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Africa: Innovative Global Financing

AfricaFocus Bulletin
Jun 8, 2009 (090608)
(Reposted from sources cited below)

Editor's Note

"Innovative financing ... is no longer in the experimental stage. It has already produced over $2 billion dollars in three years. But there is still an enormous need for financing: to ensure primary education for all, improve maternal health, combat hunger and the great pandemics, guarantee environmentally-friendly development, etc. We know that $175 billion is needed every year at the global level to finance climate mitigation policy. We all know that $35 billion is needed to achieve the Millennium Development Goals in the health sector alone." - Bernard Kouchner, Minister of Foreign and European Affairs, France

In the course of his May 28 speech to the Leading Group on Innovative Financing for Development, to be chaired by France over the next year, Kouchner went so far as to pledge support for experimentation with a financial transactions tax, a proposal that was quickly dismissed by French Finance Minister Christine Lagarde. But it is still true that the momentum for new forms of funding, for health, education, and climate change, continues to build, a recognition that financing for such global public goods should not depend on the political fortunes of official aid budgets.

This AfricaFocus Bulletin contains the speech by Minister Kouchner, a press release on the parallel meeting of the High Level Taskforce on Innovative Financing for Health Systems, and excerpts from the conclusions of the Leading Group's ministerial meeting.

For more information:

Leading Group on Innovative Financing for Development (previously called Leading Group on Solidarity Levies to Fund Development) http://www.leadinggroup.org

High Level Taskforce on Innovative International Financing for Health Systems
http://www.internationalhealthpartnership.net/taskforce.html

Stamp Out Poverty: Campaigning for new sources of development finance
http://www.stampoutpoverty.org

Stamp Out Poverty: Financing climate change mitigation and adaptation in developing countries
http://www.stampoutpoverty.org/?lid=10939

For previous AfricaFocus Bulletins on related issues, visit http://www.africafocus.org/aidexp.php

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Sixth ministerial meeting of the Leading Group on Solidarity Levies to Fund Development - Speech by Bernard Kouchner, Minister of Foreign and European Affairs

Paris Conference opening speech by M Kouchner

Paris, 28 May 2009

Leading Group on Innovative Financing for Development http://www.leadinggroup.org/article334.html

(...) We are gathered here because we are deeply concerned about a single question: do we wish to continue to talk indefinitely about the Millennium Development Goals? Or do we wish one day to be able to talk about the Millennium "achievements"?

We are gathered here because we all share the same conviction, which the Secretary-General mentioned in passing: it is possible to change the world by force of will, by unwavering will, and with imagination! Innovative financing has passed its test. It is no longer in the experimental stage. It has already produced over $2 billion dollars in three years.

But there is still an enormous need for financing: to ensure primary education for all, improve maternal health, combat hunger and the great pandemics, guarantee environmentally-friendly development, etc. We know that $175 billion is needed every year at the global level to finance climate mitigation policy. We all know that $35 billion is needed to achieve the Millennium Development Goals in the health sector alone.

These needs are not met by conventional financing. Times are difficult, as we know, so we need to show imagination by taking advantage, if I dare put it this way, of this difficult period which has badly affected our countries.

We need a change of vision today: in the face of the financial crisis, it is in our interest to supplement the traditional aid flows which nevertheless reached a record level of $119 billion in 2008. We also need to be able to take advantage of the world's growing interdependence, of globalization, of this globalization that some fear and others hope for, and so it is in our interest to pool the resources of States and private actors.

Innovative financing is indispensable. I am convinced that we need to set out to gain new participants, new sectors and new instruments. It is important for an ever-growing number of States to join us in such initiatives as the tax on plane tickets. This innovation has already been put in place, productively, in 13 countries. It funds the paediatric treatment of HIV-AIDS in 100,000 children a year through UNITAID's programmes - thank you Philippe [Douste-Blazy, the UN Secretary-General's special adviser in charge of innovative financing]. This is very good indeed, but obviously it is not enough.

We also need to go for new sectors. We must keep in mind that innovative financing has so far focused on health goals - I'm not criticizing this, and it has been a great success! But this must encourage us to broaden the field of action, particularly to include education and climate change.

We need to gain new mechanisms which bring intervention from countries in the North and South. Paradoxically, the financial crisis, as I said, gives us the opportunity to upset concepts that used to be certain! In this context, innovative financing can also contribute to better regulation of the economy. It is a valuable tool in globalization, a globalization which, it has often been said, would be more just and more humane. France, a pioneer in introducing many innovative instruments, wishes today to continue to propose to her partners new ambitions to help the poorest. It remains imperative to persuade everyone of the utility of innovative financing and to explore mechanisms appropriate for global needs, for the developing world, based on the principle of economic rationality. These two worlds, development and economic rationality, are not contradictory. We need today to foster bold and ambitious thinking which can make the most of the growing financial interdependence of international markets.

The future Chilean presidency of the Leading Group, which I welcome here, faces an impressive workload! It will take over at a decisive time characterized by our resolve to reject resignation.

The need for scaling up - as it is referred to in the language of the UN - innovative financing is now on the international community agenda, this too being a UN expression. It was recognized by the United Nations at the Doha Conference. It was recognized by the European Union in the latest Council conclusions. Now we must act.

To this end, I would like to invite you in the coming hours, days and months, invite us collectively, to give practical effect to our commitment by taking several decisions. Because we cannot be content with just goals, generous though they may be. It is the Leading Group's role to mobilize the international community for these issues; it is also our duty, it seems to me, to give them a way forward by taking decisions.

What are these practical steps? This is not an exhaustive list:

• Firstly, for each member country next year to implement one innovative financing mechanism from among the range of mechanisms proposed during these two working days;
• Secondly, for existing initiatives to be adopted by new countries to increase the resources for development, and there is no shortage of projects. I have mentioned the plane ticket tax financing UNITAID, IFFIm, the so-called "D.tax" mechanism, the voluntary solidarity levies set up by the Millennium Foundation, the "Advanced Market Commitments" and so on.
• Thirdly, that we should extend our work to include the fight against tax evasion which deprives the developing countries of considerable resources, a step the Leading Group took in response to the Norwegian presidency, and I thank it for that:
• Fourthly, that we stipulate the need to reduce the costs of migrants' transfers and encourage these to be used as effectively as possible. Do not believe that innovating financing is separate from taking political positions - it is directly at the heart of politics. If we talk about the need to reduce or eliminate tax havens, if we talk about migrations, it is because it is absolutely necessary. If we fail to address these issues, we would be being very superficial and would remain so;
• Fifthly, let us begin a debate on climate change, in particular on allocating for development, on a voluntary basis, part of the revenue from bids for carbon credits. It wouldn't be understood why we want to reduce greenhouse gas emissions - which we will succeed in doing - if the countries most in need of these reductions do not benefit from them;
• Lastly, in a personal capacity, I would like to see the Leading Group explore new forms of levy, no doubt on a voluntary basis initially, given the success of innovative taxation mechanisms. Such projects for taxation like the one on non-monetary financial transactions presuppose broad adherence and will be effective only if several States, obviously those where the main currencies circulate, decide to coordinate their implementation of them on all markets. And to do this, banks and their clients - and the task is enormous - have to be convinced. I have already proposed this repeatedly, and each time the finance ministers have all said "it's not possible." Well, I will tell you, "nothing is impossible!" Nothing, especially not that. Because you all know perfectly well it will be achieved one day even if it begins on a voluntary basis like the ethical funds, for example. Banks at some point in time will propose it to their clients, and a tiny part of financial transactions will be released for development. I promise you, and our country, France, is ready to assist a pioneer group of States in applying this type of tax which was already adopted in our parliament in 2001. So it is possible to implement such a measure, which could perhaps be applied to the European market initially. Let us think about all this in practical terms, not to say it's difficult; obviously everything is difficult but once you do it, it becomes less difficult. I am convinced that a working group must be assigned this.

Ladies and gentlemen, we need today to make the best of the growing interdependence of financial markets by using non-onerous mechanisms to tax, as I said earlier, a tiny fraction of the transactions which take place every day. This will probably happen on a voluntary basis to begin with because financing development must become a moral imperative. These amounts would then be paid to a fund receiving public and private resources so that human-scale projects selected by a group representative of the private and public sectors and NGOs, and selected for their innovativeness and efficacy, on the model of the ethical funds in particular, are actually realized.

These goals will, I hope, appear in the progress table at our next session. We will be helped in this by the major international meetings where the Leading Group will advocate for innovative financing: at the G8 very soon in Italy, at the UN General Assembly in New York next September where we will renew the Declaration [on Action] Against Hunger and Poverty. At the meeting in September, the UN Secretary-General will receive a report on innovative financing that may also be inspired by the work we are doing with our British friends. The conclusions of our work will, I hope, inspire this report.

High Level Taskforce calls for new ways of raising additional money to fund health in poor countries

http://www.internationalhealthpartnership.net/taskforce.html

Paris, Friday 29 May 2009: The Taskforce on Innovative International Financing, co-chaired by UK Prime Minister Gordon Brown and World Bank President Robert Zoellick, today made recommendations to raise additional funds as 100 million of the world's most vulnerable people remain trapped in poverty as a result of the food crisis that preceded the economic downturn.

Bernard Kouchner, French Foreign Minister and host to the Taskforce speaking at the meeting said: "It is now vital that, rather than turning off the aid tap, we look for the means to increase its flow. The cost of not raising the additional funds is dire 4 million children and more than half a million adults could die each year all from preventable illnesses."

The Taskforce met in Paris during the meeting of the Leading Group on Innovative Financing to Fund Development. The chairs of the Taskforce and the Leading Group warmly welcomed their shared objectives and noted the benefits of working together.

Taskforce members recommended that the additional funds required to strengthen health systems in poor countries can be raised by expanding existing mechanisms and complementing these with additional new approaches. These recommendations included encouraging more countries to consider introducing the solidarity levy on airline tickets and expanding the use of the International Financing Facility for Immunisation.

Remarkable progress has been made during the past decade with a significant decline in child mortality, measles, tetanus, iodine deficiency and malaria, as well as dramatic increases in access to antiretroviral treatment for HIV all of which have saved millions of lives and improved the quality of life of millions more.

But this encouraging trend could quickly be reversed without new ways of funding and running efficient national primary health-care systems throughout the 49 poorest countries in the developing world.

The Taskforce's recommendations were informed by the work of two Working Groups and a series of successful consultations with governments, civil society organisations and the private sector over the last few months. These proposals could mobilise up to $10 billion (US) per year to 2015 which, together with existing commitments, could fill the financing gap to reach the health Millennium Development Goals (MDGs). To mobilise these funds and make better use of existing funds the Taskforce recommended the following set of innovative financing options that countries and other stakeholders can choose to support:

• Expansion of the mandatory solidarity levy on airline tickets and tickets and explore the technical viability of other solidarity levies on tobacco and currency transactions;

• Expansion of the use of the International Financing Facility for Immunisation and other approaches to ensure predictability;

• Provision of public catalytic funding for large-scale private giving initiatives such as De-Tax and voluntary solidarity contributions;

• Establish or expand existing funds for results-based 'buy-down' funding;

• Strengthen the capacity of governments to secure better performance and investment from private, faith-based community, NGO and other non state actors in the health sector;

• Make the allocation of existing and additional funds in countries more efficient, by filling gaps in costed and agreed national health strategies;

  The Taskforce requests OECD/DAC undertake a review of current technical assistance by international and bi-lateral agencies, with a view to focusing it on strengthening national and local institutional capacity in priority areas such as public administration and accountability, financing, service delivery arrangements and the non- state sectors;

• Establish a health systems funding platform for the Global Fund, GAVI Alliance, the World Bank and others to coordinate, mobilize, streamline and channel the flow of existing and new international resources to support national health strategies;

• Monitor how well we are doing an annual forum will be held for countries and partners, building on the IHP+ Ministerial Review.

The Facts why funds are needed now:

Halfway to 2015, numerous countries are lagging behind in reaching the health MDGs

Worldwide a child dies every three seconds, a mother dies in pregnancy or childbirth every minute and 7,000 people are infected with HIV every day

More than half a million women die from preventable complications in pregnancy and childbirth every year. Over 300 million suffer from preventable illness and disability

Current donor funding is not sufficiently predictable or sufficiently large to support reaching the health MDGs

For more information on the Taskforce and interviews with spokespeople:
[email protected] or call +44(0)7802 296 737 or+44(0)207223 4512
http://www.internationalhealthpartnership.net/taskforce.html

ENDS

About the Taskforce

1. The Taskforce will make recommendations on the mix of innovative international financing mechanisms needed to deliver the extra resources required.
2. The Taskforce will promote international support for these recommendations to ensure they are implemented.
3. The Taskforce's first meeting was held in Doha in November 2008. The second meeting was held in Downing Street, London on 13 March 2009 and this is the third meeting in Paris.
4. There have been a number of civil society consultation events - London in March 2009; Johannesburg May 2009 and Abuja in May 2009. A number of meetings have been held with the private sector, Government Ministers and MEPs.

Taskforce members:

1. Prime Minister Gordon Brown (United Kingdom) (co-chair)
2. Robert Zoellick (President of the World Bank) (co-chair)
3. President Ellen Johnson-Sirleaf (Liberia)
4. Prime Minister Jens Stoltenberg (Norway)
5. Tedros Adhanom Ghebreyesus (Health Minister, Ethiopia)
6. Bernard Kouchner (Foreign Minister, France)
7. Giulio Tremonti (Finance Minister, Italy)
8. Heidemarie Wieczorek-Zeul (UNSG Special Envoy for Finance for Development Conference & Development Minister, Germany)
9. Stephen Smith (Foreign Affairs Minister, Australia)
10. Margaret Chan (Director-General of the World Health Organization)
11. Gra�a Machel (President and Founder, Foundation for Community Development, Mozambique)
12. Shigeru Omi (Special Assistant to Minister of Foreign Affairs, Government of Japan)
13. Bert Koenders (Development Cooperation Minister, Netherlands)

Phillippe Douste-Blazy the UN Secretary-General Special Envoy on Innovative Financing serves as Special Envoy to the Taskforce.

For more information on the work of the Taskforce and to see copies of Working Group reports please visit
http://www.internationalhealthpartnership.net/taskforce.html

Final Conclusions of the Presidency
2009-05-29

Sixth Plenary Meeting of the Leading Group on Innovative Financing for Development

[Excerpts: for full text see
http://www.leadinggroup.org/article324.html]

Introduction

In three years' time, innovative financing mechanisms for development have raised well over two billion dollars in additional funds for development. In the health sector, such funds have helped vaccinate over 100 million children a year and provide paediatric AIDS treatment for 100,000 children a year.

Stable, predictable and complementary to traditional ODA, these additional resources for development rely on four types of mechanisms (mandatory contributions, voluntary contributions, loan guarantees and market mechanisms) and generate new partnerships (between the North and the South; between States, NGOS and international organizations; between the public and private sector), with the support of civil society.

With its 58 member countries, international organizations, NGOs and companies, the Leading Group on Innovative Financing for Development has discussed and explored new resources, new sectors for action and new instruments for development.

...

3. Innovative financing for development uses four main types of mechanisms: taxes on global activities which are either taxed little or not at all (air-ticket solidarity levy or international financial transaction levies), pre-financing mechanisms based on financial markets with public guarantees (the International Finance Facility for Immunization or IFFIm) or relying on States (advanced market commitments or AMCs), market mechanisms (CO2 emission auctions) and voluntary contributions by the private sector facilitated or channelled by the public authorities (migrants' remittances, voluntary solidarity contributions).

...

7. This international mobilisation has been generated by the strides the Group's successive presidencies have made in the area of innovative financing mechanisms. Bringing together northern and southern countries at various levels of development, this Group established in 2006 is a singular structure for generating ideas, rallying support and sharing best practices. It stemmed from the High-Level Meeting of World Leaders Against Hunger and Poverty initiative supported by Brazil, Chile, France and Spain which produced a quadripartite report that was submitted to the United Nations Secretary-General in 2004. ... Brazil, Norway, South Korea, Senegal and Guinea have successively presided the Leading Group. ...

8. The French Presidency aims at a scaling up of innovative financing mechanisms, three years after the founding conference. ...

• They are first and foremost new resources for development. The International Drug Purchasing Facility UNITAID, which is mainly funded by the air-ticket solidarity levy applied in 13 countries, reduces the cost of high-quality drugs to treat HIV/AIDS, malaria and tuberculosis in developing countries. [additional mechanisms listed in full text] ...
• They are resources that can be channelled towards other sectors beyond health. The global context for better integration of climatic challenges is prompting member countries to put forward new innovative proposals concerning in particular adaptation to the effects of climate change. Regarding education, requirements with a view to achieving MDG 2 are still considerable. Migrants' remittances, which were integrated from the outset in our Group's work, can also contribute effectively to development when their transfer is facilitated and targeted towards productive investment. ...

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