07/07/2015 05:32 EDT | Updated 07/07/2016 05:59 EDT

Three Ways Civil Society Can Ensure the Private Sector Delivers Positive Development Outcomes

A local resident awaits the landing of a British Navy helicopter as it drops food aid on Sherbro Island, Sierra Leone, Sunday, Dec. 7, 2014. The WFP, World Food Program and British Military took part in a three day food distribution effort to local residents on the remote Sherbro Island, where the amount of sick people due to the Ebola virus have prevented people from farming, fishing or gathering there own food. (AP Photo/Michael Duff)

By Taryn Russell

On July 13-16 in Addis Ababa, the world's development actors will come together at the 3rd Financing for Development (FfD) conference to discuss how to fund the proposed Sustainable Development Goals (SDGs). Increasingly, in Canada and internationally, there has been a growing emphasis on the importance of innovative financing as integral to funding the SDGs. This is due to the recognition that Official Development Assistance (ODA) as it currently stands is not enough to meet the estimated trillion dollar financing gap.

Indeed, one of Canada's priorities at both the negotiations leading up to the conference and at the conference itself has been to put less emphasis on international public finance, or ODA, as the primary mechanism for funding development goals . This does not come as a surprise as Canada's ODA contributions have seen a continuous decline since 2010, resting at $4.2 billion in 2014, or 0.24 per cent of Gross National Income, barely one third of the 0.7 per cent target. Despite advocacy from Canada and other donor countries, the 0.7 per cent target will remain in the Outcome Document but will likely be framed as aspirational and non-binding.

Instead, Canada has made international private finance, specifically blended finance, one of its key priorities going into the FfD conference. Put simply, blended finance is the use of public funds to either leverage or encourage private sector investment. Canada has been a champion of blended finance both globally and domestically.

• Canada is chairing the Redesigning Development Finance Initiative (RDFI) aimed at expanding private sector investment in development.

• Canada is also leading the development of a Global Finance Exchange (GFX), a virtual `dating 'site to bring together public and private capital to invest in developing country markets.

• Closer to home, the 2015 Economic Action Plan included $300 million in capitalization for a new Development Finance Initiative (DFI) to be housed in Export Development Canada (EDC).

The increasing emphasis on the private sector as a key development actor opens up many questions around the role of the private sector in achieving development outcomes, which the Canadian CSO community is currently grappling with. What do the launch of these blended finance mechanisms mean for the future of development in Canada? How do we ensure that private sector development remains accountable and transparent? What is the role of the government in mitigating risk to the private sector?

To address these issues RESULTS Canada recently held a CSO Roundtable on Financing for Development. Thirty participants from twenty organizations came together to debate and discuss how the CSO community should respond to Canada's approach to international development financing. Here are three of the main takeaways of the roundtable:

1. Education: During the roundtable it became clear that the Canadian development community must get up to speed quickly with this new and emerging issue. CSOs are uniquely placed to have a key oversight role in ensuring accountability when it comes to public spending. Innovative and blended financing are complex issues and ones for which many development practitioners do not necessarily have a background or experience working in. If we are to ensure accountability and transparency by the private sector and the government then we will need to educate ourselves quickly.

2. Coordination: It was also clear that there is appetite for increased coordination and cooperation among Canadian CSOs in engaging around FfD. If CSOs are going to make their voices heard on key issues such as Canada's aid spending or the mandate and structure of the DFI then it is important that we share expertise and work together. The way development is financed has cross-cutting implications for all CSO sectors and it is counter-productive to continue to work in silos.

3. Consultation: CSOs have been largely left out of the conversation concerning blended finance and it is imperative that their participation is formalised and supported, both in Canada and other donor countries as well as in the global south. CSOs must have access to information, a formalised supported space for participation and input, and the ability to hold donors, recipients and the private sector accountable for their actions. As Canada launches mechanisms such as the GFX and writes the business plan for the DFI it is imperative that CSOs are involved in a meaningful and transparent consultation process.

Taryn Russell, Vaccines and Child Health Campaigns Officer at RESULTS Canada

The views expressed in this blog are those of the authors, and do not necessarily reflect the positions of CCIC or its members


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