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The proposals from various consultations and discussions on the post-2015 sustainable development agenda suggest that the goals and targets will likely be more ambitious than the MDGs. What this implies is that more financial resources will be required and aid alone will not be enough. Therefore, domestic resource mobilization (DRM) will be critical for
DRM has long been recognised as an important source of development finance. For example, the
However, under the MDGs financing plan, DRM was restricted to revenue accruing to governments through taxation, excluding savings and investment generated by households and domestic firms.
Given that the post-2015 development agenda is likely to be broader in scope, there is a need to include these additional domestic options in the financing architecture.
What makes DRM imperative?
Indeed, both are complementary, though DRM is less volatile and more sustainable. In my 2012 paper on foreign aid and private investment, aid uncertainty was found to impact negatively on private investment in
A recent blog post by
Beyond its financing role, DRM helps to strengthen fiscal institutions, which, often, are viewed as imperatives of state building, and key to improving accountability.
In essence, more effective and transparent tax systems can contribute to broader governance reforms in
Are there reasons for concern?
While DRM is no doubt an important sustainable source of financing for the post-2015 development agenda, there are concerns that "natural resource curse" in
These concerns are informed by the experience of some countries (for example,
Instead, resource endowments have created incentives for rent seeking, promoted bad governance and political instability. This is further compounded by the magnitude of capital flight.
A recent study estimates capital flight and stolen assets from sub-Saharan Africa between 1970 and 2010 at
Another concern is on "resource prioritization". Most resource rich countries in
This displaces resources needed to finance 'useful' development and also encourages excessive consumption of fossil fuel; thereby elevating its negative consequences for the environment.
This is certainly a threat to the environmental sustainability mantra of the post-2015 framework. In addition, fuel subsidies tend to have a "ratchet effect" - without a 'sunset' clause it is difficult to reverse.
What are the Implications for Post-2015 Sustainable Development Goals?
The overall discussion has two important implications for post-2015 development framework. First, the set of goals for post-2015 development agenda must pay particular attention to domestic ownership and national priorities.
Unlike in the past when countries depend on external resources, post-2015 should draw on DRM and other innovative domestic financing options, including repatriation of stolen assets. African countries must therefore unite efforts to develop capacity to generate their own resources for sustainable development.
The post-2015 agenda must recognise national and regional priorities; setting the same targets for countries at different stages of development or with different needs would certainly not be the right way to go. In all, finding the right mix of goals, targets and financing options that leaves no individual and country behind should be the concern of everyone.
Second, the proposed governance goals for post-2015 should include the key building blocks of fiscal accountability and transparency. Present discussion on governance goals have mainly focused on improving human rights.
While countries should be allowed to manage their own resources to their best interest, there is a need to provide mechanism to guide against mismanagement and misallocation of scarce resources. With aid, donors can condition their interventions on improving specific domains of governance, which could enhance DRM systems.
Lastly, leaving no one behind will require leaving no stone unturned in all spheres of the post-2015 agenda: finance, governance, policy implementation, global partnership among others. Development cooperation, more than anything else, is required to achieve this daunting, but important task.
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