We the peoples are the first words of the UN Charter, stating that the post-war development agenda is above all serving the peoples of the world. After the appalling atrocities of the Second World War the international agenda was based on the self-reinforcing effects of three pillars peace, human rights and development. Today it still seeks universal peace in larger freedom but the MDGs made the agenda measurable and focused on developmental goals for the first time guiding and systematizing development policies and national plans worldwide. After the joint debate on the beyond 2015 agenda that evaluated the impact of MDGs, we now live under the UN 169 commandments, mostly know by the Sustainable Development Goals. The new 17 SDGs (and 169 targets) of the development agenda has evolved to be not only a plan of action for people, but also planet and prosperity. It recognizes that eradicating poverty in all its forms and dimensions including extreme poverty is the greatest global challenge and indispensable requirement for sustainable development. It is a universal agenda based on the idea of inclusion where no one will be left behind. But it is more ambitious than ever because it adds simultaneously the mission to heal and secure our planet.
I have been actively following the beyond 2015 agenda through consultancies, forums and conferences and now the ongoing practical challenge of the SDGs is how do we support the implementation of the 2030 Agenda for Sustainable Development or in other words how do we finance sustainable development. During my networking trip to the World Bank in DC I had the opportunity to participate on a Financing for Development course and decided to share the main conclusions.
One of the major contributions to this issue has been the Addis Ababa Action Agenda (AAAA) adopted in July 2015 at the Third International Conference on Financing for Development that provided a comprehensive and integrated framework for financing sustainable development and support the implementation of the 2030 Agenda for Sustainable Development comprising several hundred concrete actions that member states pledged to undertake.
First the AAAA intends to be a response to the current context of the aid system: the SDGs have an ambitious magnitude that however exceeds the financing available. Official Development Aid ODA alone will not allow us to achieve these goals. Looking at numbers ODA comprises 135 billion USD annually; the WBG and 5 regional MDBs together committed 400 billion USD for the next 3 years. With the budget constraints triggered by the 2008 crisis the annual demand for infrastructure alone will be quite larger than all aid available through traditional channels. So the challenge is to find innovative sources of funding and unlock investment opportunities.
So for this end, the main outcomes of Addis Ababa are: 1) it recognizes the critical role of the private sector in achieving the SDGs that may find innovative solution and apply new approaches to finance. 2) The focus is now not the amount of ODA, but its use in a catalytic way crowding in additional sources of finance. 3) The role of MDBs has to be bold and innovative with a crucial role on mediating Public Private Partnerships and Solutions in order to mobilize finance. 4) It urges on the unprecedented need of cooperation and partnerships of MDBs with UN, Academic Organizations and Think Tanks, as no organization alone has the resources or the capacity to tackle these large challenges.
It is also the right time for new types of capital mobilization due to certain specific financing conditions. There is a combination of surplus of savings and low private investment in developed countries along with challenges in long term financing with low or negative yields. This absence of meaningful investment opportunities has created low confidence and depressed economic activity and interest rates. In contrast potentially high-productivity investment opportunities in developing countries with young populations are craving for sufficient financing to be channeled to developing countries. So there is a great opportunity of bridging this gap by unlocking these opportunities in developing countries. It could generate welfare gains to both advanced and developing nations. This is a win-win solution that transfers surplus savings in advanced economies with an aging population to long-term investment opportunities in developing countries in need. So it is possible to create well-structured infrastructure projects that can help reduce the current imbalance between savings and investment.
Additionally the 2030 Agenda for Sustainable Development is also an incentive to shift international investments towards climate change financing. The lack of long-term capital is pushing countries and cities towards dirty solutions (based in coal and gas) that require less upfront investment. Thus as it becomes urgent to reduce carbon relying investments there are opportunities to shift idle long-term private savings in advanced economies to green technologies in developing countries to reduce carbon footprint. It has the potential to create new meaningful income streams to global investors enhancing macroeconomic stability and supporting climate resilience. The role of MDBs is to bridge this gap and promote coordination with MDBs, governments and private sector to match the supply and demand of new innovative financing frameworks unlocking investment opportunities.
IDA has also complied to the AAAA agenda and has contributed to leverage and mobilize capital. It is the oldest and one of the largest sources of development assistance and finance for the world`s 75 poorest countries. The 18th replenishment IDA based on a coalition of over 60 donors agreed to the most radical transformation in IDA`s 56 years. For the first time IDA will leverage its equity by blending donor contributions with funds raised through debt markets. By blending concessional resources with capital markets debt IDA has expanded its fight against poverty to a record 75 billion USD. It offers expectional value for money with every one dollar generating 3 USD in spending. This leveraging effect is one of the most concrete and significant actions today on the AAAA that will be critical to achieve the SDGs.
There are also simultaneous strategic areas that should accompany these efforts to deepen its effects. Domestic mobilization through revenue mobilization and public expenditure efficiency, the improvement of business environment, promotion of transparency and control over illicit financial flows are all contributing factors to promote financing for development.
This is an exciting time for development that will require human ingenuity and creativity. Let`s hope the international community will manage to fulfil its mission and serve the Peoples of the world, our most important resource.
When the year starts and there is a reflection on past accomplishments and future trends for 2018, I remembered how an event I attended: Conferencias do Estoril could help me in this quest. Estoril Conferences is an unique event, an international conference held in Portugal (in Estoril more precisely), with the intention of providing a global forum where the world’s most pressing problems are debated.
It gathers a prestigious and eclectic group of panelists around the world providing an exciting and refreshing discussion pool in an informal tone and out of the box mood. Differently from traditional conferences that I have attended that usually have a main core subject with an homogeneous group of experts in one specific subject or area EC presents instead an eclectic and multidisciplinary environment with a diverse panoply of panelists, which makes it an extraordinary and unique event, that definitely exceed all my expectations.
Panelists have multiple backgrounds, work in diverse areas and have different styles and personalities. From university researchers; worldwide economists as Joseph Stiglitz; impressive writers as Kenan Malik; Mr. Rajendra Pachauri, Mentor of POP Movement, Protect Our Planet; the remarkable justice-makers, judge Carlos Alexandre and Sergio Moro; Passionate activist of Human Rights as Jody Williams, National Geographic officers with prospects on the health of the planet; the emotional statements of the atrocities of DAESH victim Fareeda Khalaf, the moving story of Maria Conceição that was adopted age two by a poor African women that had already 6 children and named her NGO Maria Cristina in homage to her adoptive mother;
to the impressive and sometimes terrifying pictures of global migration of the remarkable war photographer Yannis Behrakis; or the prophetic and inspiring speech of the eloquent Madeleine Albright evoking the great responsibility of youth in this uncertain future; or the direct phone call with the controversial Edward Swowden! EC is above all a very stimulating event that provides not only precious data and trends of our global society but is also a great show-hall of human emotions and its stories.
Now what does EC contributed on my quest to understand how to change the world? First by the nature of the event itself it shows that informal dialogue and out of the box exchange of ideas is the way to curb confrontation and the current polarization of society around the world. Another lesson from EC that I usually insist in my work is the multidisciplinary approach to find solutions, nothing is more scary than when a group of technical experts hold the monopoly of knowledge. The great enterprises and organisations, like let’s say NASA, or the UN or Google all have a great diversity of technical experts and are successful exactly because of that. My field of expertise for example, development economics, is very appealing because it always demands multiple expertise of different areas, from economy, to archeology, to diplomacy, engineering, human rights or social science, all always come engaged to find a joint solution.
Also specific messages were systematically reinforced during the conference that I think will be future trends. I strongly believe in one: the glocal concept, global challenges demand local solutions. Indeed one idea that I strongly endorse is that globalisation without the trickle-down effect of local solutions creates alienation and confusion. This is a crucial issue because what is in stake is how do we assure that a consensual worldwide idea is implemented nationally and then locally. This is one of the most difficult issues to solve for decades. International relations usually use the power of UN and specifically treaties to assure compliance of internationally binding principles and ideas, but we all know in the daily news how difficult sometimes that is to become reality. In economics the same perplexity is illustrated through what is called the macro-micro paradox, that shows how it is difficult to implement a good well designed macroeconomic policy effectively and assure the desired effect on households or other microeconomic agents. So this GLOCAL concept is the key to success of most international policies. A theme that is challenging this implementation and even international binding principles is Migration, one of the subjects in focus in EC. This great exodus, equivalent to a massive war migration and indeed the largest since Second World War, is shaking the structures of international relations that cannot tackle these movements with treaties and if they do they use protectionism; challenging European universal principles that sometimes see these movements as threats and exposing an appalling human drama that all get moved about, but very few find solutions to.
EC showing a proactive intervention, goes beyond its dialogue mission but also wants to materialize concrete tools to the international community, so proposed to the UN Secretary General the passport of Global Security after the Pope Francisco pledged for the recognition of migrants to fundamental rights.
I am not a migration expert, so I foresee no straightforward solutions to such sophisticated problem, but for me it is obvious that the Migration we are witnessing is an unique and very complex phenomenon because it engulfs simultaneously a panoply of diverse features of: typical war, prosecution and human rights violations, religious fundamentalism and human trafficking, so no wonder it is difficult to tackle it! It will also be a great challenge for international organizations that need to find diplomatic solutions and make government follow th rules. I could also suggest that national governments need to invest in borders administrative and pedagogic capacity to promote not only efficiency and transparency but also a dignifying human reception of migrants. But my largest contribution to this subject is as a poverty specialist. In this discuss many immediate issues are presented, but normally it is missing in the study the underlying conditions of migrants that commonly live in disadvantageous and precarious situations in their countries which lead them to forced migration. In my view migration is ultimately a poverty outcome that needs to be addressed with inclusive and pro-poor policies in developing countries. Development in a country is a way of retaining their population and the mission to protect and provide a good and prosperous life is the best way to avoid migration. To invest in the development of poor and vulnerable countries and economies has been and it is the most enduring solution and prevention for migration. Otherwise we can only concentrate on the recent great mediatic slogans that time usually dilutes fast and feel amazed as well as powerless. Failure to look deeper into this subject, can leads us to an approach in which we focus or blame the egg, but completely forget the chicken and that is not only superficial but also will not provide enduring solutions to the sophisticated problem of migration.
So as we can see nothing is more difficult than to change the world, but if we want to take some lessons on it, I guess that we need dialogue to promote consensus, we need to be GLOCAL and focus on tools and implementing practices, we need multidisciplinary joint solutions, we need to dig deeper and look to underlying conditions as poverty and then finally I guess we have to trust in the wisdom and kindness of the human spirit.
The mere thought of Brazil invades us with a sense of exotic and colorful imaginary. My visit to Brazil has triggered a great curiosity in studying this beautiful country with a monstrous scale and exciting diversity. As a BRIC and MIC country Brazil has the potential to produce innovative solutions to poverty reduction of great interest to the development agenda. Indeed Brazil has attracted the attention of the international community with several unique initiatives that have proven to be of great success. The Bolsa Família (Family Grant) conditional cash transfer program launched in recent years had a great contribution to poverty reduction in the country. The Cadastro Único registering mechanism was also a major step forward because it has compiled in an unique registering process all programs associated to each beneficiary, reducing duplication and administrative costs and improving considerably the efficiency of social programs targeting. This was a very important administrative breakthrough in terms of data collection. Cash transfer programs were not new in the country, initially idealized by the sociologist and human rights activist Herbert José de Sousa, also named o Betinho, the pioneer idea of cash transfers was first materialized as a project of direct support called Projecto de Ajuda Direta, so rather than brand new ideas it was an ongoing improved package which main added value (namely of Cadastro Único) was undoubtedly the integrating effect of all programs in a unique registering card.
Along with these specific mechanisms we also witness a flourishing production of best practices in Brasil compiled in the Learning Initiative for a World without Poverty (WWP) a partnership among the United Nations, the World Bank, and the Brazilian government to promote knowledge exchange about social protection policies and initiatives to fight poverty This platform has been crucial to monitor and evaluate social programs and has contributed with innovative solutions on best practices disseminated in various languages, it also serves as an archive of documented programs and in country tested solutions that are expected to influence the social protection policies around the world.
Interesting to take a look for more info on:
The implementation of these initiatives has resulted in a staggering decline in the number of Brazilians living below the national poverty line (of R$170 in 2016). According to the World Bank, between 2003 and 2014, more than 29 million people were dragged out of poverty. Inequality also dropped significantly, around 6.6 % as the Gini Coeficient fell from 58.1 down to 51.1. The income level of the poorest 40% of the population has also rose, on average, 7.1% (in real terms) between 2003 and 2014, much higher than the 4.4% income growth for the whole population, reinforcing the inequality decrease in the country.
However despite these remarkable results part of Brazil`s fascination is how erratically unpredictable it can become. Indeed since 2015 the rate of reduction of poverty and inequality appears to have stagnated. The country is now going through a deep recession as the country`s growth rate has decelerated continuously from an average annual growth of 4,5% between 2006 and 2010 to 2,1% between 2011 and 2014. Following the same trend the GDP contracted by 3,8% in 2005 and is expected to fall at least 3% in the future. The economic crisis was triggered by the fall in commodity of prices but also caused by the continuous political instability that ultimately led to President`s Dilam Roussef impeachment on the 31st of August 2016. It was alleged that albeit the so satisfying poverty reduction outcomes it was done at the cost of fiscal imbalances so when the former Vice President Michel Temer took office as the new President of Brazil his main priority was to proceed with several fiscal consolidation measures and a reform agenda to re-establish confidence and restore a favorable investment environment. However Mr. Temer`s mission is a difficult one. Fiscal adjustments are undermined by constitutional budget rigidities as less than 15% of expenditure in Brazil is discretionary, in other words, cannot legally be reduced. Simultaneously we have seen in 2016 and 2017 the unpopular measures of fiscal consolidation of freezing of public service salaries and reduction of social benefits has triggered an ongoing wave of violent social unrest in Brazilia, Rio de Janeiro and São Paulo. Simultaneously the zero corruption campaign led by Sergio Moro based on delação premiada confronts the Brazilian society with an endemic corruption that systematically compromises confidence of consumers and investors, dampens government credibility and creates an explosive environment as fiscal adjustments sacrifice a still emerging and struggling middle while the scandalous corruption cases, such as the one of Petrobras are ongoing. In Conferências do Estoril 2017 I could witness personally the inspiring courage and determination of Sergio Moro that is trying to promote one of the most challenging structural reforms to put in place: curb corruption.
If adventure is what Mr. Temer was casting about he will not be disappointed. While people protest in the streets he also faces strong opposition in Congress undermining even more the implementation of the reform program. However he has successfully accomplished some reform achievements. In July 2017, despite his own corruption charges he was able to pass a reform a labour law that was long hampering growth. He is also trying to simplify the tax code to reduce the 2,038 staff-hours a year that companies take to compliance. But the great hope of robust recovery lies in the reduction of public spending. He persuaded congress to agree to a 20-year real-terms spending freeze, but he will have to reform pensions that allows Brazilians to retire at 58 years. Pensions cost 13% of GDP and if not come to an halt can reach 25% of GDP. Mr Temer hopes pension reform may help salvage his reputation and known to be a deal-maker markets hope that he will gather support for his fiscal reform program. It is also good news that the Congress is attempting to reform campaign-finance laws.
Economically, In 20015 inflation got to a peak of 10,7% far exceeding the upper limit of government`s target band (4,5+/- 2%) caused by realignment of regulated prices and transmission effect of exchange rate depreciation and despite a tight monetary policy and high interest rates. The crisis also led to the current account deficit to drop 1.6% of GDP mainly due to the contraction of the GDP and moderate devaluation in the real exchange rate. Foreign direct investment accounted for 4.2% of the GDP 2015, financing 132% of the current account deficit. Brazil had an ample level of reserves of US$ 358 billion – or 18 months of imports – at the end of 2015.
Brazil’s medium-term outlook will depend on the capacity to endure current adjustments and to promote growth-enhancing reforms. Raising productivity and competitiveness are the main priority and challenge for the country to achieve higher growth in the medium-term. While growth drivers of the past decade were credit-fueled consumption, labor expansion and the commodity boom growth will now need to be based on higher investment and productivity gains.
Despite the poverty achievements of the last decade, reducing inequality remains the key to reduce the strong social disparity that characterizes this country. Universal coverage in primary education was already accomplished, the challenge is now the quality and outcomes of the educational system.
What about Tomorrow? What the Museum tells us.
A journey to Brazil, is to face contradiction, contrast and unexpected surprise. One of these moments happened when I visited the Museum of Tomorrow, Museu of Amanhã. After passing through the Rio`s city centre in a taxi, we have the experience of a multi-screen voyage of multiple distinct landscapes: there are glorious buildings, followed by squalid spots, colonial libraries, dodgy corners, fancy bistros, and picturesque botiquim. After this carousel of distinct impressions I finally arrive to the Museu do Amanhã, transported back again to the sophistication of the first world, the Museum is a futuristic architecture building launched from land into the ocean that demonstrates the creative energy of this country.
At the Museum of Tomorrow not only we witness to one of the largest capital of this country: its creativity, but also the great role it has in the leadership in the climate change agenda, conservation and ecosystem preservation. Indeed Brazil played a key role in formulating the climate framework for the 2015 COP 21 and has ratified the Paris Agreement. The country has reiterated its leadership role in international negotiations on climate change, by giving significant contributions to climate change mitigation within its borders. Brazil has voluntarily committed to reducing its greenhouse gas emissions between 36.1% and 38.9% by 2020 – and it will likely reach that objective sooner. Great progress has also been achieved in reducing deforestation in the rainforest and other sensitive biomes. However, the country still faces major development challenges – especially in finding ways to combine the benefits of agricultural growth, environmental protection and sustainable development.
While I was in the Museu do Amanhã I thought what would be the amanhã of this giant country. No one knows what the future holds, some once said that Brazil was unmanageable by nature, I sincerely hope that this extraordinary country also “bonito por natureza” as the samba sings, will serve the expectations of all its population and continue to find new ways to promote welfare to all.