FFD Update: US Delivers on DRM, Verdict Still Out On Data

The Third Conference on Financing for Development has come and gone; country delegates and their leaders, civil society actors, aid organizations, and policy wonks have all returned home. As many have pointed out, however, much work remains to be done if we want to see countries deliver on the outcome document and take significant action towards changing policies to improve development (see Owen Barder’s take on the Addis Ababa Action Agenda here).

As we discussed prior to FFD , the United States government had a major opportunity to make commitments on domestic resource mobilization (DRM) and data. So how did the US government fare in these areas? Short answer: pretty good on DRM, could have been better on data. Here’s why we think so:

DRM

Launched with as much fanfare as can be expected amidst 200+ side events, the Addis Tax Initiative (ATI) made its debut in Addis with specific commitments and a diverse set of partner countries. The Initiative aims to use greater ODA resources to spur increased domestic public finance for national development efforts.

While the name may not quicken the pulse of the development community, there’s a lot to like about the Addis Tax Initiative.

1. Concrete, measurable commitments. The ATI commits to a doubling of ODA for taxation and domestic revenue mobilization efforts by 2020. It directly links these efforts to the attainment of inclusive development and the Sustainable Development Goals. Plus, the Initiative commits to developing and tracking country-specific indicators and targets for revenue collection and tax system performance.
2. DRM means revenues. The ATI notes that its remit is revenues – not resources writ large. The Initiative will focus on (you guessed it) tax, rather than the much wider, vaguer notion of domestic resource mobilization. This is helpful in both defining DRM and clearly delineating where the ATI’s efforts will be directed.
3. No wheel reinvention here. There is explicit recognition of the vast and ongoing work in this area by the IMF, World Bank, and other multilateral development banks. The ATI aims to complement these efforts in substance, approach, and location.
4. Diverse (and numerous) ATI backers. The ATI is accompanied by an impressive list of members. At the time of the launch, 29 countries had joined the Initiative, including 11 developing countries. Eight international organizations, including the World Bank, IMF, Gates Foundation, and African Tax Administration Forum, also expressed their support.

But it’s not all green eyeshades and black ledgers; there’s some red ink as well. Missing from the Addis Tax Initiative are concrete steps on how developed countries will tackle broader areas of illicit financial flows, like multinational company tax avoidance and global tax reform. Increasing domestic resources through additional revenues is only one piece of the development finance puzzle.

As with all of the promises, commitments, and declarations out of Addis, the real test starts now as countries implement these agreements. At least with the Addis Tax Initiative, we have tangible measures by which we can hold the 37 countries and organizations to account.

Data

As anticipated, we saw movement from the United States and others to drive the data revolution forward, but funding commitments fell short and the value added of yet another global partnership seems uncertain.

Funding for three separate World Bank trust funds for different aspects of data was announced, but the USG was missing in the action. There was a new World Bank Trust Fund for Innovations in Development Data aiming to mobilize $100 million for Bank recipient countries over five years; a component of the World Bank’s new Global Financing Facility with $100 million from the Government of Canada for civil registration and vital statistics strengthening; and DFID announcing additional contributions to another, but already in place, World Bank Trust Fund for Statistical Capacity Building. While all of this is certainly welcome, unfortunately, these funds will barely make a dent towards the SDSN-estimated $200 million in annual funding needed to measure against the SDGs. It’s also unclear why three separate World Bank trust funds are needed to support a country’s national statistical system.

On the brighter side, the US government did show up in the announcement of a new Global Partnership for Sustainable Development Data. As part of the Partnership, the United States, along with the governments of Mexico, Belgium, Senegal, and Kenya and several foundations and private sector companies, will work to fill data gaps and invest in the capacity to use and analyze development data. So far, the Partnership has seen commitments from the Hewlett Foundation ($2 million) and the United States government ($3 million) to fund its Secretariat. However, many questions still remain: Who will lead and be a member of the Secretariat? How does the Partnership plan to deliver on its mandate? How does the Partnership fit with the data-related funding already announced and existing statistical partnerships like Paris21? How will a Partnership ensure investments to reduce data gaps and enhance use of data by countries and others align with government policymakers and civil society priorities? Will our proposed data compacts come to life through the Partnership’s efforts? In contrast to DRM, no tangible measures against which to measure progress were announced.

The Addis Ababa Action Agenda and commitments made at FFD sound good. But in the two months leading up to the UN summit on the SDGs, it’s time to get specific on how all of these promises will be translated to development impact.