NEWS ANALYSIS - Daunting Development Challenges Ahead

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By Richard Johnson | IDN-InDepth NewsReport

PARIS (IDN) - Despite development successes over the past 20 years and the progress of many emerging economies, inequality is increasing in all countries and 1.4 billion people still live in absolute poverty. This gloomy situation was acknowledged by development ministers from industrial and emerging economies, who met in London on December 4 and 5 for the High Level Meeting (HLM) of the Development Assistance Committee (DAC), which comprises 24 of the 34-nation Organisation for Economic Co-operation and Development (OECD).

A communique emerging from the meeting points out there is unequivocal evidence of absolute poverty having been halved, and progress achieved on all Millennium Development Goals (MDGs), agreed at a summit in September 2000 at the turn of the millennium. Economic growth has been a key factor in reducing absolute poverty, in the success stories of many

Yet daunting challenges persist: 1.4 billion people are mired in absolute poverty; food insecurity affects 850 million people, and 1.3 billion of the world’s people – including many women – have no access to electricity. Social inequalities are increasing in all countries – developed, emerging and developing – and are a growing concern given the threat they pose to social, political and economic stability, the ministers agreed.

The HLM also recognised important risks. The world’s population will reach 9 billion people in 2050 which, when coupled with changing consumption patterns, is estimated to require a 70% increase in food production by 2050. Within that same timeframe, global GDP may quadruple.

Given current trends and policies, this will result in an 80% increase of primary energy consumption which will impact on climate change and, as a consequence, global health, water management, food security, and poverty reduction prospects – and the protection of natural capital for future generations.

"Sustainable development and green growth are key approaches to address these challenges, and participating governments welcomed the Rio +20 commitment to integrate sustainable development goals in the post-2015 agenda," the development ministers stressed in a communique.

They also recognised that the context for development co-operation has now irrevocably changed. Shifting global wealth is breaking down the former division between North and South.

Co-operation among South-South partners, as well as triangular co-operation, is complementing North-South co-operation, thereby increasing the scope, reach and effectiveness of the international development assistance system. Likewise, civil society and the private sector are playing an increasingly important role as partners in development co-operation.

To address these challenges and opportunities, the ministers said, a new and ambitious global partnership has been established. They expect the Global Partnership for Effective Development Co-operation – launched at the Fourth High Level Forum on Aid Effectiveness from November 29 to December 1, 2011 in Busan. South Korea – to pave the way forward by providing a forum of equal partners with shared principles and differentiated but well-defined commitments.

"This Partnership will enable all providers and partners to focus on results at the country level in support of both national and global goals. For too long a lack of coordination, the fragmentation of efforts and failure to honour country ownership have inhibited the pursuit of goals to which all are committed. The Global Partnership offers a space within the international community to discuss these matters as full and equal partners," the communique stated.

Summarizing the outcomes, DAC Chair J. Brian Atwood stated: "This high-level meeting was a reflection of the changing world of development co-operation: DAC members and developing countries working in tandem with civil society, the private sector and other partners; strong support for a UN-led process for determining development goals; and innovative finance for development at a time of constrained budgets."

The ministers committed to make the effort to connect different agendas – MDGs, financing for development, development effectiveness and policy coherence for development – and thereby ensure that these vital elements are more in sync in the cause of development progress. They recognised that this broader agenda engages a larger set of partners who can contribute in different ways to development progress.

They also recognised that the international community is at an historic juncture. Work on post-2015 development goals will define development co-operation for years to come. In fact the agenda for the meeting provided for briefings by members of the United Nations (UN) High Level Panel on the Post-2015 Development Agenda, providing important insights from their contributions.

ODA

According to the communique, the ministers engaged in forward-thinking on development finance and the importance of official development assistance (ODA) and other flows that impact on development. They set out below their views and agreed on next steps regarding each of these important topics.

In their discussions about the future of ODA the ministers and agencies agreed that it must be directed to where it is most needed and can best catalyse other flows. They asked the DAC to work with the UN system together with the IMF and the World Bank on proposals for new measures of total official support for development, including defining what constitutes ODA.

With a view to ensuring that ODA is directed to where it is most needed and where it can catalyse other flows and promote accountability, the DAC will:

- Elaborate a proposal for a new measure of total official support for development.

- Explore ways of representing both “donor effort” and “recipient benefit” of development finance.

- Investigate whether any resulting new measures of external development finance (including any new approaches to measurement of donor effort) suggest the need to modernise the ODA concept.

- Undertake this work in close collaboration with other interested international agencies, in particular the United Nations, and also the IMF and World Bank, while engaging others in this exercise. A first report should be completed in 2013.

According to the communique, DAC members discussed the reporting of ODA loans in light of multiple views on the interpretation of "concessional in character" in relation to such loans. They agreed about a number of key principles that ODA measurement should meet. These are that ODA reporting should:

- Withstand a critical assessment from the public;

- Avoid creating major fluctuations in overall ODA levels;

- Be generally consistent with the way concessionality is defined in multilateral development finance;

- Maintain the definition of ODA, and only attempt to clarify the interpretation of loans that qualify as ODA;

- Prevent notions that ODA loan schemes follow a commercial logic: this includes the principle that financial reflows should be reinvested as development resources.

In this spirit, they agreed to: transparency regarding the terms of individual ODA loans; ensure equal treatment of all DAC members; establish, as soon as possible, and at the latest by 2015, a clear, quantitative definition of "concessional in character", in line with prevailing financial market conditions.

They also agreed to recognise development loans extended at preferential rates – whether "concessional in character" under a future post-2015 definition or not – as making an important contribution to development.

Post-2015 development goals

Participating governments in the London meeting committed to keep their focus on achieving the existing MDGs. "These unique development goals have rallied the global community behind a common vision that has had lasting impact on the lives of hundreds of millions of people. The establishment of a common global development agenda has been an immensely important force for galvanising support, mobilising resources, focusing efforts and making it possible to assess progress," the communique stated.

The ministers pledged to go forward, and agreed to:

- Focus their efforts on achieving the MDGs by 2015, and to work together with partners and new providers to enhance effectiveness, improve co-ordination of development activities and apply innovative methods to reach these goals.

- Strongly support the High Level Panel and the UN-led process to define a successor set of goals and a framework around which the global community can unite. This process should be inclusive of all partners, not donor-driven. Participating governments were greatly encouraged to hear of the active participation of all regions and of both state and non-state actors in this endeavour. They expressed support for goals that would expand and amplify the overall development impact of the current set of goals, including measurable targets for the global partnership as expressed in MDG8.

- Recognise that global goals were vital in establishing a common accountability agenda for development, and that national goals should be owned by all members of society and reflect the context of a particular country, its state of development and the particular needs of society as determined through the full participation of citizens.

- Recognise the importance of supporting enhanced goals for the future. Participating governments focused on the centrality of poverty reduction, with many expressing support for its eradication. They expressed concern about evidence of growing inequality, and acknowledged the special needs of fragile states.

- Support, in line with the agreement reached at the Rio +20 UN conference on sustainable development, the full integration of the sustainability dimension in the new set of goals, as essential in any development context.

- Emphasise that human rights principles will be important in developing any set of viable goals and the means for achieving them. Development of these goals should also take account of the role of democratic institutions, human security and references to the quality of life as a complementary measure to traditional benchmarks such as national income measures.

- Express the hope that, like their predecessors, future goals will be clearly defined, realistic, politically salient and measurable.

The London High Level Meeting was attended also by the International Monetary Fund, the World Bank, the United Nations Development Programme and other UN representatives, the African Development Bank, the Asian Development Bank, the Inter-American Development Bank and co-Chairs of the Global Partnership for Effective Development Co-operation. Invited high-level representatives from Brazil, China, India, Indonesia and South Africa were also present as observers to this meeting. [IDN-InDepthNews – December 19, 2012]

2012 IDN-InDepthNews | Analysis That Matters

Image credit: World Bank

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