Progressive Regional Policies Challenge Corporate Approaches to Financing for Development

In mid-September, UN member states are expected to adopt the 2030 Agenda for Sustainable Development, which picks up where the Millennium Development Goals left off. Secretary General Ban Ki-moon, announcing the Agenda recently (August 3) after several years of lead-up and negotiations, called it the UN’s “to-do list” for the next 15 years.

But the 2030 Agenda isn’t likely to be achieved, at least not through the related financing agreement that member states adopted a few weeks before. This Third Conference on Financing for Development concluded its meeting in Addis Ababa with a bad-faith plan that resulted from political manipulation and closed-door deals. It failed to get meaningful commitments from governments to deliver policies that further inclusive growth or provide adequate funding for equitable social services.

The outcome instead relies on private and corporate funding more than domestic sources for a country’s development projects. The negotiators ignored widespread warnings from civil society and some strong member states, like Brazil, who argued that this approach “outsources” the UN’s development responsibilities to multinationals that by definition prioritize profit over people.

But there are strong alternatives to the UN’s embrace of corporations. On the sidelines of the financing conference, governments and some 600 civil society organizations met to showcase progressive financing ideas flourishing in their regional and national contexts. The negotiators could have included some of these innovations – and the UN should promote these policies in its new agenda.

A recent regional initiative led by Senegal and funded largely by the Organisation internationale de la Francophonie, for example, brought together finance ministers from 18 countries to press for progressive tax policy and international cooperation. The group is promoting a financial transactions tax in Europe and targeting the World Bank’s “Doing Business” measure, which they criticize as encouraging corporations to avoid paying taxes.

A powerful Latin American policy initiative has raised taxes on oil production in Bolivia from 18 percent to 50 percent, reducing extreme poverty in the country by half and financing public and social investment at five times the previous rate. Opponents warned that foreign investment would flee the country, but none of the oil companies left and all still make profits in Bolivia. This constructive approach to foreign direct investment presents an alternative to the unqualified welcoming of private funding.

In Southeast Asia, progressive economic and social policies are linked through the Chiang Mai Initiative Multilateralization (CMIM), a regional currency swap arrangement amongst the ASEAN (Association of Southeast Asian Nations) plus China, Japan, and Korea. By providing a $240 million pool of liquidity, the CMIM can contribute to regional monetary stability, helping ASEAN balance China’s economic interests and the political rivalry among China, Korea and Japan. While the Addis Ababa financing meeting failed to tackle the skewed global system of reserve currency, the CMIM shows that regional or sub-regional groups can address economic uncertainties resulting from global macroeconomic imbalances.

On the human rights front, the Asia Dalit Rights Forum outlined policies to promote the economic and financial inclusion of the subcontinent’s Dalits, such as preferential rates of interest based on gender and caste; targeted budget allocations and policy measures; and regional initiatives to combat discrimination based on work and descent. These proposals are important for South Asia in efforts to eliminate caste- and gender-based discrimination and to achieve SDG 10, “Reduce inequality within and among countries.”

As the international community turns its attention towards implementation of the 2030 Agenda for Sustainable Development, progressive regional perspectives and proposals like those spotlighted here should be elevated in the global discussion. The UN should create open and effective space to echo these progressive policies that are already being enacted at the regional and national level, and to encourage similar endeavors worldwide. This is the real way forward for the Sustainable Development Goals, instead of the current myopic reliance on private funding.