Scaling Up SDGs Financing Effectiveness: Stronger Commitments, Greater Actions
Description
Currently, we have already seen significant political commitments translate into dedicated funds for developing countries. For instance, at the COP 15, the $100 billion/annum climate financing pledge was announced. Similarly, at the COP28, commitment to pool and manage resources specifically allocated to loss-and-damage was coined. Political commitments against development challenges are not completely new, reminiscing how as far back as from the 1970s, developed countries have agreed to allocate 0.7% of their GNI in helping the South achieve its development aid target. However, for the past decades, there has been a gap between commitment and actual contributions. In the context of ODA commitment, only 5 of the Development Assistance Committee (DAC) countries had consistently fulfilled their ODA commitment. In terms of climate financing, only per 2022 and 2023 did the developed nations fulfill their pledges for the first time. Hence, despite the efforts, commitments were not delivered timely - meaning that ways to maintain international political commitments of the developed nations shall be explored. This is particularly concerning especially since we are at the crossroad
The second challenge, despite a significant rise in international funds aimed at tackling global challenges, the principle of just and fair distribution is still not being upholded. Currently, one of the hindrances in ensuring just and fair access is the fact that development fund allocation has been largely politically-motivated. Though it is impossible to completely erase the factor out of the equation, it is important to ensure that it would not become the one sole driver. The prevalence of aforementioned practices could exacerbate the current gap of aid distribution - seeing how countries with similar risk profiles were not included in the fund delivery solely because it is not within the donors' strategic interests. On the innovative financing side, accessing funds through innovative financing mechanisms can involve a wider range of approaches and implementation methods. In the area of climate finance, for example, there are currently over two dozen climate funds and initiatives (i.e Green Climate Fund, Global Environment Facility, Clean Technology Fund, UN-REDD Programme, etc). These initiatives are bounded with diverse mechanisms, implementing entities, procedures, and prerequisites - creating concerns regarding just and fair treatment when it comes to the access to the funds.
Another issue lies in lack of common standardization internationally to ensure the quantity and quality of the committed funds. For ODA, currently, amongst the barriers include the lack of commonly-agreed definition internationally amidst the broadening conception of what ODA consists of. This allows numerous other activities to be acknowledged under ODA when in reality, the contribution of such funds in recipient countries’ economy is unclear, or even unidentified (Gülseven, 2020). For other innovative financing instruments, the same case of lack of commonly-agreed standardization stems from the fact that each financial product is institutionalized individually. For instance, in the context of Green Financing, internationally, UNFCCC provides several funding pools, ranging from the Global Environment Facility, Green Climate Funds, to Adaptation Fund - each with its own corresponding standards. Hence, common measurement can be tricky. In tackling this challenge, the Four Effective Development Principles espoused by the Global Partnership for Effective Development Cooperation (GPEDC) through its Nairobi Document have gained prominence. This initiative seeks to promote efficient and effective global development cooperation, ensuring that development assistance, including ODA and other means of SDGs financing, is deployed efficiently to maximize impact on sustainable development outcomes. As reflected in the Nairobi Document, four shared effectiveness principles were coined worldwide, namely: 1) country ownership, 2) focus on results, 3) inclusive partnerships and 4) transparency and mutual accountability. While its existence showcased immense progress, it is relevant to further assess its suitability, and later ensure all these principles are met.
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