Financing development: Addis Ababa calling

The finalisation process of a new global development agenda known as Sustainable Development Goals (SDGs) or Post-2015 Development Agenda is now on its peak. This week global leaders are gathering in Addis Ababa, the capital of African country Ethiopia, to seal a deal on financing mechanism of the much-hyped SDGs.
Formally known as Third International Conference on Financing for Development, the Addis Ababa conference is the third of its type. The first conference was held in Monterrey of Mexico in 2002, to discuss new ways to finance global development. The outcome is known as Monterrey Consensus which urged rich countries to contribute 0.7 per cent of their annual Gross National Income (GNI) as aid for the poor countries.  The second conference was held in Doha, the capital of Qatar in 2008 to take a stock on Monterrey Consensus. Seven years later, the third conference in Addis Ababa, scheduled for July 13-16, 2015, is to devise an effective mechanism with concrete commitment for financing the global development agenda of SDGs.
INITIATING SDGS: The year 2015 is the terminal year of the Millennium Development Goals (MDGs) which came into effect in 2000 to bring global development process under a common set of agenda. Having eight goals, divided in 18 targets and 62 indicators, global efforts under MDGs are directed to have less poor people, all children having access to primary education, lower child mortality rate, adequate nutrition and care for mothers of new-born babies, reduction of life-threatening diseases like malaria and HIV/AIDS, empowerment of women and greener world by 2015.
A lot has been achieved in regard to MDGs in the last 15 years while many goals are yet to be realised at a desirable level due to resource constraint and less cooperation among the countries.  Moreover, MDGs doesn't cover a wide range of critical things required to place the development at a sustainable platform.
Against the backdrop, United Nations (UN) has taken an initiative to launch a wider global agenda as a follow-up action of MDGs. Thus the process of SDGs was initiated in 2012 and in the upcoming annual session of the UN General Assembly in September, 2015, the UN member countries will formally launch the SDGs, which has 17 goals and 169 targets, for the next 15 years. The UN member countries will be called upon to spend their resources for ending all forms of poverty, achieving food security, improving nutrition, ensuring inclusive and equitable education, promoting decent works, combating climate changes along with other broad-based goals.
LOOKING FOR FINANCE: It is difficult to set the goals for sustainable development at the global level.  But, it is more difficult to find the answer of the question: who is going to pay for the eradication of global poverty? It is the most fundamental question in the mind of all who are going to Addis Aabab.  
Many believes that there are sufficient resources across the word to utilise for reducing, if not ending, poverty within the next 15 years. It is thus like the classical economic problem of wealth or resource distribution.
To comply with the Monterrey Consensus, developed countries of the world have to spend 0.7 per cent of their national income annually as assistance to poor countries. But, real scenario is far below the target. The latest data, revealed by the Organisation for Economic Co-operation and Development (OECD), shows that development aid flows from rich countries in 2014 increased slightly to US$135.2 billion from $135.1 billion in 2013. But, aid to poor countries, as categorised Least Developed Countries (LDCs), declined from $4452 billion in 2013 to $37.83 billion last year. This clearly shows that poor countries are facing difficulty in get required assistance. OECD Development Assistance Committee (DAC) has 28 countries as its members and these countries are generally considered as rich donor countries.  
Thus, the scenario of aid distributed by the rich countries is not bright at all. In 2014 only five countries - Sweden, Norway, Luxembourg, Denmark and United Kingdom - have complied with 0.7 per cent Aid/GNI ratio. Countries like United States, Japan, Germany and Canada are far below the required level although in quantity they are disbursing higher amount of aid, formally termed as Official Development Assistance (ODA).
Against this backdrop, global gathering in Addis Ababa has to face a huge challenge of ensuring commitment for higher aid and devising mechanism to deliver the commitment. Empirical evidence shows that commitment is not generally a big problem. A lot of commitments have been made by the developed countries in last 50 years to address the issues like global warming or adaptation for climate change. But, against the commitment, delivery in real term is limited, scattered and diverted.

India has already alleged that developed countries are diverting money earmarked for development into funds meant for climate change mitigation. Ahead of Addis Ababa Conference, India said that there is a trend of allocation of ODA towards other things, particularly towards climate finance. Again, they are not giving the fund as committed.  Rich countries in Copenhagen in December 2009 pledged to provide some $100 billion a year by 2020 but developing countries are yet to receive the amount.
Aid diversion is a mechanism through which developed countries disburse regular development aid to specific agenda- or programme-based aid to fulfil their obligation for later ones.  The diversion of aid is to some extent visible in the aid for trade, agreed under the World Trade Organisation (WTO).
In 2013, Bangladesh received some S$902.7 million as aid for trade against the commitment of $1690 million. And in 2012, the country received $867 million against the commitment of $1062 million. Thus disbursement is well below the commitment.
However, even within the disbursed amount, there are some ambiguities as some component of the amount is not meant for trade capacity building directly.
COMMITMENT IS NOT ENOUGH: In the lead-up to the Addis Aababa conference, Multilateral Development Banks (MDBs) and International Monetary Fund (IMF) have announced that they will extend some $400 billion to finance the SDGs. MDBs include African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank and  World Bank Group. This announcement may be encouraging for the gathering in Addis Ababa. But, it is not enough.
In fact, the United Nations unveiled last week an estimation to end hunger of the world's poorest people. It shows that each year the world needs some $267 billion, around 0.3 per cent of the global GDP, to eliminate hunger of the poorest people by 2030. It also says that each poorest people need at least $160 per year to overcome his/her hunger. Thus more than half of the fund announced by MDBs and IMF can be used to fight hunger effectively and it will help to achieve the first target of the second goal of the SDGs. The second goal is: "End hunger, achieve food security and improved nutrition and promote sustainable agriculture." And the first target of the second goal is "end hunger by 2030 and ensure access by all people, in particular the poor and people in vulnerable situations including infants, to safe, nutritious and sufficient food by all year round."
So, making fresh commitments is not enough as it happened many times in the past. Multilateral bodies and rich countries have to come up with an effective mechanism to provide sufficient aid while recipient poor countries have to ensure proper utilisation of aid with good governance.
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