Do we know enough about the various forms of ear-marked funding arrangements to inform decision-making? What positive and negative marks have three decades of earmarked contributions left on the UN development system (UNDS)? What challenges do donors face in managing earmarked funding? And what perspectives on the earmarking conundrum at the UNDS are helpful in identifying entry points for reform? This contribution provides some answers to these questions, drawing on findings from our broader study on earmarking in the multilateral development system. Towards the end of the piece, we reflect on how to take the recently adopted UN Funding Compact forward.

In a recent International Monetary Fund (IMF) study, the head of the IMF’s Fiscal Affairs Department and his colleagues show that achieving the Sustainable Development Goals (SDGs) will require a large increase in public and private investments. Low-income developing countries with average per capita incomes below US$ 2,700 per year cannot finance these investments out of domestic resources or debt financing alone – even though domestic resource mobilisation can and needs to be expanded substantially in many countries. Neither will the private sector come to the rescue, as many SDG investments cannot generate commercial returns. The IMF concludes that Official Development Assistance (ODA) and other forms of concessional finance must increase if the SDGs are to be achieved, a point also echoed in a 2018 report by the Sustainable Development Solutions Network.

The reform agenda for the UN development system (UNDS) has been dominated for some 30 years by analyses and initiatives relating to coherence. The most significant reform proposal during this period – the Delivering as One initiative – was contained in a report dubbed the Coherence Report. Reform has been clearly associated with organisational and structural reform: how can an overly complex system comprising more than thirty entities that differ in size, mandate and governance be consolidated or, at minimum, better coordinated?

The parallel resolutions on Peacebuilding and Sustaining peace, adopted in April 2016 by the UN Security Council (S/RES/2282) and the General Assembly (A/RES/70/262), emphasise ‘the need for predictable and sustained financing to United Nations peacebuilding activities, including through increased contributions, and strengthened partnerships with key stakeholders, while also noting the significance that non-monetary contributions can play in peacebuilding efforts’. The Secretary-General’s 2018 report on implementation of the resolutions pointed to discouraging trends in donor funding that result in insufficient resources dedicated to addressing conflict risks and to supporting countries going through fragile transitions. The report made several recommendations for advancing the application of the Sustaining Peace framework and to address existing gaps, including on financing.

The Secretary-General’s report on Peacebuilding and Sustaining Peace from January 2018 makes several recommendations on financing of United Nations peacebuilding activities. Among them is a call to explore innovative finance options. With slow progress in areas of voluntary and assessed contributions, the lens is often turned towards innovative finance to bring solutions. This presents a window of opportunity for the peacebuilding community to build on the motivation of actors willing to bring investment and resources. However, we need to act with caution. Innovative finance is unlikely to be a panacea that brings the ‘quantum leap’ for the Peacebuilding Fund that the Secretary-General called for in his report or to raise the needed resources for financing peacebuilding more broadly; donor contributions will remain at the heart of financing, certainly in the near term.

The Secretary-General’s report on Peacebuilding and Sustaining Peace highlights that nearly half of all people living in extreme poverty reside in fragile and conflict-affected states. Unless concerted action is taken by 2030, that figure is expected to rise to 80% by 2035. At the same time, peacebuilding and conflict prevention remains a cost-effective way to safeguard development gains – with US$ 1 invested in prevention, resulting in US$ 16 saved by one estimate. By another estimate – the United Nations-World Bank study on Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict – costs of conflict far outweigh the costs of prevention by anywhere between US$ 5-70 billion. Increasing donor spending on peacebuilding in conflict-affected countries remains an important lever by which the international community can focus on prevention and contain rising human and economic costs of violent conflicts. The present section lays out the current trends in Official Development Assistance (ODA) to conflict-affected countries as well as to peacebuilding ODA in conflict-affected countries updating the findings of a 2017 report on ‘Stocktaking of Peacebuilding Expenditures: 2002–2013’ by the Institute of Economics and Peace and the UN’s Peacebuilding Support Office (PBSO).

Violence and conflict are the most important obstacles to sustainable development. Nearly half of all people living in extreme poverty reside in countries affected by conflict. Fifty percent of the lowest ranking countries in the 2018 Human Development Index Report are affected by violent conflict. Peace and development mutually reinforce each other; violence and conflict can reverse development gains, by causing death, disease, deprivation, displacement, destruction, damage as well as leading to a decline in public services and limited access to resources, which in turn can provoke grievances resulting in mistrust and conflict. On the other hand, peace can sustain development gains. Because of this interdependence, the UN system is working closely together to ensure progress on the 2030 Agenda for Sustainable Development.

‘A key objective of TOSSD [Total Official Support for Sustainable Development] as a new international statistical standard is to help developing countries better map actual and potential sources of finance for their development.Their support and engagement is thus essential. In order to gather their perspectives and feed them into the development of the TOSSD framework, six pilot studies are being carried out in 2018–2019.’

A new generation of pooled funds is helping to bridge the humanitarian-development financing divide. These flexible instruments are demonstrating that well-designed pooled funds can quickly pivot when faced with rapidly changing conditions on the ground. They combine, blend and sequence development, peace and humanitarian funding streams in crisis-affected countries. They improve cost-efficiency, transparency and collective outcomes not only by pooling resources and delivery systems, but also by sharing, and thereby reducing, the risks that often arise in highly volatile and unpredictable settings.

Humanitarian financing is rarely an uplifting field. Its defining feature is an ever-widening gap between resources and needs, with most global appeals achieving just 50 to 60% of their financing goals. At the same time, evidence mounts that if we could ‘just’ ramp up spending on prevention, we might be able to make a dent in that gap. The ‘US$ 1 spent on prevention saves US$ X in humanitarian response’ adages become more compelling every year. The situation is further complicated by a wide range of barriers to change – public finance shortages, donor regulations that tightly define what is a humanitarian activity and what is a development activity, and, notably, the difficulty in justifying prevention in a world where emergency relief needs already outstrip supply.

Many countries around the world are extremely vulnerable to natural disasters, such as earthquakes, hurricanes, volcanic eruptions, tsunamis, severe droughts or epidemic outbreaks. While such natural disasters do not discriminate between developed and developing countries, the long-term economic impact on a developing country of such a disaster can be many times more severe than if a similar event occurred in a developed country.

Migration in 2019 is at once polarising and unifying. There was thus something a little paradoxical about the Global Compact for Safe, Orderly and Regular Migration (GCM), adopted last December in Marrakech and subsequently endorsed, in New York, by the General Assembly. The creation of the Compact revealed at one and the same time both the intensely politicised nature of the discourse on migration yet also the clear recognition of the need to come together if its advantages are to be maximised and downsides minimised.

Earlier this year the global community marked the first International Day of Multilateralism and Diplomacy for Peace, celebrated on 24 April. Some may question the need for another International Day of this kind, especially considering we already observe the International Day of Peace (21 September) and United Nations Day (24 October); two moments to reinforce the ideals and principles of the organisation. For those who ponder the relevance of a day devoted to multilateralism and diplomacy, I would invite them to take just a minute to flip or thumb through their favourite newspaper or social media newsfeed.

The Sustainable Development Goals (SDGs) have always been an ambitious set of targets for the world to achieve. But, have no doubt, those goals can be achieved by 2030 as long as we all put our shoulders to the wheel.

Bilateralism vs Multilateralism: these are usually thought of as opposites.You are for one or the other. There is an undertone that if it is serious you do it bilaterally. This is fundamentally mistaken. Multilateralism is a hard option. To be effective, multilateralism must be a choice that is made because it is the most effective or efficient instrument available to a government. Countries should work multilaterally when it is the most effective way to meet a challenge.

Multilateralism is under attack. A number of prominent leaders from a wide variety of countries, from global powers (the United States) to emerging powers (Brazil and India), criticise major multilateral institutions such as the United Nations and the Bretton Woods institutions. Nationalist movements around the globe fuel mistrust in international cooperation via inter-state platforms. Their leaders argue that, not only is national sovereignty incompatible with multilateralism, it is in fact directly threatened by the latter. They seize upon areas of relative or perceived inefficacy to make umbrella statements questioning the practices, motivations and principles underpinning major multilateral organisations.

Who is the millennial investor, and why focus on this cohort to drive Sustainable Development Goal (SDG) financing? Born in the late 1980s through mid-1990s, this age cohort constitutes a large proportion of the economically active population in many countries, including in emerging economies. To cite a few examples, in Nigeria and Ethiopia the median age is 18, Egypt 24, South Africa and Saudi Arabia 27, India 28, Indonesia and Colombia 30, Bahrain 32, Armenia 35, China 37, USA and Australia 38, UK 40, France and Sweden 41.

Graphs provided by Development Initiatives give an overview of international financial flows to developing countries. A global snapshot is provided in Figure 1 below, with disaggregated graphs provided in the subsequent graphs (Figures 2-5), presenting the trends for Least Developed Countries (LDCs) vs. non-LDCs, and fragile vs. non-fragile countries respectively.While commercial long-term debt and Foreign Direct Investment (FDI) are dominant overall for the totality of ‘developing countries’, Official Development Assistance (ODA) remains a major source for the LDCs as well as fragile states as groups. Furthermore, the overall international financing flows are unevenly divided: LDCs – which housed about 15% of the developing countries’ population in 2016 and 7.6% of those living in poverty – received less than 10% of the total flows to all developing countries. Further, fragile developing countries accounted for less than 15% of the total inflows.

This paper discusses trends in cross-border financing of investments that impact the Sustainable Development Goals (SDG). We presage this discussion with one stark observation: choices on the level and quality of physical and human capital investment in the next decade will shape development trajectories for years to come. Once in place, these investments cannot be easily undone. The window for putting in place sustainable infrastructure is rapidly closing. More infrastructure will be built over the next 15 years than the entire stock of today’s infrastructure. If it is not low carbon, a climate-friendly development pathway is not feasible. Also, more people are moving to cities than ever before. If transport, land-use and public service delivery are not made more accessible, inequality cannot be addressed. Last, there is a demographic bulge in Africa. If these children are not kept healthy and skilled, they will be left behind.

I arrived in New York in early 2016 to take on my new responsibility as Canada’s Permanent Representative to the United Nations. During my introductory meeting with former Secretary-General Ban Ki-moon, I asked him for advice about which area I, as Canada’s new Ambassador, could focus on that would have the biggest impact. His answer surprised me.

Over the last 18 months a number of multilateral resource mobilisation efforts were completed. The consultations among the member countries that precede agreements on the replenishment of multilateral concessional funds and on capital increases for multilateral development banks represent important opportunities for members to set the strategic directions, policies and operational modalities for these institutions, and to ensure that they remain appropriately funded to deliver on their development mandates.

China has become a major source of development finance for the developing world. Its highest profile effort is the Belt and Road Initiative (BRI) – Xi Jinping’s vision of providing infrastructure and connectivity along the ancient Silk Road as well as along a so-called ‘maritime route’ that goes South from China, past Southeast Asia and South Asia, and on to Europe through the Suez Canal. But China’s effort goes well beyond this one project.

India’s development cooperation policy is the reflection of the broad principles followed by the Indian foreign policy of sovereign equality and a belief in friendly relations with all countries. In particular this means a new emphasis on the ‘Neighbourhood First’ approach by Prime Minister Modi’s administration, which in last four years has seen more of the lines of credit (LoC) (concessional financing) in the neighbourhood than ever before.

One of the derived wisdoms from the experience of implementing the Millennium Development Goals (MDG) suggests that the absence of an apriori understanding on the financing possibilities of the global agenda did affect its delivery. Thus, widespread satisfaction was expressed when the third Financing for Development (FfD) conference was held in Addis Ababa in July 2015, ie before the adoption of the Sustainable Development Goals (SDG). As the SDGs are rolled out at the country level over the next three years, it may be observed that the state of financing of the SDGs, particularly in the developing countries remains problematic—like clouds and wind without rain.

Civil society is committed to channelling individual voices and perspectives toward an improved present and better future through the Sustainable Development Goals (SDGs). Unlike the Millennium Development Goals (MDGs), civil society voices in the SDG agenda drove innovative and multi-sectoral approaches that are grounded in transparency and accountability of governments, thus living out the Busan principle that non-governmental organisations (NGOs) and civil society are ‘development actors in their own right’.