Supporting Africa's middle-income countries
This R/UNDG meeting on MICs countries support is happening at an opportune and pivotal time not only for the UN System but also for the entire development world in terms of processes that will determine the future of the planet in a number of areas.
As you are aware, the Third International conference on Financing for Development just concluded about 2 weeks ago in Addis Ababa. The agreement recorded in the outcome document has been described by many as historic; historic in the sense that it paves the way for underwriting the ambitious Sustainable Development Goals which will be finally decided upon in September.
After the FfD3 conference in Addis Ababa, in a little over one month time, i.e. in September, about 150 world leaders will congregate to adopt the 17 Sustainable Development Goals during a summit which will be held in New York.
Subsequently, the Conference of Parties (COP) on Climate is the last of the three crucial events this year that can set the world on an unprecedented path to a prosperous and sustainable future, after the FfD3 agreements that provides for a strong foundation for countries to finance and adopt the proposed sustainable development agenda in New York in September. This foundation, we hope, will enable stakeholders at the COP to reach a binding agreement at the UN climate negotiations which will take place in Paris in December that will reduce global carbon emission.
Allow me to at this juncture, to expand a little more on the recently held FfD3 meeting to highlight some important features of this agreements arrived at by 193 Member States. One important thing is that the adopted agreement marks a milestone in forging an enhanced global partnership that aims to foster universal, inclusive economic prosperity and improve people’s well-being while protecting the environment. Moreover, it completely goes along the new goals that will be addressed during the Sustainable Development Summit this fall.
The Addis Ababa Action Agenda contains more than 100 concrete measures. It addresses all sources of finance, and covers cooperation on a range of issues including technology, science, innovation, trade, governance, stemming illicit cash flows and capacity development.
The outcome document also underscores the importance of aligning private investment with sustainable development, along with public policies and regulatory frameworks to set the right incentives.
Countries also agreed to new initiatives, including on Technology, Infrastructure, Social protection, health, micro, small and medium-sized enterprises, Foreign aid, measures for the poorest countries, Taxation, and Climate Change. All these are not only relevant but are pertinent to our discussions during the next 3 days.
These commitments roped together with the correct will can and should bring about real change, however the real test ultimately lies in their implementation through operationalization.
To paraphrase the Global UNDG Chair who is also UNDP Administrator, Ms. Helen Clark, and I quote “we are seeing the development finance landscape rapidly transform. Increased and more varied streams of financial flows beyond traditional ODA are available to developing countries: foreign direct investment (FDI), private debt, and remittances have overtaken ODA by a large margin. Although total share of ODA from OECD-DAC members given to the multilateral system increased from 36 per cent to 41 per cent from 2007-2013, this was mainly driven by earmarked support tied to specific purposes, rather than provided as flexible core resources.
As for the non-core funds which represent the lion’s share of our financial envelope, for every US$1 of core funds invested in LDCs and LICs, we leverage US$4.6 and US$5.2 respectively.
In MICs, for every dollar of core invested, we leverages US$25 in other resources – of which more than US$15 comes from programme governments’ domestic resources. This is another reason why the old dichotomy between core and non-core is increasingly anachronistic”.
What does this mean for the MICs?
According to the UNDG Chair, Ms. Clark, with more than 100 MICs already, and this category of countries set to expand even further, ODA will continue to decline as a share of total development resources. Our experience in managing non-core resources shows that if we are valued as a partner of choice, providing relevant, quality development services and thought leadership, funding will follow. For this reason, we must make every effort to explain to programme countries our role as a development partner, rather than as a donor.
These are some aspects of the battles we have to fight as UN System if we are to continue to have a credible niche, solid and relevant programmes that can mobilize resources for our operations in the Middle Income Countries. The strategy of support to middle-income countries which we are going to discuss during the next 3 days must specifically address those realities.
In this sense, the fact that the FfD3 conference has happened right before this meeting is a real opportunity, in the sense that the MICs strategy will have to target some of the specific issues and goals of Addis Ababa outcome document.
I understand this is not an easy task. The United Nations System starting looking into problematic aspects of financing development in MICs way back in 2007. Since then at least 9 General Assembly resolutions, directly or partially dealing with mechanisms, coordination processes and special needs of the MICs have been passed, that could bring more appropriate responses to MICs needs and challenges in a way that ensures that achievements made by these countries are sustained. The deliberations of this meeting will contribute to the overall process in the search of solutions to the challenges of UN intervention in within the MICs countries.
Africa is on track. We hold this truth to be genuine and evident and have the data that attest and confirm this fact. More appropriately so, 3 days ago, to a summit of entrepreneurs in Nairobi, Kenya, President Obama solemnly proclaimed that Africa’s time has come to be a pole of innovation with young people and women as the engine of this new and profound continental transformation. “I wanted to be here because Africa is on the move”. He said, “This continent needs to be the hub of global growth, not just African growth”, before adding that as example, “Kenya is leading the way”. Some encouraging words coming from President Barack Obama.
This positive trend of Africa’s renewed social and economic vibrancy can also be verified by charting the number of countries that have achieved “Middle Income status” and that would be graduating out of the LDC in the coming years.
However, reaching MIC status is not a goal in itself. Sustaining growth and making it more pro-poor will be a tall order, as the experience of some of the “mature” MICs like South Africa shows.
Yes, Africa has had remarkable growth since the turn of the century. Yes, the continent has been hailed as the next frontier for opportunity and a potential global growth pole. “The world’s newest and most promising frontier of limitless opportunities” in the words of Kenyan President Uhuru.
Yes, in most cases, economic growth is robust and economic management, governance and political stability have improved along.
All these facts that are contributing to a global perception that the continent has enormous potential and will be a power, at least, a force to reckon with in the world development discourse.
We have to note though that this recent economic performance has not generated enough economic diversification, job growth or social development to create wealth and lift millions of Africans out of poverty. A key challenge, therefore, is how Africa and specifically MICs can pursue more effective policies to accelerate and sustain high growth and make that growth more inclusive and equitable. As UN System, we have to put in place the right strategy, innovative and bold enough to help us to continue to support this movement all the way.
- Extract: Speech by head of UNDP Africa to meeting of UNDG Strategy of Support to Middle-income Countries in sub-Saharan Africa, Seychelles, 29 July 2015