How we can benefit from better tax administrations

Peacekeeping - UNMIT

By Michael Keen, Acting Head of the TADAT secretariat

 
No one likes paying taxes. But everyone benefits when collection of those taxes is efficient and fair. For almost all developing countries, building more effective and trusted tax administrations is critical. This helps finance much needed social spending, infrastructure, and reduce dependence on aid, now subject to its own pressures. It’s also a key pillar in building accountable, effective and respected government institutions.

Achieving this is partly down to good tax design. But it is also largely a matter of building strong tax administrations. This is not easy. A new instrument being developed at the International Monetary Fund with donor support and technical input from a wide range of experts — the Tax Administration Diagnostic Assessment Tool (TADAT) — aims to help.

The tool — which is welcomed in the Communiqué of the First High-Level Meeting of the Global Partnership for Effective Development Co-operation — provides an independent, standardised, evidence-based, quality-assured, all-round assessment of the performance of a tax administration. All of these adjectives are critical, as will become clear. TADAT provides, in effect, a revenue-side analogue to the highly successful Public Expenditure and Financial Accountability (PEFA) framework.

The technical design of TADAT will be completed in the next few months. The tool itself will be posted on the TADAT website for public comment in a few weeks. It has already been piloted in three countries – in Zambia, a low-income economy; high-income Norway; and the emerging economy of South Africa. Countries differ greatly in circumstances, culture and organisational/legal structures, and it is important that the tool be robust enough for use under a wide range of circumstances.

With several more pilots planned, results have been uniformly encouraging so far. All three pilot countries have found the tool extremely helpful. One striking regularity is that administrations often found that they were not performing as impressively in some areas as they had thought — but that they were also not doing as badly in others as they had feared. This is exactly the value of an independent, standardized assessment.

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The TADAT Wheel

TADAT works by evaluating a tax administration in each of nine ‘Performance Outcome Areas’ (POAs), shown in the TADAT ‘wheel.’ This starts with taxpayer registration — making sure all are in the tax net who should be, and that records are up to date – and goes all the way to looking at how tax disputes are handled and whether the tax administration is working transparently. A score is given for each area, with 27 ‘indicators’ forming part of 54 detailed ‘dimensions.’

This is all much simpler than it may sound. Take, for instance, POA 5: Payment of Obligations. Clearly any tax administration wants to make sure that taxpayers pay on time and in full – so one of the two indicators here is timeliness of payments. We can assess this by looking at such things as whether VAT payments are made on time, recording an ‘A’ if the proportion is above 90 percent to ‘D’ if it is below 50 percent.

This exercise doesn’t aim to reach some overall score or country ranking. Nor does it come up with immediate recommendations or advice. This is diagnosis, not prescription.

The idea, rather, is to help countries themselves to identify their own tax administrations’ relative strengths and weaknesses, and develop reform strategies accordingly. TADAT’s standardization and rigid insistence on firm evidence for all assessments will make a major contribution to more effective development co-operation, helping donors and other stakeholders identify and agree on the areas where support is most needed, coordinate their efforts and debate the issues in an agreed framework.

And with repeat assessments, TADAT will give a systematic and structured view of progress being made.

Importantly, TADAT is not only for developing countries. Tax administrations in all countries face the same basic challenges, and indeed the years since the 2008 financial crisis have exposed weaknesses in many tax administrations in advanced economies, and lent renewed urgency to fair and effective tax collection in many more. At the same time, many have been asked to do more with fewer resources. For them too, a hard-nosed and independent assessment of their strengths and weaknesses can provide an invaluable perspective in deciding their own priorities for improvement.

Its implementation is being overseen by a Steering Committee of enthusiastic donors – the European Union, Germany, Japan, Netherlands, Norway, Switzerland, and United Kingdom along with the IMF, World Bank and South African Revenue Service. A technical advisory group provides, well, technical advice. Day-to-day operations are overseen by a small secretariat within, but at arm’s length from, the IMF.

This secretariat will be responsible for developing the tool, and — crucially — for assuring the quality of TADAT assessments.

These assessments will be undertaken by a wide range of organisations: regional development banks, international organisations, consultancy firms and others. A key element of the TADAT philosophy is that assessments should be undertaken only by tax administration experts specifically and extensively trained to do so. Over the next few months, a core goal is to build up a highly professional pool of accredited assessors to undertake the substantial work ahead and ensure that the unique and exciting potential of TADAT is fully realised.


KeenBioMichael Keen is Deputy Director in the Fiscal Affairs Department at the IMF, and Acting Head of the TADAT secretariat. For more information on TADAT, see www.tadat.org or contact secretariat@tadat.org.

Local priorities to achieve effective development

Secretary-General Ban Ki-moon visited MDG Project in Mbalmayo.  He was shown a water purification process and visited a radio station

By Célestine Ketcha Epse Courtés, Mayor of Bagangté Municipality, Cameroon

 
I think that it is crucial to take local priorities as the starting point for development co-operation.

Let me give you a very concrete example of why this is important. As mayor of Bagangté Municipality in Cameroon, I developed a project to provide drinking water to my citizens. With support from the International Association of Francophone Mayors, we built a well and held a large campaign to explain the need for citizens to pay taxes to ensure long-term sustainability of the drinking water system.

This was working well, and access to water was increasing. Then all of a sudden, our central government decided to launch a project in my region to provide free drinking water to citizens. This would cancel out all our efforts! I therefore told the government that we already had a programme to provide my people with water access and that this new project was unnecessary and potentially unsustainable in the long term. I am convinced that charging citizens for a service makes them take better care of the network, and ensures long term sustainability, as maintenance will be easier when people feel that the service belongs to them because they pay for it. I explained that if the central government wanted to invest in my community, their support for access to electricity would be far more useful. This example is a typical one.

Unfortunately, the Ministry refused to change or transform their project to improve the existing network.

Secretary-General Ban Ki-moon visited MDG Project in Mbalmayo.  He was shown a water purification process and visited a radio station

 

In too many countries, local priorities are not taken into account, or not sufficiently known.

As a Champion on Development Co-operation for the global organisation of United Cities and Local Governments, a function shared with eight other mayors from around the world, I aim to increase recognition of local governments’ role in development. I see it as my task to feed lessons from my local reality into international discussions on making development co-operation more effective, coherent and accountable.

Local governments are on the front line of dealing with development challenges, and identifying solutions to them. It is only natural that they take a leading role in the elaboration of development strategies for their areas. A formal consultation mechanism should ensure that these are included in national development strategies. What’s more, local governments and their associations should be supported to have the capacity to engage in this dialogue.

Local government development co-operation as effective solution

Let me get back to my example from Cameroon. Our well project was supported by an association of local governments from abroad, with help from experts from other local governments that knew the kind of services we deliver and how to do this effectively. This helped to make the project a success. This “decentralised development co-operation” had a high degree of ownership and local traction, based on my local government’s priorities.

This kind of co-operation between peers is based on long-term relationships, resulting in trust, transparency and good dialogue between partners. This is very important to achieve sustainability. It can be done in a very cost-effective manner since the co-operation initiatives build on the existing local governments themselves and use existing staff within the municipal organisations. This avoids the need to set up parallel structures that could lack the political leadership of the partner itself.

The cost of not working with local governments

Strengthening local governments is crucial to achieve development goals. A top down approach by central government can result in development policies ill-adapted to local needs and contexts. Development partners such as multilateral organisations, states, and civil society should understand that the cost of not working with local governments may be high, missing local ownership, as seen in the case of the water project in Bagangté.

For a start, their action might not be sustainable when not embedded into a local public policy designed to meet the needs of the citizen. Embedding development priorities in local public policy ensures their continuation and follow up because municipal policy is attached to a concrete workplan with a budget. This bottom up process is very important.

There may also be duplication of work at local and national levels, with a risk of confusion on the mandates of different levels of government. Bypassing local government may also generate distrust among citizens.

I believe that local government development co-operation initiatives can provide national governments with a broad range of experiences to help them respond to issues, challenges or disasters that have effects at the local level. It is crucial that local governments become true partners in national dialogues on development priorities, policies and strategies.

It is also important that reviews of development co-operation commitments such as the Busan commitments give more attention to the role of local governments in national debates on development priorities and implementation. It is good that UCLG is back on the Global Partnership for Effective Development Co-operation’s Steering Committee.

I think UCLG should also explore, within the Global Partnership, how the post-2015 development goals will be implemented. It is in this regard important that more focus is placed on who can help achieve which goals, as opposed to just focusing on what should be achieved.

I hope that together we can ensure that the level of government closest to citizens, becomes more equipped to address the upcoming new set of development goals, which should be in line with our own priorities at the local level.


CourtesBioCélestine Ketcha Epse Courtés is mayor of Bagangté Municipality, Cameroon and Champion on Development Co-operation for the global organisation of United Cities and Local Governments (UCLG). The UCLG Champions are supported by the UCLG Capacity and Institution Building Working Group, which has its secretariat within the International Co-operation Agency of the Association of Netherlands Municipalities (VNG International). For more information contact uclg.cib@vng.nl.

Progressing Aid Effectiveness in the WASH sector

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By Clare Battle, Policy Analyst, Aid Effectiveness & Sector Strengthening, WaterAid

As the 2015 deadline for the Millennium Development Goals (MDGs) approaches, the Water, Sanitation and Hygiene (WASH) sector continues to face serious challenges that are hampering progress. Although the world has met the MDG target for drinking water, 748 million people still lack access to an improved drinking water source, and 2.5 billion people cannot access a basic toilet. Sanitation is among the most off-track of all the MDGs, with the percentage of people with access to improved sanitation barely increasing since the MDGs were agreed 15 years ago.

Yet despite these considerable challenges, ambition is increasing. As negotiations for a new set of post-2015 global development goals move forward, there is growing expectation that universal access to water and sanitation by 2030 will be a key pillar of a new framework to eradicate extreme poverty. Such international commitment would amount to an historic opportunity.

But the step change needed to meet this goal would not only require significantly more investment; it would also require a different way of doing business.

Governments, donors, the private sector and civil society will all have a vital role to play in ensuring sector resources are put to good use. They must strengthen the country processes needed to deliver permanent WASH services that reach everyone. One particularly important area is the effectiveness of development aid. Many developing countries remain heavily dependent on donor funds to deliver WASH services, and effective aid that enhances recipient country governments’ capacity to extend and sustain WASH services is crucial to achieving permanent universal access.

However, evidence suggests that aid to the WASH sector is not currently as effective as it could be. Fragmentation remains a challenge, and donor commitment to strengthening national institutions and addressing national priorities is sometimes trumped by desire to maximise short-term impact. Statistics show that project type interventions accounted for 88% of water supply and sanitation aid in 2012.

There is therefore an urgent need for the WASH sector to improve its understanding of how aid can optimise progress, and to foster mutual accountability for sector performance. A new report by WaterAid – released last month – is a useful starting point, drawing on previous work both within and beyond the WASH sector. It looks at how the health and education sectors have tackled the challenge of strengthening mutual accountability, with case studies in Ethiopia and Timor Leste providing examples of current practice in the WASH sector.

These studies demonstrate the complexity of development co-operation in the sector. In Ethiopia, the Government has launched its One WASH National Programme (OWNP), with the vision that development partners will align around a unified set of country-owned systems. But despite donors’ broad commitments, there are concerns that headquarter rules and perceptions of risk will limit how far they can align with these policies in practice. In Timor Leste, new Water and Sanitation Information Systems have marked important progress in monitoring WASH sector results, but there are still major technical and political challenges to effectively link monitoring to planning and resource allocation. Both countries also face challenges in increasing transparency and strengthening mutual accountability in the sector.

WaterAid’s report aims to support the sector in addressing such issues. It proposes a series of common practice and performance measures that capture the most important facets of effective WASH aid. It also explores the types of institutional arrangements that could be used to monitor practice. This provides the first step towards a global framework that can introduce greater scrutiny and mutual accountability into development co-operation in the WASH sector.

wateraidquoteWe must ensure that the WASH sector’s work to strengthen mutual accountability is closely linked with global efforts to improve the effectiveness of development cooperation.

Over the coming months WaterAid will work closely with other members of the Sanitation and Water for All partnership (SWA) to increase our understanding of current practice in aid to the WASH sector, and to develop a bold roadmap to make it more effective. But the Global Partnership for Effective Development Co-operation also has an important role to play in ensuring development resources are translated into improvements in sector performance. There is clear evidence that momentum created by global agreements such as the Paris Declaration and Busan Partnership Agreement (and their associated monitoring processes) can drive progress and improve the effectiveness of development co-operation among WASH sector actors. A globally coordinated dialogue that maintains momentum around these principles is therefore invaluable. The WASH sector also has much to learn from initiatives to strengthen country processes in other sectors, such as health and education, as well as much to contribute from its own experiences. The Global Partnership can play a unique role in facilitating such dialogue and exchange by doing more to reach out to sector actors, and using their experience and expertise to strengthen the Partnership’s own work.

We must ensure that the WASH sector’s work to strengthen mutual accountability is closely linked with global efforts to improve the effectiveness of development cooperation. Only then can we successfully catalyse the step-change in performance needed to realise our ambition of sanitation and water for all.


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Clare Battle is a Policy Analyst at WaterAid, an international charity that transforms lives by improving access to safe water, hygiene and sanitation (WASH). Her role includes leading WaterAid’s work to improve aid effectiveness and strengthen country processes in the WASH sector.

Using domestic revenue to build democracy

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By Peter Moors, Director General for Belgian Development Cooperation and Humanitarian Aid

 
Revenue authorities are central to building viable and accountable democracies. This idea is gaining traction in sub-Saharan Africa. Governments are recognising that social services and infrastructure will increasingly have to be financed with domestic revenue. Reinforcing the tax system in order to raise this revenue is central to strengthening the state and fostering good governance. A transparent and efficient tax system simultaneously bolsters intra-societal relationships and the relationship between citizens and the state.

Belgium believes that international assistance for domestic resource mobilisation is an important catalyst for broader governance reforms and development.

Domestic resource mobilisation is crucial in building sustainable states, representing an excellent investment for the development community. It is a vital avenue to finance human development and recovery and can provide an eventual exit from aid dependency. This vision was widely shared at a focus session that Belgium co-organised with Germany and the Effective Institutions Platform at the first High-Level Meeting of the Global Partnership for Effective Development Co-operation in Mexico earlier this year.

As the 2014 OECD Fragile States report points out, mobilising revenue in fragile states is a key element of a functioning civil service and robust state-society relations. It should be seen as a vital process whose positive side effects for society and stability are at least as important as the financial outcome itself. In many fragile countries, however, revenue authorities must be (re-)built from scratch. In this regard, Belgium is offering assistance to the Burundian authorities.

'Back To School' Programme in BurundiOfficial Development Aid for building tax systems can yield impressive returns on investment. The case of Burundi clearly demonstrates how effective revenue reforms can transform a developing country’s fiscal position, increasing country ownership.

Burundi, like many other fragile developing countries, has not yet been able to collect sufficient tax revenues to finance the necessary services and public goods to help the country meet the Millennium Development Goals. In 2009, however, the Burundian government began taking measures to improve public financial management in the face of out-of date legislation, weak governance structures, excessive bureaucracy and opacity over organisational roles and low skill levels. These efforts included a tax revenue modernisation programme and the creation of the Office Burundais des Recettes (OBR – Burundi Revenue Authority).

The OBR’s initial goal to improve the proportion of tax revenue contributions to GDP by 1% before 2016 was already achieved by 2011. That year, the OBR collected tax revenue that was nearly 60% higher than in 2009 – the year before it was set up – and one-third higher in real terms. By 2012, Burundi almost doubled its domestic revenues in comparison with the base year of 2009. In that year taxes collected by the OBR rose to BIF527 billion (US$350m), 75% more than in 2009, and the contribution of tax revenues to GDP was 16.7% against 13.8% in 2009. By 2013, the OBR was the most improved revenue administration in East Africa, having a score of 16.4 on the East African Bribery Index, down from 35.7 the previous year. This is a clear indicator that the OBR integrity policy is producing results.

Although the OBR has made very good progress in its brief five-year history, establishing a fully functioning revenue authority is a long-term project.

Burundi’s government is now generating a great deal more revenue from domestic sources, but there are insufficient domestic resources or external funding for the massive infrastructural development and expansion of public services required to consolidate the relative stability experienced since 2005. Burundi’s tax base remains narrow and for many years, fiscal revenues have formed just 20% of GDP, compared to an average of 45% in OECD countries. Annual GDP growth of around 4% is half of what the country needs to make real headway towards achieving its Poverty Reduction Strategy and Vision 2025. Until there is a significant rise in GDP per capita in Burundi, tax revenues will unfortunately be insufficient to finance the country’s development priorities.

In order to increase the quality of support, the political economy of tax reforms (in particular ownership and political will) has to be taken into account. Tax reforms should also be embedded in broader governance reforms. They should involve not only tax administrations, but also Ministries of Finance, sub-national governments (and the relationship between the national and regional levels), Parliaments and civil society, in order to increase accountability. The private sector, including informal businesses, is also an important actor.

Funding these reforms is a complicated affair, involving multiple donors. The UK’s Department for International Development (DfID) was the OBR’s inaugural donor in 2009, encouraged by its successful support of the Rwanda Revenue Authority (RRA). When it closed its office in Burundi in 2011, the administration of DfID’s funds – and the task of acquiring new donor support – was taken over by TradeMark East Africa (TMEA), a regional programme which works closely with East African Community institutions, national governments, the private sector and civil society organisations. It seeks to promote economic growth and poverty reduction through increased trade. The TMEA Burundi programme runs from 2010 until 2016. Belgium has provided funds through delegated co-operation and will also offer direct assistance to the OBR from mid-2015 through the Belgian Development Agency (BTC).

Official Development Aid for building tax systems can yield impressive returns on investment. The case of Burundi clearly demonstrates how effective revenue reforms can transform a developing country’s fiscal position, increasing country ownership.


Moors%20-%20A%20day%20in%20the%20life%20-%2028.03.2008Peter Moors is Director General for Development Cooperation and Humanitarian Aid in Belgium’s MFA since 2007. A career diplomat, he was Ambassador to Athens and Deputy Chief of Staff of the Prime Minister. Prior to that, he served at the Embassies in Prague and Rabat and the Permanent Representation with the European Union.

Reinventing foreign aid: send us your views

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By Pierre Jacquet, President of the Global Development Network

 

Official Development Assistance (ODA) has long been an important resource for development. But despite its long history and the lessons learned, its current definition, measurement and operation hinder donors from building a convincing narrative and seriously limit its effectiveness.

This very timely topic is much in need of fresh thinking.

That is why the Bill & Melinda Gates Foundation and the Global Development Network have partnered to launch the Next Horizons global essay competition designed to generate innovative ideas on the future of development assistance.

In the hope of inspiring reactions and innovative essays, let me provocatively claim that the aid system has remained trapped in a mostly solidarity-driven paradigm, in which spending more taxpayers’ money for development is dictated not by impact but by a sort of beauty contest among donors against a background of political pressure from beneficiaries to get more. The intrinsic tension between a duty of international solidarity and an imperative of effectiveness has of course been recognised, and the past decade has witnessed efforts to build aid and development effectiveness, notably through the Paris, Accra and Busan declarations. However, these policy prescriptions have paid insufficient regard to the framework of incentives directing donors’ and recipients’ behaviours.

Recognising this flaw, some critics have jumped to the conclusion that aid is wasted and that the system should be dismantled. We believe, to the contrary, that the aid system needs to be modernised and strengthened, and that a new narrative and a new measurement system are urgently needed, in line with the evolution of the world economy and of public policies, and with the emerging United Nations post-2015 development agenda.

A few themes may merit special attention. First, the current challenges of the world economy and post-2015 discussions make the dangers of working in silos clearer than ever. Yet we still see uncoordinated approaches from various actors (governments, private sector, NGOs, international organisations, foundations), or action targeted to individual sectors that ignores interaction between sectors. Food, health, infrastructures, water and energy are all deeply connected. More than ever, the role of aid should not be to “do” things through financing them, but to get them done by leveraging and catalysing other resources and energies in innovative ways. This resonates with the work of the Global Partnership for Effective Development Co-operation, which aims to connect the various players and build new forms of development partnership between governments, civil society, private sector, international organisations and foundations.

Second, relevant and contextualised knowledge is needed to identify and understand interactions and synergies, to act effectively and to address specific problems. However, the production and dissemination of knowledge is still concentrated in developed countries’ premier research centres and universities.

GDNquote1More development assistance should go towards helping local researchers, so that they can produce local knowledge with global credibility to inform the development debate and policy. This is the mission of the Global Development Network.

We must dare to leave the illusory comfort of concrete and measurable achievements and enter the murky world of people and processes – with the long term objective of empowerment. This clearly challenges the current approach to aid effectiveness, and inviting new methods of measuring results. The present essay competition is an opportunity for scholars the world over to contribute their suggestions. The debate on aid effectiveness should not be left to donors alone.

Third, notwithstanding provider countries’ repeated promises of meeting the 0.7% target for aid as a percentage of their gross national income, the years and possibly decades ahead will be those of tight budget constraints for public policies in most donor countries. This constraint should be transformed into an opportunity. New and imaginative means must found to leverage taxpayers’ money, echoing the role of aid as a catalyst already mentioned. This requires new competences for donors – understanding market failures and working out how aid can address them; and analysing and understand risk, so as to crowd-in, rather than crowd-out, the private sector, without piling-up bad risks on their balance sheets. None of this means that aid should no longer be an expression of international solidarity. But solidarity must be combined with effectiveness to make things happen that would not otherwise take place and that effectively contribute to development.

On these and other issues, we want to hear your voices and ideas to submit your 5,000 word entry in the GDN Next Horizons Essay Contest 2014 before the deadline of September 15, 2014.


JacquetbioPierre Jacquet is the President of the Global Development Network (GDN). He was formerly Chief Economist (2002-2012) and Executive Director in charge of strategy (2002-2010) of the French Development Agency (AFD). From 1995 to 2012, he was also Chairman of the Department of Economics and Social Sciences of the French Graduate Engineering School Ecole Nationale des Ponts et Chaussées. Preceding AFD, he was Deputy Director of the French Institute on International Relations (IFRI), where he was responsible for the economic program and was Chief Editor of IFRI’s quarterly review Politique Etrangère.

Time to make sure young people help to rewrite the rules of development

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By Mark Nowottny, Policy and Practice Director, Restless Development

 
It’s not always immediately obvious why young people should care about effective development co-operation. Even for those in development circles, it has been the inclusive and broad-based process of shaping the next Sustainable Development Goals (SDGs) – the “whatof development – that has perhaps most captured the imagination.

But there’s a provocative argument going around. It goes something like this: over past months, the development community has been transfixed with and channelled its energy into shaping the SDGs, with each actor lobbying hard for specific causes like gender, disability, or inequality. But now that the shape of the Goals is starting to emerge in the latest results from the Open Working Group, it’s looking possible that history will judge the biggest changes to have come not in what the world wants by way of development, but on how it delivers it.

There are a number of concurrent processes including the Global Partnership for Effective Development Co-operation (GPEDC), the UN Development Co-operation Forum (UNDCF) and the Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF). That’s a whole lot of letters – 16 to be precise. Still, things have been moving along swiftly beneath the impenetrable acronyms, albeit without the same visibility afforded to the post-2015 process. Ask most civil society groups about these processes and they might tell you the same thing: the most important, and as yet unanswered, question is how to make sure that development financing from the private sector is underpinned by strong accountability frameworks and human rights principles. Put this together with other radical shifts in the development co-operation landscape – not least the emergence of the BRICS’ New Development Bank last month – and there are plenty of reasons why young people should be focusing their energies as much on effective development co-operation as they are on the new global goals.

And youth are indeed getting vocal. In April this year, Restless Development, the youth-led development agency putting young people at the forefront of development, brought a delegation of seven young global leaders to the Global Partnership High Level Meeting in Mexico. There, they shared key messages and asks with decision-makers around youth participation, summarised in a blog we wrote at the time. When the Global Partnership Steering Committee Co-Chairs rotated in July, our same delegates called on the new Co-Chairs to understand youth as leaders (not just partners or beneficiaries), to give youth a leadership role in the governance of the Global Partnership, and to give them a structured role in monitoring the commitments made by governments through the Global Partnership. Most recently this last August 7 and 8, the CSO Partnership for Development Effectiveness (CPDE, the leading civil society platform) hosted their first ever global youth meeting in Brussels to plot what structured youth engagement might look like.

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The new Global Partnership Co-Chairs, perhaps more than anyone else, have an opportunity to recast the role of youth in writing the new rules of development.

 

So, collectively, what could we now do to make sure that young people become systematically involved in rewriting the rules of development?

First, Those charged with the governance of the GPEDC, UNDCF and ICESDF need to hardwire permanent youth participation into the way they work. This could involve creating a youth sub- or shadow committee, giving young people a central role in organising events and meetings, making funding available for youth delegates to take part in meetings, and communicating with a growing constituency of interested young people all year round and not just when major summits happen.

Second, the GPEDC, UNDCF and ICESDF need to co-ordinate on how they’re going to open up to and actively reach out to youth. Even the most interested young people are at risk of drowning in alphabet soup. They want to get to grips with the issues, the power relationships, and changing the world for the better rather than spending limited time understanding the peculiarities of bureaucracies and getting their foot in the door of three separate and overly complex intergovernmental processes.

Finally, between them, youth and civil society need to build a platform or mechanism fit for purpose and able to navigate and consolidate the diverse views of young people. Young people have multiple identities and ideologies, and they need spaces to work through these if they’re to form powerful shared positions where they do have common cause. In Mexico’s High-Level Meeting, different delegations from youth and civil society rarely strategised enough together. The CSO Partnership for Development Effectiveness remains an option for convening these different actors under one platform, but the successful experience of the Major Group of Children and Youth reminds us that youth are actually often highly efficient at organising themselves when given the tiniest space and support.

The new Global Partnership Co-Chairs, perhaps more than anyone else, have an opportunity to recast the role of youth in writing the new rules of development. But civil society, youth and those running concurrent intergovernmental processes must all play their part.


NowottnyMark Nowottny joined Restless Development, the youth-led development agency putting young people at the heart of development, as their new Policy and Practice Director in April 2014. Previously, Mark was Head of Strategy at CIVICUS: World Alliance for Citizen Participation, the global civil society alliance based in Johannesburg. You can follow him on Twitter: @MarkNowottny @RestlessDev.

Why partnering with the private sector is key to inclusive growth

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By Lakshmi Venkatachalam, Vice-President of Private Sector and Cofinancing Operations, Asian Development Bank

 
Over the past couple of decades, no one can deny that the Asia and the Pacific region has represented a remarkable success story. Absolute poverty levels have fallen significantly and the region is on course to achieve a number of Millennium Development Goals (MDGs).

But more than 1.6 billion people in the region continue to live on less than USD 2 a day and remain vulnerable to shocks — whether economic or environmental. The region is also confronting widening inequalities and the challenge of enabling a decent quality of life.

A strong need remains for both dedicated knowledge support and for financing to address the region’s social and infrastructure gaps, including urgent measures to address climate change.

Over the past few years, policymakers and development finance institutions (DFIs) have increasingly looked to the private sector to help meet these financing needs. In the right investment climate, the private sector can support the inclusive and environmentally sustainable growth that is at the heart of the global development agenda.

A key contribution of the private sector is in promoting economic growth, which it does through investments, knowledge transfer, and enhanced productivity. By creating new markets, fostering competition, and making investments, the private sector helps allocate resources productively and efficiently, improving prospects for economic growth. Economic growth generates resources that can be used for future investment as well as social development.

According to the World Bank, the private sector is the source of nearly 90% of the world’s jobs. So by providing direct employment, as well as finance to the sectors and geographic regions where it is most needed, the private sector promotes not just growth — it promotes inclusive growth.

The private sector also helps to boost living standards. This extends beyond extreme poverty as captured in the MDGs to areas such as the availability and quality of goods and services such as housing, infrastructure, health, and education. In this context, the private sector also plays a critical role in improving service delivery through public-private partnerships. These are particularly relevant in the case of infrastructure, as they allow for risk sharing, and are benefitting from improved institutional capacity and clearer legal and regulatory frameworks.

The private sector can also promote the adoption and/or retrofitting of environment-friendly technologies. This is valuable in the face of climate change, which can adversely impact many critical development goals such as food security, health, and water. The largest mitigation opportunities, especially for energy efficiency, remain in middle income countries.

Lastly, the private sector is a reliable source of revenue for government operations through its contributions to taxes and duties.

Given these advantages, it is not surprising that DFIs have come together relatively quickly to agree on a core set of principles that would guide support for private sector initiatives. These include commercial sustainability, promotion of high standards and additionality – that is, the extent to which a new input or action can add to already existing ones. More importantly, the private sector itself, not least due to the fall-out from the global financial crisis, has begun to reexamine its role in promoting economic growth as well as its responsibility to society. It is therefore increasingly open to engagement on these issues, particularly with DFIs.

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Asia and the Pacific’s financing needs are indeed daunting. We, the multilateral development banks, need to engage the private sector on all fronts to an even greater extent than we currently do, to leverage both finance and knowledge.

The Asian Development Bank (ADB) has long recognised the private sector as a key driver of change in attaining its three long-term strategic agendas of inclusive growth, environmentally sustainable growth, and regional integration. In line with our commitment to transparency, ADB publishes the annual Development Effectiveness Review, with 89 performance indicators to assess progress in implementing these priorities. The dedicated 2013 private sector operations Development Effectiveness Report was published on July 25th.

With $1.8 billion approved in 2013, our Private Sector Operations Department provides comprehensive financial assistance including loans, equity investments, guarantees, cofinancing and technical assistance. Our clients are private companies, banks and financial institutions, investment funds and state-owned enterprises. All our private sector interventions are aimed at maximising development impact. In doing so, our aim is to supplement or complement commercial finance, particularly in areas where perceived or persistent market gaps are inhibiting private investments.

What can ADB contribute to effective development co-operation with the private sector? Firstly, we are an Asian institution with a long and stable relationship with developing countries in the region. Based on the foundation of our strong infrastructure and financial sector exposure, we are increasingly entering sectors where we see promising potential for sustainable inclusive business models, such as agribusiness, education and health. Our strength lies in the synergies we derive from our sovereign operations in the core areas of policy and regulatory support.

Our private sector portfolio has more than doubled since 2006, totaling $6,219 million in 2013, comprising 155 accounts and 140 projects in 20 countries. Aligned with ADB’s core specialisations and sector priorities across individual member countries, 96% of the portfolio supports infrastructure, environment, and finance sector development.

Asia and the Pacific’s financing needs are indeed daunting. We, the multilateral development banks, need to engage the private sector on all fronts to an even greater extent than we currently do, to leverage both finance and knowledge.


VenkatachalamBio

Lakshmi Venkatachalam is the Vice-President (Private Sector and Cofinancing Operations) of Asian Development Bank since June 2010, leading ADB’s private sector initiatives and cofinancing activities. Based on the Midterm Review of its Strategy 2020, ADB’s activities in private sector development and private sector operations are targeted to reach 50% of its annual operations by 2020.

Civil Society’s Campaign for Effective Development: the Istanbul Principles

CPDEpic

By Patricia Blankson Akakpo, CSO Partnership for Development Effectiveness

How has civil society adjusted to the shift in global dialogue from aid to development effectiveness? Civil society has been at the forefront of campaigning for effective development, while still recognising that aid has the potential to help eliminate the root causes, as well as the symptoms of poverty, inequality and marginalisation.

Under the banner of the CSO Partnership for Development Effectiveness (CPDE), civil society has committed to the three-year programme “Civil Society Continuing Campaign for Effective Development.”

The programme, announced at the Global Partnership for Effective Development Co-operation’s High-Level Meeting in Mexico in April 2014, aims to make several concrete contributions to global development. At the end of the three years, CSOs in at least 50 countries should be able to claim their rights in multi-stakeholder development effectiveness policy arenas, as well as working on their own effectiveness. By then, CSO advocacy positions should also be clearly influencing global development and development co-operation policies. Finally, multi-stakeholder initiatives should be advancing an enabling environment for CSOs at relevant national, sub-regional, regional and global policy arenas.

Looking at our own effectiveness

In the two years since Busan, CSOs around the world have been actively promoting the Istanbul Principles for CSO Development Effectiveness and the International Framework for CSO Development Effectiveness. Hundreds of CSOs at the country level have developed initiatives to assess and improve their practice to make sure development has more positive effects on the lives of poor and marginalised people.

CPDEquoteDespite strong evidence of shrinking spaces for CSOs as independent development actors, stories of good development practices attest to the commitment of CSOs to work in ways that are consistent with the principles of development effectiveness.

For example, a “Training of Trainers” workshop in Johannesburg, South Africa involved 45 trainers from around the world to develop regional plans and advance development effectiveness in their region. Codes of conduct, workshops and learning tools have been adapted to country contexts to increase awareness of the Principles and their practical implications. This work includes promotion of the Principles with official aid provider agencies and partner country governments; workshops to strengthen Human Rights-Based Approaches to development co-operation; promoting gender equality as an essential condition for CSO development effectiveness; and developing tools and workshops to strengthen understanding of development relationships that reflect equitable partnerships. Finally, CSO are working to be more transparent and fully accountable for their development efforts.

Reflecting on emerging results

These efforts are starting to show results. For instance, the Istanbul Principles helped grassroots communities in Cameroon to participate in local development plans. They also helped establish five citizens’ councils across the country to give the people a voice in local governance.

In Georgia last year, a Memorandum of Understanding (MOU) was signed between local CSOs and the Parliament, officially endorsing the Istanbul Principles. The MOU institutionalised policy dialogue based on mutual respect, trust and fair co-operation between legislative bodies and CSOs —reflecting the beginnings of equitable partnerships and solidarity.

In Asia, CSOs in Cambodia developed their own Code of Ethical Principles and Minimum Standards for NGOs to support their work on their own organisational practices. Cambodian CSOs also played a pivotal role in developing their own self-regulation system to practice transparency and accountability.

CSOs’ commitment to maximising their development impact is starting to bear fruit, as shown by some of the many examples of CSOs working on their own effectiveness and accountability as independent development actors.

Continuing the Campaign

The fourth High-Level Forum on Aid Effectiveness held in Busan in 2011 was a breakthrough in its acknowledgement of the link between effective CSO work and the conditions that enable them to maximise their contributions to development. The policies and practices of governments, donors and the private sector all affect and shape CSOs’ capacity to engage in development practices. Progress in realising effective development, therefore, depends not only on CSO initiatives but also equality among all stakeholders involved in shaping the global development architecture.

Despite strong evidence of shrinking spaces for CSOs as independent development actors, stories of good development practices attest to the commitment of CSOs to work in ways that are consistent with the principles of development effectiveness. Clearly, challenges remain and more progress is needed, which is why the CSO Partnership is more committed than ever to continue its campaign for effective development.


AkakpoBioPatricia Blankson Akakpo is one of the CPDE Co-Chairs and Senior Programme Officer/Head of Secretariat for the Network for Women’s Rights in Ghana (NETRIGHT). She has a Master’s degree in development studies from The Hague, Netherlands, and more than fifteen years of experience in the field of gender and development, human resource management, labour relations and programme management.

Moving forward for Egypt’s development

EgyptMain

By Ashraf El-Araby, Egyptian Minister of Planning, Follow-up, and Administrative Reform

 
In less than three years Egypt has witnessed two revolutions. Masses took to the streets in January 2011 and again on 30 June, 2013, demanding a better, more democratic future. Our transitional period has not been easy, but we continue to take steady steps towards democracy. The amended Constitution was approved earlier this year, President Abdel-Fatah El-Sisi was recently sworn in as the new Egyptian President, and soon Egyptians will visit the ballot box once again to elect their new parliament. Yet, despite the positive developments witnessed after the January Revolution, it is no secret that the political instability delivered a strong blow to the economy and the development process.

Economic development in the past decades has led to Egypt’s graduation to the status of a middle-income country. Yet, like other countries that fall in the lower bracket of this middle-income group, we continue to suffer high levels of poverty, unemployment, among many other development challenges. Despite the relatively high growth rates witnessed in Egypt in the years preceding the 2011 revolution – reaching a high of 7% and an average of 5.6% from 2007 to 2010 – social indicators were steadily worsening. Unfortunately, the high levels of economic growth have not been equitable. There were and still are great disparities among the Egyptian population. The economic downturn following the 2011 revolution further complicated the economic reality and, sadly, the most vulnerable segments of society were hit the hardest.

In an effort to counter this deterioration, and in response to the main demand of the Egyptian people, social justice, the government has been actively shifting its policies towards inclusiveness since January 2011. The new Strategic Framework for Economic and Social Development 2012-2022, which guides all our planning efforts, is based on the principle of inclusiveness. The Framework itself was inclusively designed through a series of public and societal dialogues with different stakeholders, with notable participation from the private sector and civil society. It is worth highlighting that the Framework, which was designed by the Ministry of Planning in co-operation with the Japan International Cooperation Agency (JICA), also incorporates the principles of effective development co-operation. It includes clear guidelines to: firstly, set a strong Monitoring and Evaluation scheme in key ministries; secondly, improve domestic accountability; thirdly, support the engagement of the private sector and civil society as partners in development; and fourthly, reinforce Egypt’s South-South co-operation.

We are proud to continue striving to realise our development goals despite the many impediments. The challenges are huge, and the aspirations are even higher, and the Government certainly needs to work in tandem with all its development partners to succeed. We co-ordinate with our national partners from the civil society and private sector. We also work closely with the international community in order to speed up our development process.

The Egyptian Government has been an active player in the aid effectiveness dialogue, participating in Paris, Accra and Busan high-level fora. We supported the Paris Declaration, Accra Agenda, and the Busan Partnership, and we joined the international development community in Mexico in April 2014 to reaffirm our support to the Global Partnership for Effective Development Co-operation. We also took part in the Paris monitoring surveys, and more recently the Global Partnership monitoring survey. While there is more work yet to be accomplished, the surveys nevertheless showed progress in adhering to the principles of aid effectiveness. We believe that development co-operation is a two-way street, and we are working hard to improve different areas of aid management.

To consolidate its efforts on this front, the Egyptian Government, in co-operation with its development partners, drafted the Cairo Agenda for Action. The Agenda was drafted after Accra in an effort to translate aid effectiveness principles into policies. The Ministry of International Co-operation is currently pursuing the Agenda and plans to update it in light of recent developments.

For more than 40 years we have worked hand in hand with our partners in the international community to better the livelihoods of Egyptian citizens. In order to move ahead we need not only the serious engagement of all national stakeholders, but also the support of our development partners.


20140415_110302 - Copy (1)Ashraf El-Araby is former Egyptian Minister of International Cooperation. He headed the Egyptian delegation to the first High-Level Meeting of the Global Partnership for Effective Development Co-operation, which took place in Mexico City, Mexico, on 15-16 April, 2014. Dr. El-Araby is currently the Egyptian Minister of Planning, Follow-up, and Administrative Reform.

Why open data matters for sustainable development post-2015

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By Rachel Rank, Deputy Director of Publish What You Fund

 
Earlier this month, we launched our new campaign Road to 2015: Open Data for Sustainable Development at the United Nations Headquarters.

As with all the work we do, transparency and accountability are at the heart of this new campaign. They also feature heavily in the principles of the Global Partnership for Effective Development Co-operation.

But while we’ve spoken a fair bit about our expectations for the Global Partnership, this was the first campaign we have launched at the UN. We did so because it was there that, earlier this year, a panel of world leaders proposed a highly anticipated framework for stamping out extreme poverty by 2030 – the Sustainable Development Goals (SDGs).

The recommendations are a dramatic shift from the Millennium Development Goals (MDGs), which expire at the end of 2015. They call for a ‘data and information revolution’ and put transparency and accountability at the heart of this new framework.

A lot has changed since the MDGs were agreed. We have faced a global financial crisis and increasing political instability. This has made transparency, public accountability and citizen engagement in the post-2015 agenda even more critical. Poor economic growth is a reason to prioritise transparent and accountable financing for sustainable development.

The world of development finance is also changing. Top-down development, with donors telling recipients what to do, is twentieth-century thinking. We are at a critical point in the push for open data.

pwyfquoteOpen data has the power to reduce corruption, improve decision-making and the allocation of resources, empower citizens and support good governance – all prerequisites for encouraging local ownership and responsibility and, ultimately, sustainable development.

Partner countries are better equipped now, more than ever, to take full ownership of their development agenda. They have asked for more information about development co-operation spending so they can better manage their own resources, and ensure the delivery of results.

Our Road to 2015 campaign will ensure that the focus on transparency remains throughout the new agenda-setting process. We believe this process should start with better information about aid for two reasons.

Firstly, the new goals will be global targets. Responsibility for delivery lies with every nation (as well as with the collective global community), not just with governments of developing countries. It is essential that aid providers — both bilateral and multilateral — practice what they preach in terms of good governance, transparency, accountability and citizen participation.

Secondly, there is already a precedent for transparent publication of aid data, in the form of the International Aid Transparency Initiative (IATI). This is the only existing system for making current information about aid easily accessible to everyone, in a comparable format that is free to access, use and re-use.

At the Busan High-Level Forum on Aid Effectiveness in 2011 the international development community, including the world’s largest donors, promised to fully implement by December 2015 a common standard for publishing aid information, which includes IATI and OECD-DAC reporting systems. While some are now publishing this data, efforts remain uneven.

IATI is the only standard that satisfies our four pillars of transparent aid, ensuring data is published in a manner that is timely, comprehensive, accessible and comparable. These aspects are all crucial, as only then can donor aid spending be mapped and properly aligned with the partner country’s domestic budget.

Access to information can potentially transform the relationship not only between citizens and governments, but also between donors and recipients. Open data has the power to reduce corruption, improve decision-making and the allocation of resources, empower citizens and support good governance – all prerequisites for encouraging local ownership and responsibility and, ultimately, sustainable development.

Making aid more effective is a crucial part of the UN’s goal to end extreme poverty by 2030, as is good governance and the data and information revolution. As debates on the next set of SDGs and the role of the Global Partnership come to a head, transparency must be an essential part of all goals, giving citizens more information and more say in their own lives.

The Road to 2015 must be paved with open data, not just good intentions.


RankbioRachel Rank is Deputy Director of Publish What You Fund, the Global Campaign for Aid Transparency. Her role includes developing and managing our research and monitoring products, particularly the annual Aid Transparency Index, and establishing partnerships with other organisations focusing on transparency, accountability and access to information.

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