Taking fragility seriously in financing the SDGs

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      The recently published OECD report ‘States of Fragility 2015 – Meeting post-2015 ambitions’ presents very interesting facts and figures on the likelihood of fragile states meeting the post-2015 development goals. Until recently, a very popular quote from the 2011 World Development Report was that not a single fragile state would achieve any of the MDGs by the end of 2015. Although this statement might no longer be entirely true, nearly two-thirds of fragile states are still not expected to meet the goal of halving poverty. Fragile states are home to 43% of people living on less than US$ 1.25 a day and looking to the future gives cause for concern.  If progress continues at current trends, nearly half a billion people will still remain under this poverty threshold. Unsurprisingly, they will not fare a lot better on other indicators too. This leads to a very simple conclusion. If we want to meet the post-2015 goals, in whatever form they take, we need to take fragility very seriously. This means drawing on the lessons learnt in the past, and making sure that the outcome of the Third Financing for Development Conference (FfD) in Addis Ababa this July is a step forward from where we are now. The zero draft of the Financing for Development outcome document is our window into the future of financing.

      Ensuring sufficient focus on fragile states

      So what are the issues that need to be taken seriously? Firstly, there is the need to allocate sufficient resources to the countries that need them most. Secondly, there is a need to include the key areas that require financing. Finally, there is the need to use the right sources of finance for the right priorities and to make sure they are used well. Recommended Reading Fragile and conflict-affected states: The new norm in development finance’ by International Alert Financing the future: How international public finance should fund a global social compact to eradicate poverty’ by ODI Financing the post-2015 Sustainable Development Goals: a rough roadmap’ by ODI Fragile states are less able to access other sources of financing, and where possible may leverage Official Development Assistance (ODA) to break down such barriers. Fragile states are likely to remain those most in need of ODA financing, along with other Less Developed Countries (LDCs). The zero draft of the FfD outcome document does indeed hint regularly at the special importance of fragile states. A specific target for fragile states is commendable, but not absolutely necessary. As poverty is likely to remain concentrated in fragile states, maintaining a focus on poverty would be sufficient to making sure that resources are directed to the countries that need them the most. An outstanding concern however, is the risk of conflating climate finance and ODA. Climate adaptation finance should be strongly linked to development financing (as the zero draft indicates) but should be additional to it - a question the zero draft seems to circumvent.

      Focus on the essentials

      The second question is a key one; what are the areas that are of pivotal importance to fragile states and do they receive sufficient funding? One of the main lessons learnt in the past is that fragile states had to first work on the fundamentals before they could reach the MDGs. As a result, fragile states and other key stakeholders came together and formulated the five peacebuilding and statebuilding goals (PSGs). For these, the OECD ‘States and Fragility’ report produces interesting new information, showing that key goals such as ‘legitimate politics’, ‘justice’ and ‘security’ have received a very low proportion of ODA funding – only 4%, 3% and 2% respectively. A new framework for development financing will therefore need to ensure that these vital areas receive sufficient funding with an adequate model to track funding streams. This is an area of concern, not yet taken sufficiently seriously in the zero draft FfD outcome document. Other areas of key concern to fragile states are addressed more strongly in the FfD zero draft. This is most notable in the need to increase domestic revenue and combat illicit financial flows. Equally important is the recognition that strong capacity building is necessary to ensure that fragile states can engage effectively with global initiatives that aim to address such problems. The FfD proposals for a global social compact and nationally appropriate social protection systems for all are very welcome, especially as they include a commitment to international support for national budgets. The call for a global initiative that scales up investments in resilient infrastructure is commendable, but this should not be framed as ‘climate change-resilient infrastructure’, but rather as ‘infrastructure that increases resilience’ – that is infrastructure that increases economic, social and technological connectedness.

      Getting the modalities right

      The third question is on modalities. There is relatively strong recognition in the FfD zero draft of the importance of national ownership, alignment of activities with national priorities, fully (!) untied use of aid, use of country systems, the building of genuine partnerships and enhanced transparency and mutual accountability. All good. Yet the reality often proves more stubborn than paper. Building national capacities and using country systems remains a big stumbling block for development partners, even for those genuinely committed to standards of aid effectiveness, as the New Deal Implementation Monitoring report showed. Furthermore, new donors are appearing on the scene and private sector actors are actively encouraged to participate as new forms of financing are forged. Private financing for change in fragile or conflict-prone countries carries considerable risks given that there is little control of such financial flows and this type of financing, as we know, can contribute to exorbitant forms of corruption which can further deepen the fragility of states and even fuel new conflicts. How will the principles of aid effectiveness be maintained? How will conflict sensitivity be maintained? These elements are of crucial importance to fragile states, and the zero draft FfD outcome document needs to include a much stronger commitment and tracking mechanisms to ensure the right use of public sources of finance - and ideally extend these to other sources of financing. Strengthening national capacities and using country systems becomes increasingly important when considering the number of global initiatives and global funds that are currently being proposed, which are all likely to have multiple sources of finance. It is fantastic that global issues are starting to be tackled globally, but let us not forget that national (and sub-national) capacities will remain key to achieving these goals. The views expressed here are those of the author, and not necessarily those of ECDPM.
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