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…]

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…]

Globe and Mail: Importance of African Agriculture for Ending Extreme Poverty

Yesterday The Globe and Mail published a short piece I recently wrote on the importance of boosting African smallholder agriculture as a key element of any global effort to end extreme poverty.  The Globe ran the piece under the title, “To end poverty worldwide, fix African agriculture first.”  This reproduced a post I wrote originally for the ForumBlog a couple of weeks ago, under the title “Ending extreme poverty in Africa by 2030.”  Full text pasted below.

***

To end poverty worldwide, fix African agriculture first

The public chorus to eliminate extreme poverty by 2030 now includes US President Barack Obama, World Bank President Jim Yong Kim and Bono. The backdrop is extremely promising since the developing world has already cut the share of people living below US$1.25 a day by half since 1990. At a consistent rate of progress, the other half could well cross the line in another 20 years too.

But, as my colleague Laurence Chandy and Brookings co-authors have recently pointed out, the distance to crossing the US$ 1.25 line varies tremendously by region. Most of China has already crossed the US$ 1.25 threshold and India has a huge share of its population poised to make the leap next. Sub-Saharan Africa has the farthest to go, despite recent progress, since a large proportion of its population still lives so far below US$ 1.25 per day, often at half that level of income.

Most of Africa’s poorest people live on small farms in rural areas, so those places will likely form the final frontier of the global quest to end extreme poverty. Although fast-growing cities have gained attention for their role in fighting poverty, including in the World Bank’s latest Global Monitoring Report, it is increases in rural productivity, especially agriculture, that are typically a fundamental driver of the urbanization process.Watch Full Movie Streaming Online and Download

There are grounds for optimism. Growing academic evidence highlights agriculture’s unique role in helping to reduce extreme poverty. For example, an important 2011 paper by economists Luc Christiaensen, Lionel Demery and Jesper Kuhl shows that agriculture is roughly three times more effective at reducing extreme poverty than non-agricultural sectors.

There has also been a global renaissance of attention on the need for an African Green Revolution, driven by both public and private investments in a manner that respects local community structures. The World Economic Forum’s Grow Africa initiative, which convened last week in Cape Town, offers a potential high-impact platform, bringing together investors and governments to launch practical joint strategies at scale.

Complementary investments in transport infrastructure, irrigation, farmer credit and input support systems (e.g. for fertilizer and seeds) were essential to Asia’s 20th century green revolutions that laid the foundation for that region’s subsequent economic breakthroughs. The same basic approach, updated for today’s social and environmental realities, can help to ensure Africa’s long-term economic success is equally, if not more, robust. The sooner the process starts, the faster the world gets to the finish line on extreme poverty.

“Getting to Zero” on Child Mortality

[Cross-posted with the World Economic Forum’s blog site earlier this week]

What child survival goals should be included in a global vision of “getting to zero” on extreme poverty? This question will be increasingly debated as the world maps out a framework to succeed the Millennium Development Goals post-2015. As a first crack at an answer, I suggest a universal target of no more than 30 deaths per 1,000 live births for every community on the planet by 2030.

For context, one of the biggest global breakthroughs of the past decade has been faster progress in reducing child mortality. In statistical jargon, the developing world’s aggregate child mortality rate dropped from 80 per 1,000 live births in 2000 to 57 in 2011, en route to a projected 51 in 2015.

In plain English this means that, as of 2000, more than one out of every 12 children born in the developing world did not live to see their fifth birthday. By 2011, the figure improved to one in 17, and for 2015, it is on track to be one in 20.

But even though every developing region has seen progress quicken since 2000, mortality rates still vary tremendously, as shown in the table below.streaming film Suffragette 2015

TABLE: Under Five Mortality Rates and Projections

(Deaths per 1,000 live births)

Recent Data

At current trend

REGION

1990

2000

2011

2015

2030

East Asia

48

35

15

11

4

South Asia

116

88

61

54

34

lyLatin America and Caribbean

53

34

19

17

10

Sub-Saharan Africa

178

154

109

96

59

All developing regions

97

80

57

51

33

Source: UN Inter-Agency Group for Child Mortality Estimation (2012), author’s calculations

In light of ongoing advances in programmes and technology, it makes sense to set an absolute minimum standard for all of humanity: no more than 30 per 1,000 by 2030, and perhaps even 25 per 1,000. For comparison, Algeria and Mongolia are currently at 30. Most rich countries are at around 4 or 5.

If Africa continues to improve at recent rates, its mortality will hit 59 per 1,000 in 2030. If it improves almost as quickly as East Asia did in the 2000s, it could get below 30. With slight acceleration, South Asia could also reach 20 or 25 by 2030, making sure averages don’t mask disparities and no community remains above 30. Technology improvements could accelerate things even more.

Nonetheless, it is important to remember that even a child mortality rate of 30 still tragically implies that more than 3% of babies do not reach their fifth birthday. That single sobering fact should serve as enormous motivation when considering how historic it would be to ensure every part of the world reaches at least that standard within the next 18 years.

John W McArthur is a Senior Fellow with the UN Foundation and Non-resident Senior Fellow with the Brookings Institution. He is vice-chair of the Global Agenda Council on Poverty and Sustainable Development and a member of the Forum’s community of Young Global Leaders. Follow him on Twitter @mcarthur.