Project for Financing for Development

By Tekaling GidiDecember 2015

The ground rule for the new SDG and the Past MDG

• The sustainable development goals (SDGs) are a new, universal set of

goals, targets and indicators that UN member states will be expected to

use to frame their agendas and political policies over the next 15 years.

• The SDGs follow and expand on the millennium development goals

(MDGs), which were agreed by governments in 2001 and are due to

expire at the end of this year.

The MDG: the global development agenda from 2000 until 2015.

Why we need SDG???

• The MDG goals made no mention of human rights and did not

specifically address economic development. While the MDGs, in

theory, applied to all countries, in reality they were considered targets

for poor countries to achieve, with finance from wealthy states.

Conversely, every country will be expected to work towards achieving

the SDGs.

The new SDG Goals

• The sustainable development goals (SDG) are a reflection of the situation

in the world today. According to Jan Eliasson, the SDG reflect that the

world need peace, development and human rights. The year 2015 offers a

unique opportunity for global leaders and people to end poverty and to

transform the world to better meet human needs and the necessities of

economic transformation, while protecting our environment, ensuring

peace and realizing human rights.

What we need to accomplish the SDG???

• In order to accomplish the SDG we need International perspectives as

well as regional, national and local perspectives. These goals are many

and complex than the MDGs.

What are the sources of finance for SDG?

• We have to go from billion to trillions. Trillions of will be needed

every year. “We need to radically rethink how we unlock resources

and connect the billions of dollars in official development assistance

(ODA) to trillions in investment of all kinds, public and private,

national and global.”

• The global community provides roughly $135 billion a year in official

development assistance, according to the Organisation for Economic

Co-operation and Development (OECD). But the SDGs are ambitious,

and the cost of achieving them will far exceed current development

funding.

• The largest potential sources of finance for development come from

countries themselves and private investors. International financial

institutions such as the World Bank Group can help countries get the

money they need for development through better tax policies, more

efficient public spending, and private investment.

The time of SDG

• The SDGs will be officially adopted at a UN summit in New York in

September, and will become applicable from January 2016. The

deadline for the SDGS is 2030.

Implementation of SDG

• Implementation and realization of the goals is crucial at the

international, nation al and local levels.

What is the Key to achieve SDG?Especially for Africa!

Domestic Resource Mobilization

• Domestic Resource Mobilization is the most resource available to implement the SDG

• Domestic Resource Mobilization (DRM) — the process in which countries

transparently raise and spend their own funds to provide for their people – is the long-

term path to sustainable development finance. DRM doesn’t have to mean new taxes

or higher tax rates — governments often see their revenues rise through improved

audits or simplified filing processes. Improvements in tax compliance and revenues

can, and often do, enable countries to lower tax rates.

• The growth and scale of domestic resources in the developing world are

impressive; for example, total domestic sources of revenue grew in the 54

Sub-Saharan African countries from $100 billion in 2000 to nearly $513

billion in 2011 according to the African Economic Outlook.

• Contrast that with the growth of ODA during the same period, which

went from $20 billion in 2000 to approximately $60 billion in 2011.

Tax Administration System for Effective Domestic Resource Mobilization

• How a tax system is administered affects its yield, its incidence, and its efficiency.

• Three ingredients are essential to effective tax administration: political will, a clear

strategy, and adequate resources.

• Administration that is unfair and capricious may bring the tax system into disrepute

and weaken the legitimacy of government.

• The three major tasks of an effective tax administration are facilitating

compliance by ensuring that individuals obligated to pay taxes are doing

so and to try and make compliance easier for the taxpayer; enforcing

compliance and reducing tax evasion; and improving governance to keep

tax officials honest and reinforce the legitimacy of the tax system.

• Facilitating compliance• The first task of any tax administration is to facilitate compliance: ensure that those who

should be in the system are in the system, and that they comply with the rules.

• Enforcing compliance• To enforce compliance and reduce evasion, the administration needs to understand the extent

and nature of the potential tax base to estimate the tax gap, preferably by sector and type.

• Improving governance• The task of the tax administration is not to assess who owes what, but instead to guard the

“borders” of the system and verify that those who should be self-assessing are behaving responsibly.

Reference

• From Billions to Trillions: Transforming Development Finance, WBG joint with IMF and MDBs, 2015. Pages 7-12 • Domestic Resource Mobilization, USAID, 2015 (read webpage

introduction and 2-page El Salvador case study)• Financing the future: Why domestic revenue mobilization belongs on

the post-2015 agenda. Devex, 2014 (OpEd, 1 page)• Smart Tax Administration, WBG, Economic Premise, 2010 (Briefing

Note, 5 pages