Financing and investing in Sustainable Development & Road to 2015: a Pivotal Year for Sustainable Development

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1 Financing and investing in Sustainable Development & Road to 2015: a Pivotal Year for Sustainable Development Chantal Line Carpentier Chief UNCTAD New York Office 17 November 2014 carpentier@un.org

2 Outline HOW SDGs ICESDF FfD Post 2015 Hot issues and way forward

3 Lessons learned from MDGs MDGs focused on what, the SDGs focus on expended MDGs and the how as well MOI No investment-push or technology transfer to meet future energy and food security Prevailing development policies did not support MDGs Social is not enough, sustained poverty alleviation requires taking into account interrelated challenges of building productive capacities, advancing technological progress and promoting structural transformation => investment vs financing Must integrate the 3 dimensions of SD

4 UNCTAD recognizes the world economy inter-dependence and different level of development and capacities of countries Focal Point within UN System on Trade and Development and related issues of finance, investment debt, technology and thus for MoI Responsible for: Preferential duty-free entry for certain products imported from designated countries; Classification of the Group of Least Developed Countries; the 0.7 % of GDP target for ODA; Proposed debt relief for poor countries & DMFAS in more than 100 institutions/60 countries Creation of world association of Investment Promotion agencies Concept of policy Space; Concept of development productive capacities to absorb investment Development-centered Globalization The Common Fund for Commodities: intergovernmental financial institution to improve socio-economic development of commodity producers; Control of Restrictive Business practices: Competition policy;

5 Post Rio+20 Goals and Financing 193 countries, 17 goals and169 targets - 42 on MoI Large ownership by M.S., more ambitious than had expected, basis of Post 2015 development agenda Goal 17: Strengthen the MoI and revitalize the global partnership for SD Finance developed countries implement fully ODA commitments to provide 0.7% of GNI in ODA to developing countries of which % to LDCs on an agreed timeline strengthen domestic resource mobilization, including through international support to improve domestic capacity for tax collection, and mobilize additional international financial resources from multiple sources assist developing countries in attaining long term debt sustainability

6 Goal 17 Multi-stakeholder partnerships support current broad-based multi-stakeholder partnerships and encourage new ones that mobilize knowledge, expertise, technologies and financial resources to support the achievement of sustainable development goals in all countries, particularly developing countries encourage and promote public, public-private, and private special funds and foundations, building on the experience and resourcing strategies of partnerships such as GFATM, GEF, GAVI, BMGF, SE4All, EWEC

7 G77 also insisted on MOI under each goal (1.a) ensure significant mobilization of resources from a variety of sources to provide adequate and predicable means to implement programmes and policies (1.b) create sound policy frameworks, at national, regional and international levels, based on pro-poor development strategies to ensure accelerated investments in poverty eradication actions. (8.a) improve Aid for Trade support for developing countries, notably through the Enhanced Integrated Framework for LDCs

8 G77 insisted on MOI under each goal (9.a) facilitate sustainable infrastructure development, with emphasis on enhanced financial and technical support to LDCs (9.b) ensure a conducive policy environment at all levels for industrial development, promoting entrepreneurship and innovation, with special attention to national circumstances in developing countries; (9.c) enhance R&D activities and upgrade technological capabilities including access to environmentally sound technologies in all countries.

9 G77 insisted on MOI under each goal (10.a) respect the principle of special and differential treatment for LDCs in relevant international agreements including the WTO; (10.b) direct ODA and encourage financial flows, including foreign direct investment, to states where the need is greatest, in particular LDCs, African countries, SIDS, and LLDCs; and (10.c) by 2030, reduce to less than 5% the transaction costs of migrant remittances. (11.c) support least developed countries, including through financial and technical assistance, for sustainable buildings utilizing local content and materials.

10 ICESDF report ICESDF provided an analytical framework to enhance understanding of how public and private, international and domestic sources of finance can work to achieve sustainable development Basket of options for policymakers at countrylevel International policy architecture to revitalize global partnership for SD Financing needs differ across countries and regions ( ) with specific need in LDCs, SIDS or LLDCs

11 ICESDF report cost estimates ICESDF gathers estimates-> annual costs Poverty alleviation $66 billion Hunger alleviation $50.2 billion Universal health care $37 billion Universal primary education $42 billion Investment in infrastructure for sustained and inclusive growth and job creation $$5-7 trillion Unmet credit for SMEs $3.5 trillion Public goods (climate change adaptation and mitigation, oceans, biodiversity etc)?? Costs of inaction larger than the costs of action!

12 The United Nations Sustainable Development Goals (SDGs) will need to bridge a large investment gap Estimated annual investment needs in key SDG sectors (power, transport, telecom, food, climate change, biodiversity, health, education (Trillions of dollars, annual average) Total annual investment needs Current annual investment Annual investment gap Source: World Investment Report, 2014

13 UNCTAD s role

14 Source: UNCTAD World Investment Report

15 Source: UNCTAD World Investment Report

16 Multi-part financing framework for Sustainable Development is needed Source: UN Report of the Intergovernmental Committee of Experts on Sustainable Development Financing

17 UNCTAD s role

18 Trade and Sustainable Development: An UNCTAD s perspective A Big Push for private investment in the SDGs: Action Packages

19 ODA continues to be important Commitments to provide 0.7% of GNI of developed countries as ODA, still not met, only 0.29%. ODA has fallen 2 consecutive years since it has peaked in While increasingly overshadowed in quantitative terms by private financial flows, ODA remains an important source of funding, especially for the most vulnerable countries as it is focus on the world s poorest and most vulnerable populations. Today, the allocation of aid is far too often dominated by political economy considerations. ODA should target geographical and thematic areas that are unlikely to attract other sources of financing. Alongside a continued focus on social issues, aid should increasingly be directed at issues of global concern, where societal benefits cannot be fully internalized. Use ODA as a catalyst to leverage other sources of financing, thereby reducing aid dependency. By building capacities and strengthening institutions, development cooperation can help countries to use external resources more effectively and thereby also attract additional development cooperation. Strengthened national capacities, productive capacity and diversification can also help to foster domestic resource mobilization and tackle illicit financial flows.

20 Financing for Development (FFD) First FfD conference in Monterrey, Mexico in > Monterrey Consensus. Introduced six leading actions for the FfD process: 1. Mobilising domestic financial resources for development 2. Mobilising international resources for development: FDI and other private flows 3. International trade as an engine for development 4. Increasing international financial and technical cooperation for development 5. External debt 6. Systemic issues: enhancing coherence and consistency of the international monetary, financial and trading systems in support of development. Second FfD Conference in Doha in > Doha Declaration on FfD reaffirms the Monterrey Consensus and calls for a UN Conference at the highest level to examine the impact of the world financial and economic crisis on development. In June 2014, the GA adopted resolution on Modalities for the third International Conference on FfD to be held in in Addis Ababa, July 2015 and focus on: Reviewing the implementation of the Monterrey Consensus and Doha Declaration on Financing for Development Addressing new and emerging issues related to the mobilization and effective use of financial resources for SD Reinvigorating the FfD follow-up process The Conference should constitute and important contribution to and support the implementation of the post-2015 development agenda. Several M.S. especially G77 wanted the Conference to be held before Post 2015 summit

21 Trade and Sustainable Development: An UNCTAD s perspective Hot issues and way forward

22 Trade and Sustainable Development: An UNCTAD s perspective We are at a new significant historical juncture in 2015 Post a new set of universal development agenda with sustainable development SDGS at their core. => universal vs CBDR Different United Nations intergovernmental processes, namely, the sustainable development agenda, the post-2015 development agenda and the financing for development process, are about to converge. Financing for sustainable development is a key element in these processes. The Monterrey Consensus and the Doha Declaration on Financing for Development provided a sound conceptual basis for discussions but must be enlarged to take into account sustainable development as well as international trade and financial system, policy coherence and the enabling environment for development, could guide the formulation of a financing strategy for sustainable development. Greater efforts are needed to accelerate progress and to achieve sustainable development beyond 2015, we need an integrated financing framework for a post-2015 development agenda. Both public and private sources of financing need to be tapped, and public resources need to leverage private resources and encourage long-term investments.

23 .. Inequality and heterogeneity rising - top 10 GDP=65%..new model needed!

24 Financing the real economy to meet the new patterns of demand A redesign of development strategies involves an expansion and diversification of productive capacities and their adaptation to new demand patters, all of which requires investment and its financing Improve economic performance through countercyclical macroeconomic policies for some time and providing coordinated economic stimuli; Key challenges: Trade and Sustainable Development: An UNCTAD s perspective Capital flows management: pragmatic exchange-rate and capital-account management needed to reduce vulnerability to external financial shocks Domestic financial systems need to channel credit towards productive investment in the real sector: central banks should pursue a credit policy, rather than just a monetary policy

25 3 rd FfD Conference & Post 2015 FfD process Norway and Guyana appointed co-facilitators Submitted a Road map and work programme for the deliberations consisting of: 4 substantive informal sessions up to December 2014 Informal interactive hearing with civil society organizations and the private sector in Jan. 2015; Regional consultations (dates to be decided) 3 drafting sessions in January (27-29), April and June 2015 Post 2015 process Kenya and Ireland appointed Co-Facilitators HL summit September 2015 Modalities by December 2014 MoI for each goal and goal 17 role and relationship to FfD? Role of Synthesis report!

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27 Agreed SDGs by OWG of Member States 1. End poverty in all its form everywhere 2. End hunger, achieve food security & improve nutrition, and promote sustainable agriculture 3. Ensure healthy lives and promote well-being for all 4. Ensure inclusive and equitable quality education and promote life-long learning opportunities for all 5. Achieve gender equality and empower all women and girls 6. Ensure availability and sustainable management of water and sanitation for all

28 SDGs continued 7. Ensure access to affordable, reliable sustainable, and modern energy for all 8. Promote sustained, inclusive and sustainable economic growth, full & productive employment, and decent work for all 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation 10. Reduce inequality within and among countries 11. Make cities and human settlements inclusive, safe, resilient and sustainable

29 SDGs continued 12. Ensure sustainable consumption and production 13. Take urgent actions to combat climate change 14. Conserve and sustainably use the oceans, seas, and marine resources for SD 15. Protect, restore, and promote use of terrestrial ecosystems, sustainably manage forests, combat desertification and reverse land degradation and biodiversity loss 16. Promote peaceful and inclusive societies, provide access to justice, & build effective, accountable and inclusive institutions at all levels 17. Strengthen the MOI and revitalize the global partnerships for SD