Global financing summit opens in Ethiopia

Global leaders are meeting from Monday in the Ethiopian capital of Addis Ababa to find  ways to pay for the ambitious and costly sustainable development goals (SDGs) which will take over from the Millennium Development Goals upon a lapse at the end of this year.

Key in the agenda is ending global poverty and achieving food security in every country of the globe by 2030. The UN estimates that to achieve these goals will require as much as $11.5 trillion a year or up to $172.5 trillion over the 15 year time frame.

Domestic financing

However the financing of the SDGs as envisaged in the draft document of the conference will be largely left to domestic borrowing meaning that governments will have to further squeeze the domestic markets to finance the development goals.

Domestic investment accounted for a third of all funding currently available for developing countries in 2012, while foreign aid made up just 0.4% of the total. “Domestic resources that developing countries raise themselves will be the largest single resource for funding development in most countries,” said Jesse Griffiths, director of European Network on Debt and Development (Eurodad).

However with the global crunch experienced in countries such as Greece and the market volatility in China are some of the indicators leaders at the Summit will have to take into consideration as they discuss the SDG financing formula.

Somali economy

Somalia, whose economy largely depends on external funding and diaspora remittances will equally have to strive to develop its local economy in order to meet these development goals. Political stability and security are critical components in Somalia’s effort to exploring its natural resources which could provide the much needed capital to lift its economy. The development of a robust tax collection system in Somalia is also an imperative to ensure government can be able to develop the economy.

Illicit financial flows

Illicit financial flows coupled with aggressive tax avoidance, repatriation of profits and debt repayments are depriving developing nations of much-needed resource. A report by the tax network Eurodad indicates that the poorest countries have lost just over $2 for every $1 gained since 2008, with illicit financial flows, profits taken out by foreign companies, debt repayments and lending to rich countries responsible for most of the outflow.

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