Nearly a decade has passed since the 2015 International Conference on Financing for Development and the Addis Ababa Action Agenda that resulted from it. Several commitments made during the conference remains unfinished and the financing gaps continue to widen, with an estimated annual requirement of $4 trillion to meet development and climate targets. As a result, doubts have emerged regarding the potential effectiveness of the upcoming conference scheduled for June/July 2025 in Spain.
During the recent Financing for Development Forum in New York, U.N. Secretary-General António Guterres underscored the difficulties encountered by countries seeking support from the global financial system. He highlighted the system’s lack of responsiveness to their demands and its inability to provide stability or sustainability, thereby emphasizing the significance of the forthcoming summit.
The Fourth International Conference on Financing for Development will center on reshaping the global financial framework, particularly concerning debt, taxation, and aid. One of the contentious issues to be addressed involves empowering countries in the global south to have a greater influence on global taxation, rather than having decisions made solely by Organisation for Economic Co-operation and Development countries. The objective is to create a global tax structure and tackle the key challenges of debt, debt restructuring, and the cost of capital.
The conference will also serve as a test of whether nations can overcome heightened geopolitical tensions and reach a consensus. U.N. Development Programme chief, Achim Steiner, has emphasized the importance of the conference in rebuilding trust among nations and understanding the world’s interconnectedness, particularly as donor nations have reduced their contributions.
In preparation for the financing conference, African leaders have joined forces to establish the “Africa Club” – a consortium of regional banks advocating for Africa on related matters. They aim to devise tailored solutions and financing instruments to meet Africa’s developmental requirements and pool resources for their effective deployment. Furthermore, a gathering of African leaders in Nairobi, Kenya, called for new funding for the World Bank’s International Development Association, with a focus on job creation, energy, digital access, and resilience building.
Another noteworthy development is the rise in blended finance deals, with a five-year peak of $15 billion worth of deals in 2023. The surge in substantial transactions exceeding $100 million indicates a positive trend in financing, as per a report from Convergence. However, the report also highlighted the challenges of debt-for-nature swaps, citing them as complex, costly, and potentially ineffective in delivering sustainable development benefits.
As preparations for the 2025 Financing for Development conference continue, the global community will closely monitor the outcomes and agreements reached at the summit. The success of the conference will be vital in addressing the urgent financial requirements of developing countries and achieving sustainable development goals.