Lurdes de Sousa *
France’s summit for a New Global Financing Pact just ended in Paris. Although no legally bidding agreement per se was presented, the summit was nonetheless important as it contributed to the agenda on issues facing the Global South, creating narratives for a road map leading to the next meetings and namely the Africa Climate Summit in Nairobi, the SDG Summit, the G20 in New Delhi, the COP 28 in Dubai.
Who attended the summit? Dozens of heads of state and government from the Global South to G20 countries and the usual faces from the world of the United Nations and international financial institutions and amongst them Ajay Banga, the newly elected president of the World Bank, Kristalina Georgieva from IMF and Antonio Guterres, UN Secretary-General.
The summit for a New Global Financing Pact conveyed, in Paris, on 22 and 23 June, with the aim of discussing the long lasting efforts on reforming the mechanisms on development and its financing with emphasis on the reform of the so called ‘Bretton Woods institutions’ (World Bank and IMF). Why the debate around financing the Global South is so severely attacking the Bretton Woods institutions? Mostly because the institutions, created after World War II, are now faced with other kind of challenges such as extreme poverty, environment and biodiversity or in other words, as French President Macron, put it in his opening remarks, the summit is guided by “the principle that no countries should have to choose between poverty alleviation and protecting the planet”.
Amongst one of the highly attended intervention was the intervention of Chinese premier Li Qiang, a crucial player in the South-South cooperation.
In the face of the global development-financing gap, Li Qiang pointed out the call on the international community to cooperate and act to jointly solve the problems of developing countries, especially vulnerable countries. China, in a pragmatic move, proved to be a key player, during the gathering, in the $6.3 billion debt restructuring with Zambia (China is the largest official creditor to Zambia, with $4.1 billion owed to the Export-Import Bank of China alone). The country, pragmatic engagement in finding solutions for the Global South, owns to the fact, as premier Li Qiang stressed in his remarks, that development global issues concerns are reflected on China self-trajectory with the record of lifting 770 million people since 1978 out of extreme poverty (World Bank and the Development Research Center of the State Council, the People’s Republic of China. 2022. Four Decades of Poverty Reduction in China: Drivers, Insights for the World, and the Way Ahead. Washington, DC: World Bank). Indeed a remarkable record for a country that is very consistently working to achieve carbon neutrality by 2030
What did the summit achieved and announced? Some milestones such as Debt suspension clauses for loans from the World Bank and a $100 billion target in Special Drawing Rights for vulnerable countries within the IMF as part of a new vision statement for multilateral development banks. Collaterally it debated a various range of themes from gender smart finance, financing digital infrastructure to accelerate transitions – sustainability, connectivity, resilience, Financing for SDGs solutions, through MDBs, Sovereign Wealth Funds and Development Partners amongst others.
A reinforced commitment and role for Philanthropies
Most interestingly, the summit did stress the idea of mobilizing additional financial resources, especially from the private sector and private philanthropies as part of the new global financing pact. As the Financial Times framed it in an article published on 20th June, ‘the green transition won’t happen without financing for developing countries’.
‘At a time when there are growing financing needs to address climate, nature and development challenges, it is essential that foundations come together to leverage philanthropy’s comparative advantage, including to help mobilize private capital through new instruments and innovative blended finance’ the final statement of philanthropies stated.
It’s the opportunity for the non-state actors to further mobilize and scale up financing to tackle structural barriers to meet the SDGs and Agenda 2030, for which philanthropies are not new comers, according to OECD (2022), philanthropic action to address climate change has significantly increased in recent years rising to an estimated $1.5 billion in 2021.
Unlocking additional concessional resources, through philanthropy’s financial contributions, will be key to achieve the global objectives of poverty alleviation and addressing the effects of climate change. Climate shocks and emergencies, such as pandemics, curb the financial capacity of Low- and Middle-Income Countries to invest in a just, resilient, country-led and low-carbon or net zero transitions.
It’s time for philanthropies around the world to contribute to win the battle against poverty and vulnerabilities for a safer, cleaner and equitable world for the Next Generation.
*President, Associação Internacional de Filantropia (Macau)
國際꺽愛協會 (걜門)
Macau Daily Times is the official media partner of the Associação Internacional de Filantropia (Macau).
