Unlocking Finance To Build Forward Better From The Covid-19 Crisis & Accelerate Delivery Of Sustainable Development.
The African government's economic crisis over the Covid-19 Pandemic equals (1 to 7)% of their GDP, contributed by African Governments deploying fewer funds and measures for high-quality recovery. At The Youth Café, we believe that there is a need for financial education. This will increase unlocking finance to build forward better from COVID-19 and accelerate delivery on Sustainable Development as intended: To identify effective measures to address the overarching challenge of mobilizing adequate and sustainable finance to invest in sustainable recovery from the COVID-19 crisis and accelerate the implementation of the 2030 Agenda and Agenda 2063. To identify and articulate the financing needs and provide high-level insights on opportunities to mobilize finance, focusing on the role of the Liquidity and Sustainability Facility designed and launched by ECA and partners.
Governments need to adequately understand the implications of their individual policy choices in alignment with their national sustainable development objectives, for example, potentially bringing unintended costs. A tactic to leave potential development gains on the table is fiscal policy. Fiscal policy aims at financial management for COVID 19 recovery. It uses government spending and taxation to influence the economy, promoting solid and sustainable growth and reducing poverty. The problem is that governments spend more money than they collect through taxes. Fiscal management means planning, organizing, directing, and controlling financial activities such as utilizing funds, thus ensuring efficient and effective use of limited levels of resources for success.
A common constraint is policymakers lacking effective mechanisms for tracking the cumulative impact of their budgets, thus making it challenging to demonstrate progress to donors, secure new financial support, and lower borrowing costs. The Global Recovery Observatory, an emerging global transparency tool, will help governments make more informed financial decisions. This trend can help build back better from the coronavirus pandemic while advancing the full implementation of the 2030 Agenda for Sustainable Development and the Agenda 2063, requiring a systematic integration of sustainability considerations in policy-making design and implementation.
Many African countries (48 out of 54) have shown commitment and substantial progress towards implementing the SDGs where every country is either on track to SDG achievement or moderately improving. African nations are on the way to meeting the Climate Action (SDG 13) and moderate progress in clean water and sanitation (SDG 6). The set of goals in the African Union's Agenda 2063 broadly aligns with those in Agenda 2030, each providing standards for equality, living, sustainability, and peace, while the region as a whole is far from achieving all these committed targets, an upward trajectory was evident before 2020.
Operating with already limited fiscal space to include; increased costs, declining foreign investments, insufficient foreign aid mounting pressure on the national budget. Governments across the region must now cope with expanded health and social care costs while taxation revenues have collapsed.
The economic fallout of COVID-19 amplifies existing inequalities within society, leading to further marginalization of disadvantaged groups and threatening the “Leave No One Behind” philosophy underpinning the SDGs 2030 Agenda.
Fiscal management has proved to be significant over the years in its application. Many researchers have highlighted the potential for some budgetary investments to simultaneously support social and economic objectives. Recommended specific global policies include clean physical infrastructure investment; building efficiency retrofits; investment in education and training to address immediate unemployment from COVID-19 and structural unemployment from decarbonization; natural capital investment for ecosystem resilience and regeneration; and clean Research & Development investment.
Research has found that green investments are promising. Vivid Economics modeling has also suggested that investing in green initiatives could create up to 60% more jobs in the short-term and as much as 140% greater economic value in the long term.
The scale and urgency of Africa's challenges require that national economic policymaking be aligned with Agenda 2030 and Agenda 2063. Nations should employ systematic review or planning processes for national budget design. There should be tools to help policymakers compare, contrast, and commit to policy initiatives in presence. For instance, the Irish Penal Reform Trust (IPRT) software dynamically assesses policy planning frameworks' alignment with both Agendas, enabling the visualization of country performance regarding alignment and progress in implementing these plans. The Global Recovery Observatory and the Accompanying analysis highlight that appropriate planning tools are likely to be structured and implemented sustainably.
The Sustainable Budgeting Approach (SBA) provides and enables systematic training and assessment (environmental and socio-economic) of disaggregated national budgets to bring unprecedented transparency and accountability to the use of public funds and encourage countries to better design and public spending. In the long term, combining national and global databases would help policymakers and researchers learn about which types of policies can respond to both political-economic incentives and the environment. Sectors could also aggregate data to provide targeted intelligence and progress towards Agenda 2030 objectives.
Individual governments have made their own economic recoveries green, having seen some success in their efforts, with the percentage of global green recovery spending slowly increasing throughout the pandemic. An initiative from the Global Recovery Observatory has brought transparency to government spending habits to prompt better behavior. The Observatory's initiative tracking shows the degree to which economies make sustainable decisions in their COVID-19 recovery spending. The Observatory has found success in helping government decision-makers learn from the actions of other governments to understand where green investments have been made and how they might secure economic gains.
Grounded in the Global Recovery Observatory methodology, the Sustainable Budgeting Approach (SBA) aims to help policymakers understand potential and actual fiscal policy decisions' environmental, social, and development characteristics. It is also a powerful tool for increased transparency and accountability for the Member States, providing helpful forward guidance, signaling, and credible monitoring for potential investors and financial institutions. An application example is a produced sustainability-oriented Public Financial Management (PFM) review in Gabon. This review allows Gabon to integrate new green fiscal taxonomy into the Gabonese policymaking process. With stakeholders' cooperation, the SBA will also help catalyze progress towards fulfilling nationally-set principles and attaining other development agenda items, including Leave No One Behind (LNOB).
African Regional Forum on Sustainable Development (ARFSD) will facilitate new interactions with policymakers on the topic and hopefully lead to new piloting programs across the continent, and it will be through a five-part sustainable budgeting approach including;
Record policies, spending policy-level measures found in the national budget, sub-policy/program measures assembled from accompanying investment documentation (national or ministerial), and recorded taxation measures to include policy titles, descriptions, dates, values, and sources. Categorize policies using Oxford taxonomy, which is archetypes of operational-type like ongoing spending or discretionary like new investment and sub-archetypes that are mutually exclusive, collectively exhaustive, and relevant social, development, and environmental impact measure.
Through running automatic assessment of policies, basing scores on the nature of being directional and flexible, intending to provide a broad overview of a nation's policy landscape, such as those covering social development and environmental factors such as air pollution. Determining superior policies is through linkage and comparison with other policies across Africa and using the impact scores and accompanying descriptions of sub-archetypes. These policymakers have the same development outcomes without the environmental or social costs. Learning from the other countries, the SBA incorporates live global comparisons of spending for policymakers to facilitate direct policy learning across regions.
The Sustainable Budgeting Approach (SBA) helps policymakers understand their budget decisions' potential development, social, and environmental impacts. African nations are missing opportunities to use their limited fiscal space to accelerate development and climate action. The Sustainable Budgeting Approach (SBA) provides a step towards action, making leading environmental and socio-economic science accessible to policymakers to guide sustainable development. The approach is adaptable; it can be calibrated based on policymaker needs and country context. Adopting the SBA could strengthen the Public Financial Management (PFM) foundation for progress towards Agenda 2030 and Agenda 2063.
By combining science with socio-cultural perspectives, the approach can integrate sustainable planning processes into public financial management. Doing so could contribute directly to SDGs 1, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 17. More efficient and effective fiscal management, aligned with Agenda 2030, could attract increased external financing supporting national development objectives. Getting from "billions to trillions" [1], as envisaged in the Addis Ababa Action Agenda (AAAA), requires scaled-up contributions from all financial stakeholders.
Support from Development Finance Institutions (DFIs) and some parts of the private sector could help find better policy options and compare global performance, new fossil energy electricity generation, new clean energy electricity generation, short-term GHG, long-term GHG, air pollution, natural capital, adaptation, job creation, poverty alleviation, wealth inequality, quality of life, and rural livelihood.
COVID-19 Global Recovery Observatory, Green recovery spending (% of total recovery spending), Recovery spending (% GDP, logarithmic scale) dramatically increased with transparent and effective public finance systems. Many donor countries have a political imperative to support climate action and a sustainable growth pathway; thus, adopting the SBA could demonstrate progress in Africa.
This document will introduce ARFSD participants to the SBA, facilitate new pathways to align national budgeting with sustainable and inclusive growth objectives, and hopefully lead to new SBA piloting programs across the continent.
The Youth Café works with young men and women around Africa as a trailblazer in advancing youth-led approaches toward achieving sustainable development, social equity, innovative solutions, community resilience, and transformative change.
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