Report on the 4th International Conference on Financing for Development and Sustainable Development Goals (SDGs)

Introduction

Next week, leaders from government, finance, and civil society will convene at the United Nations 4th International Conference on Financing for Development in Seville, Spain. This conference presents a critical opportunity to address systemic global inequality by improving equitable access to affordable, long-term financing, a major constraint to achieving the 2030 Sustainable Development Goals (SDGs).

Challenges in Financing and Development

Access to finance and technology remains the most significant barrier to economic growth and SDG progress, especially in Africa. High sovereign debt levels have limited African governments’ ability to invest in human capital and research infrastructure, suppressing innovation and technological development. This has widened income and development gaps between Africa and other regions.

Current State of SDGs and Financing Gaps

• Only 17% of the SDGs are currently on track globally, with more than one-third stalled or regressing.
• Africa accounts for approximately 55% of global poverty, with over 237 million children living in extreme poverty.
• The global annual financing gap for the SDGs is estimated at $4 trillion, with Africa alone requiring $1.3 trillion annually.
• Debt servicing costs in Africa reached $163 billion in 2023, significantly limiting development financing.

Impact of Global and Geopolitical Factors

Overlapping crises such as the COVID-19 pandemic, tightening global financial conditions, rising geopolitical tensions, and climate catastrophes have undermined SDG progress, particularly in vulnerable low-income countries. Heightened protectionism and deteriorating commodity terms of trade have further constrained economic growth and investment in Africa.

Regional Disparities in SDG Progress

1. Asia: Asia, especially China, has demonstrated remarkable progress in reducing poverty through sustained public and private investment, integration into global value chains, and technology transfers. Asia received over 71% of inward foreign direct investment (FDI) in developing countries in 2023.
2. Africa: Africa’s marginalization in global value chains, high borrowing costs, and limited access to affordable financing have hindered economic diversification and SDG achievement. African countries often pay 5 to 10 percent higher interest rates than advanced economies, with debt interest consuming 14% of government spending on average.

Systemic Inequalities in Global Financial Architecture

• Credit rating agencies have inflated risk perceptions for African bond issuers, resulting in $74.5 billion in excess interest and forgone funding.
• Many African countries spend more on debt servicing than on essential public services such as healthcare.
• The global financial system has failed to provide African nations with financing of adequate quality, undermining their capacity to invest in sustainable development.

Opportunities and Recommendations for SDG Advancement

Despite the challenges, the world possesses significant wealth, with $128 trillion in assets under management by the largest investment managers as of 2023. To advance the SDGs, particularly in Africa, the following actions are essential:

• Adopt a new development mindset transcending the traditional developed/developing country divide to address systemic global inequality.
• Improve access to affordable, long-term financing tailored to the needs of low-income countries.
• Promote education, technology transfer, and infrastructure development to enable integration into global value chains.
• Enhance global cooperation to restructure sovereign debt and reduce volatility in public spending.
• Encourage sustained public and private investment to catalyze economic diversification and employment growth.

Conclusion

The 4th International Conference on Financing for Development represents a pivotal moment for global leaders to commit to equitable financing solutions that support the achievement of the 2030 Sustainable Development Goals. Without decisive action to address financing inequities and systemic barriers, progress toward eradicating poverty, reducing inequality, and promoting sustainable development will remain insufficient, particularly in Africa.

Author: Hippolyte Fofack, former chief economist at the African Export-Import Bank, Parker fellow with the Sustainable Development Solutions Network at Columbia University, research associate at Harvard University, distinguished fellow at the Global Federation of Competitiveness Councils, and fellow at the African Academy of Sciences.

Image: A woman walks outside the United Nations headquarters during the 74th session of the United Nations General Assembly in New York City, September 24, 2019. Photo via REUTERS/Eduardo Munoz.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 1: No Poverty – The article highlights the sharp increase in poverty in Africa, with Africa accounting for around 55% of global poverty and 237 million children living in extreme poverty.
2. SDG 8: Decent Work and Economic Growth – Issues related to economic growth constraints due to inequitable access to finance, sovereign debt, and lack of investment in human and technological capital are discussed.
3. SDG 9: Industry, Innovation, and Infrastructure – The article discusses suppressed innovation and technological infrastructure in Africa and the need for technology transfers and manufacturing diversification.
4. SDG 10: Reduced Inequalities – The article addresses systemic global inequality, income gaps between Africa and other regions, and the marginalization of Africa in global value chains.
5. SDG 13: Climate Action – Environmental degradation and the strain of debt servicing on Africa’s capacity to tackle climate change are mentioned.
6. SDG 17: Partnerships for the Goals – The article emphasizes the need for global cooperation, improved financing mechanisms, and restructuring sovereign debt to achieve the SDGs.

2. Specific Targets Under Those SDGs Identified

1. SDG 1 Targets:
   • 1.1 – Eradicate extreme poverty for all people everywhere.
   • 1.2 – Reduce at least by half the proportion of men, women, and children living in poverty.
2. SDG 8 Targets:
   • 8.1 – Sustain per capita economic growth in accordance with national circumstances.
   • 8.3 – Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation.
3. SDG 9 Targets:
   • 9.1 – Develop quality, reliable, sustainable and resilient infrastructure.
   • 9.5 – Enhance scientific research, upgrade technological capabilities and encourage innovation.
4. SDG 10 Targets:
   • 10.1 – Achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
   • 10.2 – Empower and promote social, economic and political inclusion of all.
5. SDG 13 Targets:
   • 13.1 – Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters.
   • 13.a – Implement the commitment undertaken by developed-country parties to the UNFCCC to mobilize jointly $100 billion annually by 2020 to address the needs of developing countries.
6. SDG 17 Targets:
   • 17.3 – Mobilize additional financial resources for developing countries from multiple sources.
   • 17.9 – Enhance international support for implementing effective and targeted capacity-building in developing countries.

3. Indicators Mentioned or Implied to Measure Progress

1. SDG 1 Indicators:
   • Proportion of population living below the international poverty line (extreme poverty rate).
   • Number of children living in extreme poverty.
2. SDG 8 Indicators:
   • Annual growth rate of real GDP per capita.
   • Proportion of informal employment in non-agriculture sectors.
   • Foreign Direct Investment (FDI) inflows as a percentage of GDP.
3. SDG 9 Indicators:
   • Research and development expenditure as a proportion of GDP.
   • Manufacturing value added as a proportion of GDP.
   • Technology transfer metrics (implied through FDI and integration into global value chains).
4. SDG 10 Indicators:
   • Income growth rate of the bottom 40% of the population.
   • Measures of income inequality (e.g., Gini coefficient).
5. SDG 13 Indicators:
   • Financial resources mobilized for climate action.
   • Government expenditure on climate change mitigation and adaptation.
6. SDG 17 Indicators:
   • Amount of official development assistance and financial flows to developing countries.
   • Debt service as a percentage of government revenue.
   • Access to affordable long-term financing.

4. Table of SDGs, Targets, and Indicators

Source: atlanticcouncil.org