The landscape of financing for development is changing. Last week’s European Development Days in Brussels put a spotlight on the evolution of investment we are seeing now in global development, and how to achieve the Sustainable Development Goals within this new context of commitment and funding — in the era of Brexit and the “America First” agenda. The role of partnerships, the private sector, leadership and the innovative financing mechanisms that could be leveraged to make a real impact on global inequality were some of the key areas of discussion.
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On the sidelines of the conference, Devex spoke with Prof. Jeff Sachs, U.S. economist and director of The Earth Institute at Columbia University, about what it will take, in public, private and philanthropic funding to achieve the goals and what pace of investment is needed.
He urged donors, investors and governments to understand that the SDGs are time-bound 2030-specific goals — from universal health coverage, universal completion of secondary education and the decarbonization of the energy system.
“Let's take the goals seriously to actually achieve them,” he said, “and then we'll each have our homework assignment that comes from that depending on what sector we are.”
Speaking specifically about the announcement that the U.S. will pull out of the Paris climate agreement, Sachs said that despite investments in renewable energy from the private sector, such as Tesla and the Chinese company Tencent, this is not enough.
“The Paris climate agreement requires government leadership … [and instruments] for instance carbon pricing, carbon taxation, in addition to what the private markets are doing on their own,” he said.
Sachs also highlighted the intervention of Chinese President Xi Jinping at May’s One Belt One Road summit in Beijing about how this new era was recreating the silk roads of the past that linked Europe and Asia, as part of a shift toward finding alternative approaches and new centers of action.
Below are more highlights from the conversation, edited for length and clarity.
What can you tell us about some of the latest trends in financing models for development?
There are plenty of suggestions for financing models, but in terms of actual practice right now the first thing we're fighting is Trump who wants to cut development aid to raise military spending. It's mad, it's absolutely bizarre and it's dangerous.
For new financing look to China, the Asian Infrastructure Investment Bank, the Silk Road Fund, the New Development Bank — that's where the action is. China's doing new, innovative financing, whereas the old institutions such as the International Monetary Fund and the World Bank are basically stuck. They have the U.S. heavy hand right now, which is dilatory to their mission, and so we're not seeing a lot of innovation there.
There are a lot of good ideas that could easily be implemented. AIDS could be brought to an end: UNAIDS has a 90-90-90 program that requires $10 billion per year, which is in a way, ironically, a laughably small number; it's $10 per person in the rich world per year. But they aren't able to raise those funds yet. There are lots of good things to do, lots of good ideas, lots of ways to mobilize resources — but most of our time is now spent on Brexit, on Donald Trump … and this is a huge distraction. Fortunately, China and some other countries are moving forward, but we've got to say “stop these crazy wars, stop this crazy misdirection of our efforts, don't let the super rich off the hook” and then we'll be able to get the job done.
Do you think the transformation of development finance to private sector or domestic resources is — first — a good thing, and — secondly — happening quickly enough to actually make up for likely decreases in official development assistance?
On the whole, it's not a good thing in that it's an abdication of responsibility of rich and powerful people; in the U.S. you have some of the most powerful and richest people in the world fighting for further tax cuts.
And so I'm not too happy about all of this rhetoric that it's all domestic resource mobilization and it's all private sector [responsibility]. They have their role but so do the 2,034 billionaires on the Forbes list for 2017 with a combined net worth of $7.7 trillion. Or take the case of Saudi Arabia with Trump’s visit recently; $110 billion of new arms purchases — is that really the best use of money in a low oil price world when you have so many social problems throughout the Middle East?
So I think people need to think hard about how we're using our vast wealth right now. This is a world of $127 trillion; 1 percent of that — 1.7 trillion dollars — could solve all the problems of poverty in the world. Our failure to do so is a failure of moral imagination; it's a failure of will. Let's use some of those resources by taxation or by these wealth holders giving their funds so that we can actually get the job done. We could put a tax on the deposits in these tax havens; that would be a simple thing to do. We could say that we're going to take out of the $1.5 trillion dollars of military spending per year, just 10 percent of it, and shift it to development aid — that would be $150 billion, and that would be enough to get a lot of this job done as well.
We could easily put even a modest anonymous wealth tax on deposits in the tax havens. What that means is you don't even necessarily have to know who the owners of the accounts are, but the estimate is that the tax havens are home to $20 trillion of deposits right now.
All of these are absolutely plausible, straightforward ways to say, in a world of wealth, there should not be people dying of poverty.
What are some of the more innovative and concrete ways to convert resources into "saved lives," as you put it, and to finance the SDGs?
One of the most successful programs in the last 17 years is The Global Fund to Fight AIDS, Tuberculosis and Malaria. Money in, disease control out: It's a working machine. We should turn that Global Fund into the global health fund, so that it also helps to keep mothers alive in pregnancy and childbirth. It can be a child survival fund. In other words, it's three diseases right now, but it could be broadened into health systems more generally.
Second, diseases like malaria, AIDS, several of these so-called neglected tropical diseases — the worm infections and so forth — all have good, rigorous, scientific strategies to drive the deaths down to essentially zero. We ought to listen to the scientists, listen to the parasitologists, to the malariaologists, to the AIDS doctors. Follow the advice and then the success is within our reach.
For SDG 4, which is education, we ought to have a global education fund that is like the Global Fund, where resources go in and children's learning comes out the other side. Is this feasible? Absolutely, especially as you have new information technologies that are improving learning capacity, driving down costs of providing a quality education, available even in remote areas. IT makes a lot possible, but it requires some resources, and so a global fund for education I think would be a marvelous way to transfer some of that wealth into SDG 4.
Over 10 weeks Devex and our partners will take an in-depth look at the innovative financing mechanisms driving forward the 2030 sustainable development agenda. We’ll explore how the funding gap can be filled, ask how cross-sector collaboration can lead to improved global health care, and look at what it takes to build successful partnerships for change. Join us as we examine the innovative financing powering the Global Goals by tagging #Going4Goals and @devex.