropriate more than annual ODA flows around the precisely and to adopt rules and regulations resource mobilisation in less advantaged world), the OECD experts insist that the accordingly at all levels of policymaking. countries, so progress in terms of sustain- money can be mobilised. Their point is: ability is made. Externalities will then be “Global savings largely exceed the SDG fi- By Hans Dembowski positive and reduce the costs of further SDG nancing needs.” The snag is that much of implementation. In that scenario, multilat- those savings are not used for SDG purposes Later last year, the Organisation for Econom- eralism will be reinforced, and SDG funding so far. ic Co-operation and Development (OECD), will seem more affordable from year to year. The report’s starting point is plausible. published its “Global outlook on financing If, however, rich countries do not pro- As the document also shows, however, the for sustainable development 2019”. The flag- vide sufficient funding now, developing landscape of SDG finance is bewilderingly ship report of this umbrella organisation of countries and emerging markets will also complex. The OECD has a clear definition of rich nations raises an alarm, pointing out invest less, so the externalities will be nega- what kind of spending counts as official de- that not enough funds are being made avail- tive, and the challenges will look ever more velopment assistance (ODA) and monitors oto: Curtis/picture-alliance/AP Photo oto: Curtis/picture-alliance/AP

able for achieving the UN’s sustainable de- daunting. Multilateralism would become the relevant financial flows diligently, but Ph

D+C e-Paper July 2019 32 SDG FINANCE

there is no international consensus on what ment from the share that does not or that and regulations are needed. Quite obviously, SDG finance means. A wide range of trans- aggravates economic, social and environ- the OECD experts are eager to assume duty actions is relevant. mental outcomes.” Accordingly, the report and start tackling these multi-layered chal- ODA is only one pillar, and not the calls for a stronger culture of evaluation and lenges. Among other things, their report most important one. Others include gov- impact assessments – not merely in the pub- elaborartes a new concpet called TOSSD (to- ernment revenues of developing countries lic sector, but in the private sector and civil tal official support to sustainable develop- and emerging markets, domestic private in- society as well. ment) to complement ODA. vestments, foreign direct investments, mi- Further complicating matters, future It would be easy to dismiss their re- grants’ remittances, ODA-like programmes financing opportunities are very hard to port as a self-serving attempt to implement of emerging-market governments and ac- predict. As the number and the diversity an employment scheme at the OECD and tion by philanthropic institutions. of relevant financial actors is growing, fi- other multilateral institutions. Free-market The authors assess a broad range of nancial flows are becoming more volatile radicals will be tempted to do so. The truth, these pillars. They find difficulties every­ too. The business cycle has an impact on all however, is that many SDG challenges result where. They assume, for example, that sources of SDG finance, and world trade has from market failures. To put it more bluntly a country’s tax revenues should at least be impacts on all countries. Natural and po- than the OECD does: If markets responded worth 15 % of gross domestic product. How- litical disasters (including war) can severely to need rather more than merely purchas- ever, the average ratio for low income and harm economies. In the eyes of the OECD ing power, there would be less poverty. If least developed countries is a mere 14 %. team, all of these issues need to be taken all market transactions included payments That figure implies that tax systems have into account. for repairing unwanted side effects, there to improve in many places (also see Dereje The authors warn that the landscape would be no environmental destruction. Alemayehu on p. 20). At the same time, it is of SDG finance has become very difficult In view of the Great Depression of reckoned that 80 % of low income and least to navigate, so governments with weak ca- the 1930s, economists developed new para- developed countries offer private inves- pacities in particular are likely to be over- digms and new concepts. Back then, nation- tors tax breaks and tax holidays that do not burdened. The authors counted more than al accounts were first used to compile GDP serve sustainable development. The report 1,000 financial instruments that policymak- statistics. That is now business as usual, but states that such destructive practices must ers can choose from. From 2000 to 2016, ac- it was a major and complex innovation back be curbed. cording to the report, bilateral donors set up then, so it became possible to draft and im- It also points out that foreign direct in- 167 facilities for blended finance, involving plement macroeconomic policies. Today, vestments to developing countries dropped both private and public funding. that approach is no longer sufficient, be- by 30 % in 2016 to 2017. Protectionist trends Synergies and trade-offs are hard to cause the accounting system does not cover might reduce them further. understand, and fast innovation keeps mak- environmental issues and misrepresents so- ing the scenario ever more complex. They cial ones. It only assesses spending, not peo- RESULTS MATTER argue that the governments of low income ple’s well-being. More spending, however, and least developed countries must get the does not always mean a better life. Given that the money sent home by support they need to be able to optimise The challenges we face now are even migrants accounted for more than 30 % of their countries’ policies on SDG finance. greater than in the 1930s, but our capacities GDP in countries like Tajikistan, Kyrgyzstan In line with the aid-effectiveness debate have increased dramatically too. Nobody or Tonga, the OECD team bemoans that not the OECD launched after the turn of mil- ever said the transformation to sustainabil- enough is being done to facilitate the flow lennium, they want national governments ity would be easy or simple. The subtitle of of remittances. They are declared to be too to be in the driver’s seat when it comes to the OECD report is: “Time to face the chal- expensive. Another serious challenge is drafting and implementing development lenge”. If humankind refuses to rise to the that they are not used systematically and policies. challenge, things will only deteriorate. As prudently in ways that would lead to SDG the OECD report spells out correctly, unless achievements. More policy guidance is IMMATURE MARKET the virtuous circle mentioned above is set in needed, according to the OECD, and that motion, economic growth will prove elusive basically is true of all pillars of SDG finance. In view of all these things, the OECD authors even in the rich nations where many citi- In the eyes of the OECD experts, re- argue that the international community has zens now wonder whether the SDG agenda sults matter, but intentions do not. If, for moved on from merely assessing ODA to is not too expensive. The truth is that the vi- instance, a major infrastructure programme considering development finance in general cious cycle would prove far more costly. causes considerable environmental dam- and must now further narrow the focus on age, they want to exclude the related ex- SDG finance. In their view, the market for REFERENCE penditure from SDG finance statistics. They SDG finance is “immature”. They demand OECD, 2018: Global outlook on financing for argue that the real environmental and social more transparency, regulation and coor- sustainable development 2019 – Time to face impact of any investment – whether public dination. They speak of nothing less than the challenge. Paris, OECD. or private – must be checked: “It is neces- systemic change. Categories of SDG finance http://www.oecd.org/development/global- sary to distinguish the share of finance that must be defined accurately and the respec- outlook-on-financing-for-sustainable- effectively promotes sustainable develop- tive flows must be documented. New rules development-2019-9789264307995-en.htm

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