Paying for Zero: A new global vision for sustainable development

forumblog.org, Mar 7th 2014

When the Millennium Development Goals (MDGs) were first established nearly 15 years ago, the half-joke reminder among global health experts was that they needed to replace the “M” with a “B” when talking about financing – meaning the solutions required budgets in the order of billions rather than millions of dollars. Today, as the MDGs approach their 2015 deadline and the world negotiates a new global vision for sustainable development, the time has come to shift mindsets from “B” to “T”, since the next frontier is talking about trillions of dollars in required investment throughout the global economy.

To that end, members of the Global Agenda Council on Poverty and Sustainable Development have this week released a report distilling key financing challenges to be addressed in establishing a new generation of global development goals. The report, Paying for Zero: Global Development Finance and the Post-2015 Agenda, stresses the crucial complementary roles and opportunities for public, private and “blended” finance at the domestic and international levels. The word “zero” is used to signal a broad theme of transformation for sustainable development: eliminating extreme poverty, eliminating the most pernicious forms of inequality, and eliminating environmentally unsustainable economic activities.

Stressing ongoing generational shifts in the global development landscape, the report argues that ambitious post-2015 goals will require accompanying ambition and innovation in development finance.Watch Full Movie Online Streaming Online and Download

The conclusions tackle a wide range of issues, including:

  • Development finance will increasingly be integrated across types. Flows from public finance will need to leverage additional private finance, and all forms of finance will need to adhere to common standards of transparency, measurement and reporting.
  • As many developing countries continue to make long-term economic gains, the process of graduation from official development assistance (ODA) needs very careful consideration. For example, emerging lower-middle-income countries, especially those with large numbers of extreme poor, should not face a stark drop-off in access to external finance.
  • It is crucial that the international community place special emphasis on protecting and enhancing properly-targeted ODA budgets. These will need to prioritize the poorest countries and programmes that most effectively reduce poverty. But even with complete success in eliminating extreme poverty by 2030, ODA will continue to play a crucial role tackling many deep global priorities through to 2030 and beyond.
  • Improving the capacity of developing countries to mobilize their own resources should be an important element of ODA, without imposing unwanted conditionalities.
  • Greatly enhanced instruments are needed to incentivize the amount and nature of required private finance post-2015. Big ticket investments in infrastructure, energy and agriculture will all require some degree of blending between public and private sources.
  • Many of the infrastructure investments for sustainable development will be the same ones that determine the future of the world’s climate change mitigation and adaptation efforts.

The report’s release coincides with this week’s meetings of both the Intergovernmental Committee of Experts on Sustainable Development Financing and the Open Working Group on Sustainable Development Goals at the UN Headquarters in New York. The Global Agenda Council on Poverty and Sustainable Development brings together a variety of eminent leaders and practitioners from public, private and non-profit sectors around the world.  An earlier draft of the paper was circulated for public comment in January.

Author: John McArthur is a Senior Fellow at the United Nations Foundation and a visiting fellow at the Brookings Institution. He is a World Economic Forum Young Global Leader and chair of the Global Agenda Council on Poverty and Sustainable Development.

Image: People walk past closed shops in a slum in Rio de Janeiro, Brazil, May 23, 2013. REUTERS/Pilar Olivares.

 

How Much Aid for Basic Needs to 2030? Some Very Coarse Numbers

Brookings – Opinion | February 6, 2014

Amidst the growing global consensus around a target of “zero” extreme poverty for 2030, there is renewed debate around the role of official development assistance (ODA) and how much will be required to achieve the goal. The ideal way to assess this question would be through country-specific, bottom-up costing assessments that account for general equilibrium price dynamics and allow for the possibility of shocks, whether positive (e.g., technology) or negative (e.g., conflict or fuel price spikes). In the absence of such rigorous scenario-based analysis, some back-of-the-envelope calculations help inform the approximate orders of magnitude of aid required.

Two conceptually distinct approaches can help inform deliberations on the issue:

  • The first is to estimate the cost of essential services for extremely poor people and the amount of public expenditure required to finance them.
  • The second is to estimate the dollar value of the extreme poverty gap, i.e., the amount of transfers theoretically required to bring each person in the world up to a living standard of $1.25 a day.

1. Essential Services Budget GapWatch movie online The Transporter Refueled (2015)

A budget gap for basic services can be estimated through some simple arithmetic. Assume the following:

(1) A full package of basic public services for health, education, infrastructure, agriculture and public administration costs $200 per capita per year, including roughly $100-140 for Millennium Development Goal-type public investments (in line with the bottom-up estimates of the U.N. Millennium Project, 2005). [Read more…]

How to Pay for Sustainable Development?

Published January 24 at forumblog.orgfarmers

A plan without a budget is just a hallucination. My colleague Jasmine Whitbread, Chief Executive Officer of Save the Children International, cited this line in today’s televised Davos debate on the global agenda to end extreme poverty by 2030. A similar message was conveyed earlier in the day by Nigerian Finance Minister Ngozi Okonjo-Iweala, who stressed the need to come to grips with financing amid the interwoven practicalities of tackling climate change and global development goals.

The challenge for the world in this regard is that the nature of global development finance has changed tremendously over the past two decades. Targeted aid flows have increased, prompting tremendous breakthroughs in such areas as health and education. Meanwhile many developing countries have experienced long-term economic growth and thereby transitioned to more market-based financing mechanisms. Innovations have empowered many new sources of finance to contribute to global development. Government, business and civil society are increasingly seen as necessary partners for promoting prosperity and sustainability.Watch Full Movie Online Streaming Online and Download

A new generation of global priorities requires a renewed strategy for global development finance. Recognizing the complexity, many colleagues and I in the World Economic Forum’s Global Agenda Council on Poverty and Sustainable Development have been working to distill some key issues to be addressed to underpin success after the Millennium Development Goals (MDGs) expire at the end of next year.

This week we are circulating a working draft paper for feedback. Entitled “Paying for Zero: Global Development Finance and the Post-2015 Agenda”, the draft is shared to invite comments, and is not yet meant for quotation. It is intended as a contribution to ongoing global deliberations regarding the composition of the post-2015 sustainable development agenda.

Below is an excerpt from the draft’s concluding section. We look forward to comments and suggestions from all those who are interested.

“Financing a post-2015 sustainable development agenda will require policy-makers and publics to consolidate and bolster the key components of the current system that already work well, while addressing key constraints. At the same time they should expand the system to include a more nuanced and layered approach to match the evolving set of needs and actors around the world.

“We conclude with four key points:

  1. Transparency and accountability towards results must be a centrepiece of post-2015 finance. All stakeholders, public and private, must commit to common standards anchored in forthright reporting and measurement of transactions, beneficiaries and impacts.
  2. The ambition of ending extreme poverty by 2030 should not be confused with ending ODA by 2030. The needs for ODA go well beyond US$ 1.25/day poverty and even a fully successful extreme poverty agenda will likely require targeted support beyond 2030. Moreover, well targeted ODA is catalytic for mobilizing broader private sector investments. A dollar of ODA is typically the hardest dollar of development finance to mobilize. Even if required aid volumes might look smaller than complementary private volumes, ongoing political diligence will be required to ensure ODA is adequate to the post-2015 challenge.
  3. Greatly enhanced instruments are needed to accompany and incentivize the amount and nature of private finance that will be required to achieve a post-2015 sustainable development agenda. The biggest ticket investments are in infrastructure, energy and agriculture, all of which will typically require some degree of “blending,” whether in the form of risk guarantees, advantageous long-term borrowing structures or other appropriate structures. Many of these will also be the same investments that determine the future of the world’s climate change mitigation and adaptation efforts.
  4. Private sector actors have a major role to play in partnering with government and civil society to ensure a suitably ambitious and fair approach to mobilizing post-2015 private development finance. Private investors need to know that policymakers are keen to create the incentives that will mobilize the needed long-term investments. Policy-makers need to fulfil their mandates in serving the public trust. And publics need to know that the gains will be widely and equitably shared, towards a sustainably prosperous global future for all.”

John McArthur is a Senior Fellow at the United Nations Foundation and a World Economic Forum Young Global Leader. He is participating in the Annual Meeting 2014 in Davos-Klosters, Switzerland.

Image: Ethiopian farmers Mandefro Tesfaye and Tayto Mesfin collect wheat. REUTERS/Barry Malone

All opinions expressed are those of the author. The World Economic Forum Blog is an independent and neutral platform dedicated to generating debate around the key topics that shape global, regional and industry agendas.

Can we slash poverty and starvation by 2015? Yes, if we get to work [op-ed]

Go to the Globe and Mail homepage

JOHN MCARTHUR

Wednesday, September 25, 2013


If global development targets followed a National Football League format, we would be approaching the two-minute warning. December 31, 2015, marks the final deadline for the Millennium Development Goals, the global anti-poverty targets that have mobilized an unprecedented generational success in tackling extreme poverty around the world, most notably the burdens of disease in the poorest countries. We are now facing the final moment to bend the relevant curves of progress. For decision makers, 2013 is the real 2015. [Read more…]

Asia’s local leaders could play key role in global accountability [op-ed]

Home

John McArthur says input on social, economic and environmental issues will be vital. 

Monday, 12 August, 2013

The 2008 global financial crisis instigated a cascade of events that still frame many of the world’s foremost political tensions. Simmering beneath the daily headlines lie protracted disputes over which private and public actors caused the problems, and thus who should now pick up the tab.

The scope of debate is enormous, but it likely pales next to the consequences of other global problems like climate change, ocean acidification, air pollution, and even income inequality. Like the financial crisis, these issues call attention to the need for new notions of global accountability across public and private sectors. Much of the resolution will hinge on finding a workable path in Asia.

Ottawa Citizen Op-Ed: Redefining Accountability Abroad

This week I ran an Op-Ed in the Ottawa Citizen.  Full text pasted below.

Redefining accountability abroad

BY JOHN W. MCARTHUR, OTTAWA CITIZEN JULY 21, 2013

One of the foremost challenges Christian Paradis faces in his new role as Canada’s minister of international development is the need for better accountability structures across the complex patchwork of global development actors.

This is a hot topic in the international debates on what post-2015 framework should follow the Millennium Development Goals that have guided global anti-poverty efforts since 2000. Local governments, donor governments, private companies, civil society organizations, international agencies and philanthropists all have a role to play. But even when all sides share common goals, there needs to be a clear way to track responsibilities over time.

Nowhere is this more relevant than Mozambique, one of 20 focus countries in Canada’s current international assistance strategy. The country’s history is complex. Having suffered a brutal civil war from 1977 to 1992, it has since seen major progress on many fronts. Over the past decade alone, average per capita incomes grew more than 50 per cent while child mortality declined nearly 40 per cent, backed significantly by external aid. The country’s natural resource industry is booming, and mining companies, including Canadian firms, are investing hugely in local production. However, the progress builds from an incredibly low starting point. Mozambique still ranks 185th out of 187 countries on the UN’s Human Development Index. One in 10 children still don’t live to see their fifth birthday, and more than half of the population still lives on less than $1.25 per day, according to the latest available data.

In May I visited Maputo, the national capital. On a Friday night I was riding in the passenger seat as my friend Erik Charas drove me back to my hotel following dinner and a concert. Erik is a highly respected local entrepreneur, best known as the founding publisher of Verdade, Mozambique’s most widely read newspaper. It is distributed for free, guided by a simple mission of empowering local citizens with the tool of public information. Erik is a former mentee of Graça Machel and is also an accomplished social entrepreneur. His latest business venture introducing affordable, working-class apartments is popular enough to garner strangers’ unsolicited purchase offers when he strolls through public cafés.

A couple of weeks before my visit, Erik was detained overnight by police for not paying a bribe at an informal roadside check point. Given his profile and sophisticated knowledge of the law, the issue was picked up by local media and generated significant public attention. Erik was confident that the detention was illegal, and so asked for a proper written record of it at the police station. By the time I arrived, the legal proceedings had not yet started to churn in any direction.

Against that backdrop, I was not entirely surprised when two police officers wearing military-style greens and machine guns pulled Erik and me over as we were driving. However, I was surprised when the lead officer recognized Erik’s face and dejectedly waved us on, clearly wanting to avoid a public debacle. Even more remarkable was that we were pulled over again a second time by different police only a few minutes later, just outside my hotel. But this time the police didn’t recognize Erik and so an apparent shakedown sequence began. I don’t speak Portuguese, but I understood enough to know that Erik was declining the officer’s instructions. Agitation grew quickly until I heard the officer cock his machine gun. Erik simply drove away mid-sentence, in defiance of the threat.

Sadly, police intimidation is not uncommon in much of the world, but this was a shockingly crass breakdown of public institutions in the middle of what is otherwise a peaceful tourist zone. Locals later told me the problem in Maputo is recent and growing, a new fact of life for nighttime driving.

The obvious question is, who should be held accountable? The answer, alas, is less simple. I am not an expert on Mozambique, but this type of problem probably results from multiple factors. Part of it is likely driven by extremely low wages for front-line police officers, who feel compelled to supplement their incomes amidst a rising cost of living. Part of it is likely driven by the strain of highly visible inequalities, with the natural resource boom boosting elites’ incomes while rising prices eat away at others’ stagnant paycheques.

Part of the problem is by definition a breakdown in the discipline of public institutions. But many level-headed locals believe this to be a byproduct of a structurally flawed relationship between the national government and foreign companies. There is a broad concern that the natural resource contracts are providing huge returns for foreign investors and the politicians, but not much for local Mozambicans. And once the contracts are set, even when highly flawed, they are typically in place for decades, with no recourse for Mozambicans to cry foul and renegotiate. The rule of law protects bad contracts, even if it does not prevent them.

Such difficult situations need multi-pronged solutions. Canada should not meddle in other countries’ politics, but it should support local development and democratic processes while enforcing highest standards for its own companies. On one side, aid budgets can continue to support targeted service-delivery initiatives, like the health programs that have been hugely successful all around Africa. They can also help to ensure local civil servants’ wages are properly indexed, especially when foreign industries are pushing up the cost of living. And they can support, with no strings attached, local think-tanks that promote transparency in public debates and critical evaluations of public finances.

At the same time, new ground rules are needed for extractive industries themselves. Firms that make or facilitate bribes of course need to be punished, but that sets too low a bar. Although companies should not be expected to play the role of governments, some form of global “fair share” principle is probably required as a minimum percentage of profits that always stays within a host country. Cash transfers could be sent directly to citizens through modern banking technology, as World Bank researchers have recently suggested. Companies could support specific job training and co-op programs as a standard portion of their revenues. They could also commit a common portion to local think-tanks that promote public debate.

As a major player in natural resources, Canada has a responsibility to tackle these global issues. In 2010, the Harper government helped introduce the important G8 accountability report that tracks progress on government commitments. Amidst the shifting weight of responsibilities in the global economy, post-2015 accountability needs to incorporate the private sector too. The Canadian government should work closely with Australian counterparts to propose a draft in time for the November 2014 Brisbane G20 summit. Minister Paradis’ previous portfolio at Natural Resources positions him well to play a key role. If he can bring industry and policy leaders together to create higher explicit performance standards on all sides, Canada can be at the forefront in defining new notions of accountability. In Mozambique and all the other emerging resource exporters, countless citizens will be grateful.

John W. McArthur is senior fellow at the UN Foundation and non-resident senior fellow at the Brookings Institution. He is former manager of the UN Millennium Project.

© Copyright (c) Ottawa Citizen

The Need for a New Canadian Conversation on Foreign Aid

I have a new post at OpenCanada.org, the first of a 3-part series that aims to help kick start a new Canadian conversation around how the country approaches foreign aid over the coming generation.  Please feel encouraged to share comments directly!

New-Conversation

Canada’s foreign aid conversation is lost.  The recently announced merger of CIDA into the Department of Foreign Affairs and International Trade prompted a spate of agitated commentary across the country.  But the public debates underscored the extent to which an institutional tail is wagging the policy dog.  The issues to be resolved are much more fundamental than problems of bureaucratic org charts.  They require systematic and robust thinking, rather than the loose commentary commonly trotted out during moments of sporadic media debate.

Most significantly, there is one central question that needs to be flipped on its head.  Instead of becoming stuck in the supply-driven query, “How should Canada’s foreign aid structures be improved?” the country needs to start with a demand-driven approach, mapping out the nature and scale of the global development challenge, and then asking how Canada can best organize itself to help to tackle the problems at hand.

To that end, this post marks the start of a three-part series.  To help set the stage, below we start by unpacking some of the most common misconceptions around foreign aid.  The second installment provides some historical context for the current debates, and some recent assessments of global need.  The third proposes a way forward, not just for the Canadian government, but for the range of key constituencies that will be essential for moving Canada’s national development strategy forward.

 

[Read more…]

Short ForumLive Interview with Prof Chan Yuen Ying

On Saturday I did a short (if sleep-deprived) ForumLive interview in Davos with Prof Chan Yuen Ying, Director of the Journalism and Media Studies Centre at Hong Kong University.  In it we talked about some of the issues covered in the World Economic Forum’s Global Agenda Outlook 2013, which includes some commentary from Prof Chan (and my friend Michael Elliott) on the role of journalism in restoring trust in public institutions, plus some commentary from me and Wu Changhua regarding the MDGs and the post-2015 development agenda.

Video here:

 

Sifting Headlines and Undercurrents

[This post originally appeared at Forum: Blog]

This year’s Annual Meeting in Davos takes place at a time when nearly every major global policy topic is clouded by concerns of macroeconomic fragility. In the days ahead, I’ll be tracking those issues as closely as any other warm-blooded economist, but I’ll mainly be on the lookout for advances on other global undercurrents, especially those relating to inequality, sustainability and social renewal.

One big question is the extent to which the 2011 “Occupy” and “99%” movements infuse early conversations in 2012. The protestors’ media footprint may be in winter hibernation, but plans are reportedly underway for a spring ramp-up, targeting the US election season in particular. Last year, the protests spurred debates around the globe on core issues of policy fairness. While many question the protestors’ methods, they have received public support from global economic heavyweights ranging from George Soros, the financier and philanthropist, to Mark Carney, the Canadian Central Bank Governor and Chairman of the Financial Stability Board. I’m wondering how mindful people are of the possibilities for a deepening economic protest movement in the months ahead?Watch Full Movie Online Streaming Online and Download

As ever, I’ll also be focused on how longer-term issues of extreme poverty and sustainability are discussed. The Millennium Development Goals are entering the final phase before the 2015 deadline and this year will see a major environmental focus at the UN’s June Rio+20 summit. Around the world, conversations are taking shape on how a next generation of post-2015 goals could “get to zero” against extreme poverty while more robustly advancing environmental sustainability and equality of opportunity. Some hope Rio+20 will map out new “sustainable development goals”. If done right, such goals could improve significantly on MDG gaps. If framed too broadly, they risk losing the focus that has made the MDGs successful.

Perhaps the most important innovation I’m interested to see this week is the new Global Shapers Community. To the Forum’s credit, it has launched a major effort to invite 20-something year olds from around the world who are already pioneering major contributions in their societies. I have a pet theory that, despite increasing life expectancies, the average age of societal leaders is on a long-term decline, due mainly to the advances in technology. In between the heady formal sessions, let’s hope the wiser elders take time to grab coffee and share insights with the young innovators standing next to them.

What Happens in Davos

[This post originally appeared in February 2011 at Devex and Huffington Post]

The World Economic Forum’s annual Davos conference marks one of the world’s more layered brands. For media leaders, it is an opportunity to take stock of sentiments among global business and policy elites. For business leaders it offers a chance to broker deals and, in some cases, announce publicly-minded initiatives amidst an attentive audience. For politicians and policy leaders, it is a pre-G20 moment to meet with international peers on priority topics for the year ahead, and also to meet with private sector shapers of the global economic agenda. For non-profit leaders and academics, it is a chance to interact with all of the above, and to access a rare concentration of people who affect an uncommon share of the world’s political, economic, and public attention.

This year was the third time that I have attended Davos, and each time the experience has been quite distinct. In 2005 I attended as a staffer in my then-UN capacity, just weeks after the Asian tsunami and 10 days following the release of the UN Millennium Project’s final report, Investing in Development. Poverty and the Millennium Development Goals (MDGs) were at the top of everyone’s agenda, including politicians like then-Chancellor of Germany Gerhard Schroeder and likewise celebrity attendees like Bono, Angelina Jolie, Richard Gere, Sharon Stone, and Chris Tucker.
I returned to Davos five years later, in 2010, as CEO of Millennium Promise, a non-governmental organization (NGO) focused on the MDGs. The meeting atmosphere was reserved as the world emerged from the shocks of the global economic crisis. By then I was invited to participate as a member of a group the Forum has been generous enough to designate as Young Global Leaders (YGLs), an initiative that brings together publicly-minded people from business, government, academia and non-profit sectors to learn from each other through regular collaborations over a five year period. For non-profit representatives like myself, the Forum waives its conference fees and encourages us to make the most of the opportunities to connect, brainstorm, and problem-solve with representatives from all sectors around the globe.

In the lead up to last year’s Davos events I worked with Johann Koss, Olympic champion and CEO of the NGO Right to Play, and dozens of other members of the YGL community to launch a new initiative through which private individuals and organizations could make their own targeted, time-bound, and measurable pledges to support the achievement of the MDGs. Economists like Esther Duflo and Kristin Forbes of MIT joined with Michael Kremer of Harvard to make an MDG deworming pledge. Zainab Salbi of Women for Women made an MDG pledge, as did Sheryl Sandberg of Facebook and many other leaders in their respective fields. The Forum’s YGL initiative made this entire effort possible, and all of the pledges are publicly registered on www.mdgpledges.org, which also now partners with the UN Foundation.

This year in 2011, Davos brought many memorable moments. The press reports generally focused on the cautious optimism of the politicians and the regulatory concerns of the business leaders. But there are so many parallel conversation streams within Davos that everyone forms their own narrative. For me, a highlight in the formal program came when Bill Clinton described the MDGs as a non-optional part of the long-term US economic strategy. Another was to watch David Cameron’s political mastery as he conducted a roving Q&A with a plenary room as if it were a local town hall. Many reported the playing of Aung San Suu Kyi’s taped message as a highpoint, although unfortunately I wasn’t there to see it in the moment. On the sides of the meeting, it was invigorating to see the modernizing social network influences on this remote Swiss conference center as Twitter feeds streamed everywhere and Facebook’s Randi Zuckerburg webcasted a constant stream of live interviews with personalities ranging from Nick Kristof of the New York Times, to Kumi Naidoo of Greenpeace, to former Treasury Secretary Larry Summers. Meanwhile, YGL friends were very pleased to present the first annual report on the MDG Pledges, and to launch the new website that makes it possible for any organization or individual to register their own MDG pledge.download film Fifty Shades Darker

Amidst the ebb and flow of events, Davos is a rare moment to connect a rapid succession of informal meetings with leaders from the public, private and non-profit sectors. My own schedule included a breakfast with Paul Kagame, Tony Blair, Michael Porter and major CEOs discussing new foreign investment opportunities in Rwanda. There was the conversation on expanding agricultural credit facilities with a senior African policy maker; then the technology brainstorm with a Silicon Valley leader around a global graduate degree program I help coordinate; then a discussion with an eminent philanthropist on how new technology can foster more collaborative problem-solving between the world’s richest and poorest communities; followed by a strategy session with one of Mozambique’s leading civil society voices on how to empower citizens’ debates around the MDGs. Each of these conversations was inspiring in its own way. Together they afford a patchwork view of how various global conversations could better thread together through concerted efforts.

There is a broad understanding that many people of influence and wealth gather in Davos every year to discuss topics of mutual interest. This is fair enough in a free associating society where private companies pay membership dues to attend a major meeting and keep the trains running. At the same time, there should be greater understanding that large numbers of people with enormous goodwill and much-deserved moral influence convene in Davos every year to identify new ways to collaborate and discuss topics of global public concern. With access comes responsibility to speak on behalf of those without. Perhaps contrary to popular imagination, Davos convenes large numbers of people who live that responsibility every day. I know because I had the privilege to meet many of them last week.