The European Union and the United Nations Development Programme held a peer learning workshop in Brussels November 5–6, 2019, which gathered 58 representatives from 18 countries (Africa: Benin, Burkina Faso, Cameroon, Ghana, Liberia, Mozambique, Namibia, Nigeria, Rwanda, South Africa and Uganda. Asia-Pacific: Bangladesh, Indonesia, Kyrgyzstan, the Solomon Islands, Timor-Leste and Vietnam.), as well as from the International Monetary Fund and the World Bank. The objectives of the workshop were to enable development and finance officials to learn from each other about development finance assessments (DFAs), as well as about steps taken in establishing integrated national financing frameworks (INFFs) for delivering on their national development priorities and the Sustainable Development Goals (SDGs).
Governments are leading the way in implementing the Addis Ababa Action Agenda, which provides a global framework for financing the 2030 Agenda, with countries committed to adopting INFFs that support nationally owned sustainable development strategies.
Many lessons have been learned and best practices established in countries implementing DFAs or undertaking other institutional and policy reforms. The workshop served as an opportunity for peer learning and brought to light new areas to explore with partners, as participant countries presented their experiences and challenges in INFF- and DFA-related components and processes.
Workshop participants discussed methodology and shared experiences
During the two-day workshop, DFAs were discussed as a valuable tool in the inception phase of an INFF, drawing together data, various assessment and diagnostics, and promoting dialogue around INFF roadmaps. Participants also shared a number of innovations around financing strategies, costing and domestic resource mobilisation, as well as on aligning national budgets and private capital with the SDGs. Additionally, the United Nations Department of Economic and Social Affairs presented methodological guidance carried out under the auspices of the Inter-agency Task Force on Financing for Development, and the International Monetary Fund shared information on the various tools it can offer to countries within the framework of an INFF.
As a next step, a number of governments committed to designing INFF roadmaps and expressed a demand for further support, in terms of both methodological guidance and technical support at the country level. Government representatives welcomed further opportunities for peer learning on INFFs.
Formal INFF processes have since been launched in Cabo Verde, Kyrgyzstan and Indonesia, with many more countries taking national processes forward in the second half of 2020.
Government representatives presented their strategies on mobilising resources
In general, the workshop identified the advantages INFFs can bring to countries’ efforts in achieving the 2030 Agenda and their national development plans. Several countries emphasised the importance of comprehensive analytics such as DFAs, and of linking to public finance instruments such as medium-term expenditure frameworks on the road to an INFF. Participants noted a need to draw different areas of analysis together and to link with established systems in order to operationalise an INFF. Bringing together and coordinating different stakeholders in a long-term exercise is a key element of an INFF.
Assessments and diagnostics
DFAs are part of the inception phase in the process of operationalising an INFF. They bring together evidence and analysis on what exists, what reforms are underway and what steps can be taken to strengthen the building blocks of an INFF. Under the leadership of a government oversight team and through a process of financing dialogues, DFAs build consensus on priorities and shape an INFF roadmap which outlines steps to be taken to bring together a financing strategy, adapt governance and coordination structures and monitoring frameworks, and identify further needed assessment and diagnostics.
More than 40 countries to date have completed a DFA or are in the process of doing so; another 30–40 countries will embark on the process in the second half of 2020. Timor-Leste used its DFA in the context of a global reform process that will align its national development plan (2011–2030) to the SDGs and aims to implement a comprehensive transformation of public finance (revenue mobilisation, budgeting and planning).
Data collection, benchmarking and stakeholder coordination were key elements in Vietnam’s a successful DFA exercise.
Lessons learned on the costing of SDGs from several countries – including Bangladesh, Benin, Indonesia, Kyrgyzstan, Nigeria and South Africa – show that considerable financial efforts are required to achieve goals in education, health, roads, electricity and other infrastructures; private sector partnership, increased domestic revenues and improved efficiency are critical in this regard.
Financing strategies
Several countries presented initiatives in the area of mobilising public resources.
The Solomon Islands have developed an INFF that ties together the policies governing each type of public and private finance with long-term national development objectives and provides a strategic framework for financing reforms.
Ghana has developed a baseline report that identifies financing gaps and will set up a dashboard to increase transparency in SDG financing. In reporting on its financing gap,
Indonesia described the establishment of an innovative financing instrument, the Green Sukkuk. This Sharia-compliant financing instrument provides finance for renewable energy and environmental projects, among others.
Nigeria announced its intention to raise its value-added tax (VAT) from 5 per cent to 7.5 per cent; this change became effective in January 2020.
Liberia is focusing its taxation reform on so-called ‘discount sectors’ where the ratio of sector tax to gross domestic product (GDP) is significantly below the sector contribution to GDP.
Mozambique has focused on improving the business environment for private sector finance, particularly for the banking sector.
Vietnam reported on its 20-year-old public-private partnership program, which has resulted in some 300 investments in transportation and electricity.
Uganda’s need for private finance is compelling: government spending represents only 20 per cent of GDP and the DFA pointed out a need to focus on blended finance, which will increase private sector engagement.
The Government of Rwanda presented a comprehensive overview of measures aimed at the private sector; these included an enhanced regulatory environment, a guarantee fund for small and medium-sized enterprises, a master plan to develop capital markets and a study to establish blended finance instruments.
These examples of initiatives can benefit from a broader INFF, perspective – for instance, in terms of bringing more coherence across financing policies, considering trade-offs and synergies between financing policies and strategically choosing one financing option over another.