UN Sustainable Development Goals need overhaul of global financing mechanisms

THE principle that no country should be left behind in the pursuit of sustainability and prosperity is noble. It was explicitly adopted by the United Nations (UN) when it conceived the Sustainable Development Goals (SDGs), launched in 2016. While not legally binding, countries undertook to mobilise efforts to address poverty, alleviate inequality and tackle climate change – setting a target to achieve these by 2030. This year marks the halfway point to the target, and the progress – as an update in the run-up to the just-concluded SDG Summit indicates – has been disappointing at best and abysmal at worst.

The SDG report does not mince words. At halftime, the SDGs are in “deep trouble”; more than half the world is being left behind. On more than half of the targets, progress is “weak and insufficient”. On 30 per cent of the targets, the pace has stalled or gone into reverse. At the SDG Summit this week, UN Secretary-General Antonio Guterres said the SDGs need a “global rescue plan”. “Instead of leaving no one behind, we risk leaving the SDGs behind.”

The culprits for the dismal situation are evidently clear and intertwined. One is Covid-19, which left deep impacts on many goals, including poverty reduction, quality education and public health. For instance, pre-pandemic, the percentage of people living in extreme poverty had fallen from 10.8 per cent in 2015 to 8.4 per cent in 2019. But in 2020, populations in extreme poverty rose to 724 million, reversing about three years of progress. On the education front, of 104 countries studied, four out of five reported learning losses due to school closures.

As for global hunger, the world is back at hunger levels of 2005. About 2.4 billion people were moderately or severely impacted by the inadequacy of food. This is over 390 million more people than in 2019. Then, there is the goal of climate action where time is running out. Vulnerable communities are disproportionately affected by intensifying climate disasters, despite accounting for a fraction of emissions.

The sticking point in this litany is the inadequate and antiquated nature of the current financial architecture, which fails to keep up with the SDGs’ financing needs, estimated at US$4 trillion a year. The system today is rife with inequities. A case in point is the International Monetary Fund’s system of special drawing rights (SDRs) to provide liquidity to countries. Based on current quotas, developed countries received 66 per cent of the US$650 billion in SDRs allocated in 2021. Africa received 5.2 per cent, and the least developed countries, just 2.5 per cent.

Calls for a reform of multilateral development banks and international financial institutions – to align spending with climate goals – are not new. Last year’s climate change conference (COP27) called for the establishment of a “loss and damage” fund to assist the most vulnerable countries. The UN has also initiated the “SDG Stimulus” with the aim of scaling up financing for SDGs by ramping up affordable long-term financing from the multilateral development banks. These issues will surely be on the table at COP28 in November. There is no time to waste.