Strengthening revenue collection to help finance economic growth and poverty reduction

Improving governance—including the rule of law—and supporting stable investment and taxation environments are critical to economic growth and poverty alleviation. Countries need less aid when they can raise adequate revenue themselves to meet development goals.

Global Financial Integrity estimates that outflows from developing countries due to tax avoidance and illicit financial flows amount to around US$1 trillion each year, which dwarfs global aid flows of $134 billion.

Australia is committed to strengthening efforts to build revenue capacity and effective tax, governance and anti-corruption systems in developing countries. As part of this, we are building institutional linkages through our Treasury and Taxation Office and their counterpart authorities, with a focus on the Indo-Pacific region.

Youth centre

Australia’s support is focused on long-term outcomes through strong and collaborative government‑to-government partnerships—this must extend beyond aid.

This was one of the issues where good progress was made at the first High Level Meeting of the Global Partnership for Effective Development Co-operation in Mexico in April.

For example, Australia is working with Papua New Guinea to build institutional tax capacity, implement new automated tax systems, increase tax compliance and strengthen audit capacity. This includes assistance through the Australian Treasury, in partnership with Papua New Guinea, to undertake a General Tax Review in 2014.

During Australia’s presidency in 2014, the G20 has continued to pursue reforms to make the international tax system more coherent and transparent, and to ensure tax is paid where economic activity occurs and value is created.

In 2014, to assist developing countries to reap the benefits of these reforms, the G20 has:

 

In addition, the G20 is contributing to global efforts to fight corruption, which undermines a government’s ability to mobilise domestic resources for development. For example, the G20 has developed high-level principles to improve the transparency of information on who owns and controls companies and other legal structures (known as beneficial ownership transparency). This will help prevent the illegal use of companies for money laundering, tax evasion or other illicit purposes.

Looking beyond 2014, the G20 will work with international and regional organisations to develop toolkits that provide tailored approaches for developing countries to effectively implement reforms to combat profit shifting and tax avoidance. We will undertake additional work on related tax issues that developing countries raised as priorities during consultations, such as the effective use of tax incentives to attract investment.

To help developing countries access more and better information about their taxpayers’ profits and income being held offshore, the G20 will also support developing country pilots on arrangements to automatically exchange tax information with other jurisdictions.

The G20 will further strengthen these efforts to promote international tax transparency by identifying steps and taking concrete actions to implement the G20 High-level Principles on Beneficial Ownership Transparency.

I look forward to continuing to work with the G20, the Global Partnership for Effective Development Cooperation and our developing country partners on these crucial reforms. These form part of a broader package of support Australia will invest to help developing countries participate in, and benefit from, the G20 international tax agenda.


bishop-portrait-high-resJulie Bishop is the Minister for Foreign Affairs in Australia’s Federal Coalition Government. She is also the Deputy Leader of the Liberal Party and has served as the Member for Curtin in the House of Representatives since 1998.

New ways of working to reach the unreached children after 2015

In a country with an abundant supply of fresh food, five-year-old Asha is lucky to be alive. A lack of awareness and access to the right nutrition at the right time in rural Tanzania robbed her of her sight, but thankfully not her life.

Despite global progress in the last 15 years, millions of children like Asha still die or suffer life-long effects of poverty and under-nutrition every year. Out of sight, out of reach, out of mind, they are the often-invisible victims of two of the Millennium Development Goals (MDGs)’ failings – aiming to halve extreme poverty has seen a job half done; and measuring success through averages has failed to close the gaps in countries where the most vulnerable children live, and die.

The post-2015 framework must not only build on the MDGs’ success, but go much further to finish the job, ensuring that invisible and unreached children feel the benefits of global development progress.

World Vision believes the next set of goals must aim for zero; zero preventable deaths, zero violence against children, zero under-nutrition. We believe that achieving this is possible, but not by doing more of the same. New and innovative approaches are needed.

Like the Global Partnership for Effective Development Co-operation, World Vision is committed to identifying practical actions to implement the post-2015 development goals. It is vital that the process gives significant consideration to how the new goals will be achieved, and in particular to engaging businesses as partners.

Creating and strengthening links between groups who may have traditionally been seen as strange bedfellows is one way to achieve this. For example, partnerships between government and business, or other private sector actors and civil society, or between government, private sector and UN agencies, will help maximise development successes.

World Vision is already involved in cross-sector partnerships at various levels. Nearly 2,000 frontline staff are working in a programme to systemically build and strengthen capacity for brokering collaborations. They are full of praise for the approach. “It builds ownership, capacity and contribution of resources,” said one. And another: “The response to our new approach has been overwhelming. When we did our action planning collaboratively, people were saying ‘I can provide this’, ‘I can provide that’. This wasn’t happening before.”

Last year, World Vision and global science company working in nutrition, Royal DSM, began an ambitious partnership to tackle under-nutrition, starting in Tanzania, recognising that children like Asha continue to fall through the gaps. With a focus on fortifying maize flour with essential micronutrients, both organisations are leveraging expertise, resources, and reach.

A recent World Vision study, including over 30 interviewees from government, business, civil society and the UN, explored two questions: (1) how targets for cross-sector partnerships could be captured in the post-2015 framework, and (2) how cross-sector partnerships can help to meet the needs of the most vulnerable children.

We found that the post-2015 framework should include three targets to enable cross-sector partnerships to flourish. We need multi-stakeholder platforms at both the national and global level, and accountability mechanisms covering all cross-sector partnerships.

Our study affirmed the importance of cross-sector partnerships to reach and help the most vulnerable children, but unearthed differing views on whether ‘market-based’ cross-sector partnerships are realistic.

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Those who felt this approach was feasible said that it was only viable for those at the very bottom of the pyramid – the most vulnerable children living in fragile contexts – if subsidised, to offset the costs involved.

Those who did not agree were not, in principle, against market-based solutions for development, but said they were only viable to help less vulnerable children at the higher strata of the pyramid.

Reaching the most vulnerable is most challenging in fragile contexts, but business can still make a significant contribution within cross-sector partnerships. One way is by building infrastructure and improving physical access to children living in the most remote or conflict and fragility-affected communities. Another is by strengthening capacity within governments and among those with influence on the broader economic environment.

World Vision believes that companies should take a holistic view of their investments to ensure they maximise the benefits to the world’s most vulnerable people, especially children. This could include focusing any philanthropic spending on reaching the most vulnerable children, especially those living in fragile contexts, and ensuring alignment with national strategies and global coordination mechanisms.

Business can also increase investments in:

  • inclusive, sustainable business models, within market-based, cross-sector partnerships for the upper levels of the base of the pyramid
  • infrastructure projects that benefit the poorest in fragile contexts
  • capacity-building to strengthen civil society, local business and governments in fragile contexts
    Companies can also use their influence to advocate for pro-poor government policies and practices, particularly in fragile contexts, and act as role models in their own behaviour. As leaders across sectors look to a new set of development goals, we need to seize new opportunities and partnerships. Asha’s life was saved because a large NGO partnered with local health workers and government officials, in a programme funded by various international donors, to raise awareness of and access to the right kind of nutrition for children.

    “Every morning I would prepare porridge mixed with sorghum, groundnuts, maize and millet. This was the type of food we were taught to prepare for better health of children,” her adoptive mother said. Our hope is that in 15 years time, cross-sector partnerships will contribute to making better health the norm. For every child.


    Wisheart

    Mike Wisheart is World Vision International’s senior advisor for corporate engagement within the Advocacy and Justice for Children team. He previously worked for six years in a faith-based development organisation in Tanzania and prior to that in the private sector in the UK. Mike can be contacted at mike_wisheart@wvi.org and on twitter @MikeWisheart.

Triangular Co-operation: a view from Germany

Germany is often regarded as a so-called “traditional donor country”. The word “traditional” may sound a little antiquated at first. But I believe that Germany has shown that its policy is anything but old-fashioned. Germany is ready to embark on new avenues and forge new partnerships.

One of the new avenues on which we want to embark is to expand the instrument of triangular cooperation. Germany has been supporting this form of cooperation for a long time, since the mid-1980s in fact. Since then, geopolitical changes and the growing importance of emerging countries have led to the appearance of new actors and donors in the global development landscape. To increase the involvement of these new rising powers, the German Federal Ministry for Economic Cooperation and Development (BMZ) strives to further exploit the potential of triangular cooperation. We emphasised this intention in the Busan Outcome Document. To us, triangular cooperation arrangements act as an important link between South-South and North-South cooperation.

Together with Japan and Spain, Germany is one of the most active, sought-after and biggest supporters of triangular cooperation. At present, the BMZ and its implementing agencies are carrying out more than 20 triangular cooperation projects in partnership with various emerging countries. The majority of projects are in Latin America and the Carribean, with major partners such as Brazil, Mexico, Chile or Peru. Another major partner for triangular cooperation projects is South Africa, which cooperates with Germany and a number of African partner countries. Most of the projects are financed through our joint triangular cooperation funds in Latin America and South Africa. While the majority of triangular cooperation projects are with Latin American countries, Germany also wants to increase the use of this instrument in Asia and Africa as a whole. Some projects in Asia already show great promise.

Equal Work

 

A global group for joint learning and collaboration on triangular cooperation is what we should be striving to cement.

For Germany, triangular cooperation is an additional innovative instrument of cooperation with emerging economies, with a particular focus on our partner countries Brazil, India, Indonesia, Mexico and South Africa. These countries are hereinafter referred to as Germany’s “global development partners”. Besides mobilising transfers together with our emerging country partner – from whom we expect a significant contribution – Germany wants to share knowledge, help develop the institutional architecture of development agencies in emerging countries and foster joint dialogue on values, modes of cooperation and interests. Triangular cooperation can have a particularly significant impact when all three partners succeed in jointly addressing sensitive topics, such as the protection of global public goods, that none of them could have tackled alone. Topics should always be selected according to the interests and needs of the beneficiary country. We believe it is essential that the beneficiary country takes the lead and steers the entire process. This, however, is not an easy task. We see ourselves neither as pure donors nor as pure intermediaries; rather, we see ourselves as an equal partner in a joint project. Contributions at the first High Level Meeting of the Global Partnership for Effective Development Cooperation in Mexico made clear that development agencies in many emerging economies are already in the process of forming adequate structures, developing mechanisms and mobilising resources to fully unfold their potential. Triangular cooperation arrangements are a means of supporting this process further, since they combine political and technical dimensions of cooperation with our “global development partners”.

In the last few decades, the international community has gained considerable experience with triangular cooperation. This is definitely true of Germany. In many cases, however, exchanges of experience are limited to certain groups or topics. One way to further improve mutual learning and collaboration would be the creation of a global group on South South and Triangular Cooperation. The key issues to be taken into account by this group should include the following questions: How can we further reduce transaction costs and maximise ownership on the part of the beneficiary country? What are appropriate, well-matched instruments for monitoring and evaluating triangular cooperation projects? What are suitable formats for reporting, or communication and cooperation structures? We need to integrate experiences and lessons learnt on South-South cooperation, as well as the findings of think tanks already working to better understand various approaches and impacts. Germany therefore also supports the independent work of think tanks from the South and the North in this effort. The Global Partnership for Effective Development Cooperation (GPEDC) and the UN Development Cooperation Forum (UN DCF) have a very important role to play in this regard. Germany would like to encourage all actors to share their experiences. A global group for joint learning and collaboration on triangular cooperation is what we should be striving to cement.


PStS Thomas Silberhorn (BMZ) 2014Thomas Silberhorn is Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development. He was previously Deputy Chairman of the CDU/CSU parliamentary group in the German Parliament (Bundestag). He is also Germany’s Governor at the African Development Bank and is responsible for bilateral development cooperation with the continent of Africa. Another regional focus is on Near and Middle East countries.