Addis Ababa — For four days, government, business and organizational representatives are gathered in Addis Ababa, Ethiopia to discuss how to fund the future for "people and the planet". The Third Financing for Development summit [#ffd3].
aims to replace the United Nations Millennium Development Goals - aimed at ending extreme poverty - with a global 'sustainable development' agenda. World Bank President Jim Yong Kim said, "If we can seize this moment, we can accomplish the greatest achievement in human history." In a conversation with AllAfrica's Boakai Fofana in Addis, Carlos Lopes, head of the UN Economic Commission for Africa, agreed with other analysts who say the millennium goals campaign, which ends this year, saw substantial progress against misery in developing countries. He said funding the new sustainable development goals is essential and is in the interest of everybody everywhere.
What? Why? – convening to fund social progress
When the Millennium Development Goals were created, there was concern about how we were doing to fund all of this.Then, the first Financing for Development Conference was organized in Mexico. It went very well, but the level of ambition was also extremely careful. It was like a deal between developing countries - having to do a certain number of things on governance – [and] developed countries giving a bit more aid and being a bit more generous. That was the deal that was cut. The second conference, which was in Doha, was a review conference. It was about nothing new, in particular. It was to review progress. This [third] one comes when we are finished with the MGD's. This year the MGD's finish, so we have to get the record of what happened. Generally, lots of things happened. There was progress on every front. Africa didn't stay behind.
Africa's ambitions – everybody's business
It was a very different continent fifteen years ago, so we can say proudly that it has grown. A number of social indicators have progressed. On governance, a number of things have improved, including the ones registered in the Mo Ibrahim Index. We are now in the moment when we are defining what the future is like. The future is calling for new goals. This time, they will not be specifically for developing countries. They will be for everybody. Why? Because now the definition is that we need to deal with sustainable development.
Sustainable development is as much about how you consume in New York, as it is about how you get firewood in Burkina Faso. It is as much about how many cars you can have in Switzerland, as it is about healthcare in Guinea. So, it's everybody's business. If we consume the way we are in the western world and in developed countries, it's unsustainable. The environment cannot take it. If, on the other hand, countries that still have large pockets of poverty do not progress socially, it will also have immense implications for the way the planet is maintained and sustained. So, it has become everybody's business, and if it is everybody's business, and we are going to have goals that are universal; then, the level of ambition is much higher.
If the level of ambition is much higher, people are talking about eliminating all extreme poverty in the next fifteen years. That's a very ambitious goal. You are talking about at least 1.3 billion people that have to be uplifted from extreme poverty. This conference is very, very important. Because this conference is going to make the deal for financing all of this.
Can 192 countries save the future?
Because this is a conference that concerns everybody, it concerns different forms of financing and is centered not only on development aid. These are the 192 member states of the United Nations, all together, trying to improve what they can contribute to attain the Sustainable Development Goals.This means we are going to look into taxes; we're going to look into fiscal policies. We're going to look into capital flows, private-sector investment. We have to look into new and novel forms of financing, like the ones that deal with philanthropy. Funds have to come from different streams, in a package that is going to be approved in this conference, that is much more comprehensive than anything that has been attempted before in terms of financing.
Aid – essential but overshadowed
Overall, out of Africa's combined GDP, about three percent comes from aid. People normally tend to inflate that. It's relatively small. The majority is domestic investment. We always announce the amount of investment that is coming into a country from abroad. We never [tell the story] about national investment itself, even though in the investment that is occurring in Africa, public beats private. The days of aid are more or less over. It doesn't mean that aid is going to disappear, but the centrality of aid in the debate is no longer what mobilizes the energies of people.
What mobilizes them is how they can increase their economies, so they can increase their taxes, so they can increase their domestic-resource mobilization. How do you make sure that your 'patient capital' [long-term funds without expectation of quick profits] contributes to productive investment? How do you make sure that your remittances from your migrants are being used productively? These types of debates have become much more insightful and interesting, I would say, than the ones about development aid.
#1 priority – the 'real corruption'
Corruption is an entry point to [discussing the much larger issue of] illicit financial flows. Of course, you have corruption, like the policemen that asks for money when he stops your car. As much as it is an annoyance – and it is not good for the progress of any given society or country – the amount, from a macro point of view, from that type of corruption is significantly lower than the real corruption, which are illicit financial flows.Contracts from extractive industries that cheat on the real value of the production. Transfers of profits from one location, where most of the production is, to another where their headquarters are, but not much of the activity.
That type of corruption for us is the number one priority. In the case of the Economic Commission for Africa (ECA), we have supported a panel about illicit financial flows chaired by [former South African] President Thabo Mbeki . I was the vice chair to President Mbeki in that panel. We came up with very significant recommendations for both the national and international level, about how to tackle the issue of illicit financial flows. That's where we should start.
Some of those recommendations are basically to improve contract negotiation modalities, better regulation. To make sure that financial transparency is much more acute in the banking systems in Africa, so you can get much more accurate information. Also, improving customs administration at the national level. Then you also need it at the international level, because if you have fiscal paradises in places where people can hide the money, it's always going to be difficult to run after the loss.
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Leaping into the future
For Africa, the number one priority should be industrialization. It is a 'pull' factor that links together many streams. For instance, we have very low agricultural productivity. That produces poverty, because a majority of the population lives out of it. If you want to increase productivity, and therefore lift people out of poverty, the pull factor is agro-processing. That gives better prices, better distribution, investment in infrastructure, access to credit, you name it.
The same with skills. You can train a lot of people, but if they are not hooked into an industrial policy, you are training youth who are unemployed, well educated, but not hooked up to the economy. Industrialization has the capacity to focus discussions around a couple of issues of importance for the transformation of the continent. So, we think that's where money should be put.
Can a conference matter?
This is a very important conference – in its intent, its reach, its dimensions. It's also important because it's the first time that such a conversation has been taken to Africa. Before, it's been in other places, in other cities, in other parts of the world; so we are very pleased that this conference is taking place in Addis Ababa, the 'African capital' [home of both the African Union and the UN Economic Commission for Africa]. It was an offer by the Ethiopian government to host, and it was very warmly accepted. It is clear that it would not have happened with an Africa who, in the past, had a stigma as a continent that was poor and disabled in many aspects.
This is a new Africa, a proud Africa, and this conference is part of it.
