Better Policies, Investment in Infrastructure, Industrialization Key for Creating Thriving, Sustainable Societies, Speakers Tell Economic and Social Council
Unlocking developing countries’ potential for green growth depended on using the right keys, learning from past mistakes and shaping new ideas based on bolstered, more coordinated action, speakers told the Economic and Social Council today at a special meeting on innovations for infrastructure development and promoting sustainable industrialization.
Despite a plethora of obstacles, working together to foster equitable, inclusive growth — in line with the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda of the Third International Conference on Financing for Development — could produce concrete, lasting and environmentally friendly results on the ground, speakers stressed.
Structural transformation through industrialization was indeed a route to poverty eradication, said Li Yong, Director-General of the United Nations Industrial Development Organization (UNIDO). Countries and regions with burgeoning manufacturing sectors had achieved spectacular progress, he said, noting that between 1990 and 2013, the number of people living in poverty in East Asia and the Pacific had declined from 1 billion to 71 million. In sub-Saharan Africa, although poverty numbers had increased, there were signs of progress.
While such success stories demonstrated that industrialization could be an engine of growth, the road ahead was long for the least developed countries, he said. Most lacked the capacity to meet international social and environmental standards, with infrastructure remaining a critical missing piece of the puzzle. “The only thing we need now is action, action, action, and we need to deliver now,” he said, announcing that the General Assembly would hold a high-level meeting in September on the Third Industrial Development Decade for Africa (2016-2025). The international community, including the United Nations system, could play a critical role in helping countries to overcome challenges, he stressed.
Wu Hongbo, Under-Secretary-General for Economic and Social Affairs, said that with sufficient investment and effective planning and execution, infrastructure and industrialization could be key drivers of sustainable development. That would require new ways of thinking and working, moving beyond “business as usual” in technology, policymaking and how poverty was addressed and the Sustainable Development Goals achieved. There was ample space for collective action to fill the infrastructure financing gap, estimated to be about $1.5 trillion annually in developing countries.
Speakers suggested a number of ways to close that gap. Fekitamoeloa Katoa ‘Utoilamanu, High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said public-private partnerships had an important role in tackling challenges facing many of the 92 States her office represented. Multilateral development banks must provide technical support to vulnerable countries to attract foreign direct investment and there was great potential for regional cooperation, which could help boost countries’ economic development. Transport, with regard to the industrialization-infrastructure nexus, and financing were critical areas that needed to be addressed.
New approaches were necessary, said Liberia’s delegate, speaking on behalf of the African Group. Welcoming the General Assembly’s declaration that 2016 to 2025 was the Third Industrial Development Decade for Africa, he said the previous two decades had never been translated into concrete projects. “If we are to expect different results, we need to avoid repeating the same mistakes,” he said, emphasizing that predictable financing and resource mobilization were key to realizing industrial development. Efforts should focus on bankable projects and on helping Member States mobilize donors for specific programmes while harnessing regional integration for industrial development.
Obstacles included financing and technology transfers, speakers said, with some pointing at the current dearth of industrialization and sustainable infrastructure. “Without a breakthrough in international cooperation in the field of technology, shifting to a more sustainable path would be very difficult and burdensome for developing countries,” said Ecuador’s representative, speaking on behalf of the “Group of 77” developing countries and China.
Echoing that view, China’s delegate, also speaking on behalf of Brazil, Russian Federation, India and South Africa, encouraged creation of a favourable policy environment for innovation and enabling conditions for entrepreneurship, and a focus on building infrastructure, including roads, information and communications technology and electricity. Similarly, the representative of Bangladesh, speaking on behalf of the Group of Least Developed Countries, said a blend of efforts could produce tangible results. “Modern infrastructure development, seamless access to energy, market access for products and increased foreign direct investment can play a catalytic role in fostering industrialization,” he said.
The special meeting included three interactive discussions on “The industrialization-infrastructure nexus in developing countries”, “The potential of agro-industry and agricultural systems for sustainable development” and “Building capacities and mobilizing resources for infrastructure, industrialization and innovation”.
The first discussion featured speakers from Africa, who pointed out that the continent’s miniscule contribution to global growth was due to a lack of industrialization. Ibrahim Mayki, Chief Executive Officer of the New Partnership for Africa’s Development (NEPAD), said that opportunities existed for Africa to leap-frog forward using the right technological and institutional innovations. The continent could finance its industrialization through remittances, mineral revenues, stock-market capitalization and other means.
Economic and Social Council President Frederick Musiiwa Makamure Shava (Zimbabwe) delivered a statement during the opening segment. José Graziano da Silva, Director-General of the Food and Agriculture Organization (FAO) spoke in a video message for the occasion.
The Economic and Social Council will meet again at a time and date to be announced.
Opening Remarks
FREDERICK MUSIIWA MAKAMURE SHAVA (Zimbabwe), President of the Economic and Social Council, in opening remarks on the theme “An Integrated Approach to Achieving Sustainable Development Goal 9” said that in his travels across Africa, he had seen how limited access to reliable transportation, energy and communication could restrict people’s opportunities. At the same time, he said, he was amazed by the region’s desire to create and innovate. Recalling that the 2030 Agenda for Sustainable Development recognized the importance of industrialization and innovation for eradicating poverty and expanding opportunities, especially for the world’s poorest, he said progress on Goal 9 would have a ripple effect on other Goals regarding poverty, hunger, health, education, water and sanitation, affordable and clean energy, decent work and economic growth, and sustainable cities and communities.
Today’s meeting would engage high-level representatives from key sectors and stakeholder groups with respect to Goal 9 in order to forge recommendations and propose practical steps for the Council to support and move forward, he said. Recalling the preparatory meetings that took place in Dakar, Senegal, and Victoria Falls, Zimbabwe, on “Innovations for infrastructure development and sustainable industrialization” and “Agriculture and agro-industries development towards sustainable and resilient food systems” respectively, he said the United Nations Industrial Development Organization (UNIDO) and Food and Agriculture Organization (FAO) had identified two important initiatives that they would announce in their respective interventions. Their proposals — the Programme for Country Partnership and the Accelerated Agriculture and Agro-industry Development Initiative PLUS known as 3ADI+ — best reflected what the United Nations and its partners could do when working in tandem.
WU HONGBO, Under-Secretary-General for Economic and Social Affairs, said infrastructure development and sustainable industrialization, captured by Sustainable Development Goal 9, served a catalytic and cross-cutting role across the 2030 Agenda and the other 16 Goals. With sufficient investment, when innovatively and effectively planned and implemented, infrastructure and industrialization could have enormous multidimensional benefits, being key tools for achieving poverty eradication and sustainable development. Access to those tools and the promotion of sustainable industrialization was essential for inclusiveness.
Achieving it, he said, would require new ways of thinking and working, moving beyond “business as usual” in technology, policymaking and how poverty was addressed and the Goals achieved. Challenges included the current global infrastructure gap, which was being addressed by the Addis Ababa Action Agenda’s Global Infrastructure Forum. There was ample space for collective action to fill the infrastructure financing gap, estimated to be about $1.5 trillion annually in developing countries. National projects needed to be financed by domestic resource mobilization, focused official development assistance (ODA), private investment and other sources and channels. Leadership, policy integration and coordination were needed at all levels. Additional challenges were urbanization and the importance of building and applying effective technology for resilient infrastructure and industrialization in rural areas.
“Now is the time to take action,” he said, pointing to elements such as integrated policy advice, capacity-building, partnerships, information and data on infrastructure for follow-up and review, and engagement of relevant stakeholders. Multi-stakeholder engagement should be supported, with a focus on development banks and the private sector. An evidence-based approach was instrumental to support policy evaluation. The United Nations supported the institutionalization of resilient, sustainable, inclusive and equitable infrastructure and industrialization across the three dimensions of sustainable development — economic, social and environmental. The Economic and Social Council, including its forums and segments, served to identify trends, analyse and affirm policy options and forge policy integration, thus supporting an effective follow-up and review of progress towards resilient infrastructure and industrialization.
Keynote Addresses
LI YONG, Director General, United Nations Industrial Development Organization, said that at the Dakar and Victoria Falls preparatory meetings, there was a consensus that structural transformation through industrialization was a pathway towards poverty eradication. Empirical evidence demonstrated that that consensus was warranted. Countries and regions which had successfully developed their manufacturing sectors had made spectacular progress in reducing poverty, including among women and young people. Between 1990 and 2013, the number of people living in poverty in East Asia and the Pacific had declined from 1 billion to 71 million. In sub-Saharan Africa, although poverty numbers had increased, there were signs of progress, he said, citing the creation of 50,000 decent permanent formal jobs in the textile and garment sector in Ethiopia and an influx of $300 million of foreign direct investment into landlocked Rwanda.
Such success stories demonstrated that industrialization could be an engine of growth, but for the least-developed countries, the road ahead was long, he said. Most of those countries lacked the capacity to meet social and environmental standards, while infrastructure remained a critical missing piece of the puzzle, with 1.1 billion people — many of them in sub-Saharan Africa and developing countries in Asia — lacking electricity. The international community, including the United Nations system, could play a critical role in helping those countries to overcome such challenges, he said, citing UNIDO’s Programme for Country Partnership and FAO’s African Agribusiness and Agro-industry Development Initiative known as 3ADI.
He described the UNIDO Programme as an innovative model for accelerating inclusive industrial development, with Ethiopia, Senegal and Peru participating as pilot countries. UNIDO was assisting them in setting up integrated industrial parks where small producers could add value to their export-oriented products. For example, UNIDO had provided a master plan for an industrial park in the south of Ethiopia that would create 134,000 new jobs, particularly among women and young people. For its part, 3ADI sought to speed up the development of the agro-industrial sector by supporting investment programmes. As a result of the Victoria Falls meeting, it was proposed that the 3ADI initiative be scaled up, to be known going forward as 3ADI+, underpinned by a value-added approach. “The only thing we need now is action, action, action, and we need to deliver now,” he said, announcing that the General Assembly would hold a high-level meeting in September on the Third Industrial Development Decade for Africa and that UNIDO would expand the Programme for Country Partnership by seeking a few more countries to participate in it.
JOSÉ GRAZIANO DA SILVA, Director General of the Food and Agriculture Organization, said, in a video message, that agro-industry was fundamental to achieving Goal 9 and other global goals on poverty eradication and ending hunger. The recent Zimbabwe meeting had identified critical constraints, including limited access to finance and a lack of coordination of activities. FAO would continue to support the Economic and Social Council to advance the outcome of the Victoria Falls meeting and enhance cooperation with key partners.
General Discussion
JONATHAN VIERA (Ecuador), speaking on behalf of the “Group of 77” developing countries and China, said developing countries were the most affected by the lack of sustainable and resilient infrastructure. At the same time, they faced serious financing challenges. The result was a wider global infrastructure gap, he said. Technical assistance and capacity-building needed to be channelled urgently to developing countries, which also required increased access to technology transfer on favourable terms. He went on to emphasize the need for urgent action to bridge the technological divide, including a strengthening of the international intellectual property regime and full operationalization of the Technology Facilitation Mechanism and the Technology Bank for Least Developed Countries.
“Without a breakthrough in international cooperation in the field of technology, shifting to a more sustainable path would be very difficult and burdensome for developing countries,” he said. Those countries needed adequate policy space for their industrialization and development efforts, he said, appealing to industrialized partners not to kick away the ladder upon which they had climbed to their current level of industrialization. Developing countries needed an enabling global environment to complement their national efforts in achieving inclusive and sustainable industrial development, he added.
LIU JIEYI (China), also speaking on behalf of Brazil, Russian Federation, India and South Africa, said the international community must support industrialization and mass entrepreneurship while assisting the growth of small-, micro- and medium-sized businesses to improve progress in developing countries. With a view that industrialization could improve people’s lives and encourage economic growth, the Group encouraged assistance to create a favourable policy environment for innovation and enabling conditions for entrepreneurship.
He said attention must focus on building infrastructure, including roads, information and communications technology and electricity, and developing countries must be supported to be able to seize the opportunity to transform industry in ways that would achieve sustainable development. Mobility of professionals and workers also needed to be facilitated. For its part, the Group had already achieved positive results, including the establishment of a development bank to promote progress among least developed countries and to support the implementation of the Sustainable Development Goals.
TAREQ MD. ARIFUL ISLAM (Bangladesh), speaking on behalf of the Group of Least Developed Countries, said one of the major challenges to unlocking the potential of vulnerable States was a lack of adequate resilient infrastructure, which hampered economic diversification and social development. Industrial development was critically important for structural transformation, employment generation and sustained economic growth. Raising several concerns, he said the value-added share of manufacturing among the Group’s members had remained stagnant for the last decade. While the Istanbul Programme of Action and the 2030 Agenda had addressed existing financing gaps, he said the state of science, technology and innovation remained poor, with disparities between least developed countries and the rest of the world.
Public-private partnerships, he said, were an effective method to address that divide, with regional infrastructure projects, including in transport, energy and tourism, providing additional benefits. While the global market’s various venture capital and pension funds could be a significant financing source for Sustainable Development Goal-related infrastructure projects, the main challenge was the long-term nature of returns. Therefore, packaging infrastructure projects to make them attractive from a profitability perspective was an important first step, coupled with increased engagement between States with bankable projects and the managers, owners and shareholders of those financial resources. Relevant United Nations agencies and other stakeholders could help least developed countries to address that aspect and continue to support financing-related projects.
Least developed countries must take appropriate steps to significantly increase inclusive and environmentally friendly industrialization with a view to enhancing the share of manufacturing in their total economic basket and diversifying local productive and export capability, he said. “Modern infrastructure development, seamless access to energy, market access for products and increased foreign direct investment can play a catalytic role in fostering industrialization,” he said. Innovation and access to modern technology were also vitally important for rapid industrialization.
Special Address
FEKITAMOELOA KATOA ‘UTOILAMANU, High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said the link between industrialization and poverty reduction was crucial to vulnerable countries. Many of the specific challenges in the 92 States her office represented were highlighted in the 2030 Agenda, with industrialization also highlighted in the Istanbul Programme of Action for the Least Developed Countries for the Decade 2011-2020, Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014-2024 and Samoa Pathway for Small Island Developing States. Outlining obstacles, she said many vulnerable countries had limited productive capacities and declining value added in manufacturing and agriculture.
Elaborating on that point, she said the 48 least developed countries, with a population of 900 million, had seen slower structural transformation, with a general consensus that building infrastructure was a precondition for structural transformation and reaching the Sustainable Development Goals. Poor energy access remained a key impediment. The 32 landlocked developing countries suffered from geographical disadvantages, with infrastructure deficiencies and poor trade facilitation. Similarly, small island developing States shared geographic remoteness, narrow economic bases and isolation from major global markets.
Highlighting common challenges among the three country groupings, she said transport played a key role in the industrialization-infrastructure nexus and achieving growth would require financial and technical support and strong partnerships with various stakeholders. Access to financing was another challenge, with major constraints including a lack of scale and substantial local investment, poor credit ratings and low project preparation capacities and skills to deploy financing models that encouraged blended finance to attract more funds. Public-private partnerships would have an important role to play, being specifically tailored to meet each country’s aspirations. To attract foreign direct investment, multilateral development banks must provide technical support to vulnerable countries. There was great potential for regional cooperation, which could help boost countries’ economic development.
Session I
The Council then held its first session of the day on “The industrialization-infrastructure nexus in developing countries”. Moderated by Macharia Kamau (Kenya), it featured presentations by Ibrahim Mayki, Chief Executive Officer, New Partnership for Africa’s Development (NEPAD); Abdou Mamane, Minister of Industry of Niger; Brian Mushimba, Minister of Transport and Communication of Zambia; and Maria Kiwanuka, Special Presidential Adviser, Uganda.
Mr. KAMAU said the world was in the throes of a new industrial revolution that was expected to be global, to leave no one behind and to transform the lives of all, with the 2030 Agenda guiding the way forward. He also noted that the panel was made up entirely of Africans — a rare event which he suspected had never happened in the Council before.
Mr. MAYKI said that Africa’s 0.1 per cent contribution to global growth was due fundamentally to the fact that it did not significantly add value to its products because of a lack of industrialization. By comparison, China accounted for 15 per cent of the global economy, having made significant investments in its industries under a policy going back to the 1970s. However, opportunities existed for Africa to leap-frog forward, using the right technological and institutional innovations. It could finance its industrialization through remittances, mineral revenues, stock-market capitalization and other means. It only needed to focus on what its key priorities were in terms of policies and projects. Identifying African pension funds as a financing source, he said infrastructure projects should be reclassified as an asset class so as to attract investment.
Mr. MAMANE said that one of the benefits of infrastructure development and industrialization was that it promoted investment and helped build human capacity. International cooperation and private-sector support were indispensable for meeting challenges. In Niger, the Government had undertaken a number of reforms to promote investment and industrialization, including the creation of a dry port at Dosso to serve as a logistical platform between the port of Cotonou in Benin and the interior of the country. A railroad between Cotonou and Ouagadougou via Niamey was meanwhile under construction, as well as a trans-Saharan road network. With regard to agriculture, he said the Government had put into place a development programme for agro-business and agro-industry that included the 3ADI initiative.
Mr. MUSHIMBA noted the challenges faced by landlocked developing countries, including their geographical location and the feeling that they were isolated and marginalized. Market access for those countries was difficult, their economies were under-diversified and Internet and mobile-phone saturation was limited. Significant resources would be required to close existing gaps, he said, noting Zambia’s vulnerability to price fluctuations in copper, its main source of foreign earnings. Describing the Vienna Programme of Action as a good guide, he said Zambia wanted to ensure that it could improve infrastructure and industrialize its economy, adding value to its raw materials by exporting semi-finished and finished products, thus creating more jobs and reducing poverty.
Ms. KIWANUKA, noting that all the countries represented on the panel were landlocked, said the nexus between infrastructure and industrialization must be considered on a country-specific basis. Uganda was 1,000 kilometres from the sea, but it considered itself “land-linked” through its neighbours, which imported Ugandan food. Each country needed to assume a holistic approach and recognize its advantages. She added that infrastructure, while accounting for more than 50 per cent of Government expenditures, was a support structure for agriculture, industry and mining that must pay its way. In Uganda, the Government needed to concentrate its limited resources and capacities in those areas where it alone could act, including the creation of a stable macroeconomic framework and a regulatory system that ensured a level playing field for all investors. She emphasized the need for Government to work in concert with the private sector to develop human resources and create skills that the market — rather than academicians in ivory towers — wanted. Describing the private sector as very agile, she said it could run rings around any Government any day before lunch, and then eat the Government for lunch. She added that Governments needed to ensure that whatever was foregone in tax exemptions was less than the benefits accrued for the country as a whole.
In the ensuing discussion, the representative of the United Arab Emirates discussed the outcomes of the Global Manufacturing and Industrialization Summit, hosted by the Department of Economic Development in Abu Dhabi, which sought to promote a road map for future industrial development to echo the evolution in international trade and global best practices.
The representative of Kyrgyzstan, noting the structural challenges faced by landlocked developing countries, described her country’s nationwide digital transformation programme, which would provide a unique opportunity for making a rapid breakthrough in its economic development.
Session II
In the afternoon, the Council held a session on “The potential of agro-industry and agricultural systems for sustainable development”. Moderated by Gerardo Patacconi, Acting Director, Department of Agri-business Development, United Nations Industrial Development Organization, it featured presentations by Lisa Dreier, Head of Food Security and Agriculture Initiatives, World Economic Forum LLC; Magnus Arildsson, Head of Internet of Things, Product Management, Ericsson; Bill Polidoro, President and CEO, ACDI/VOCA; and Andrew Ndaamunhu Bvumbe, Executive Director, Africa Group I, World Bank Group.
Mr. PATACCONI said the discussion would look at the connection between innovation, industrialization and the agro-business sector, and how by adding value agriculture could lead to new jobs, new technology and new markets. A bigger issue would be urbanization and its impact on food and other agricultural products, he said, adding that solutions would be found through partnerships, innovation and the avoidance of fragmentation.
Ms. DREIER said that part of the work of the World Economic Forum involved catalysing public-private collaboration in order to achieve food security and agricultural development. Currently, the food system was not serving the planet in the way that it should. Many issues and obstacles needed to be overcome and that would require systemic change, she said, proposing a concept called “system leadership” that would bring together all stakeholders behind a shared goal and facilitate their efforts towards achieving that goal. Mobilizing decentralized action was the spirit behind system leadership, she said, referring to such initiatives as the Grow Africa Partnership and Grow Asia Partnership. Multi-stakeholder partnerships were not the solution to every problem — they could be complicated and slow, with high transaction costs — but in the long run, she said, the results could have a big impact.
Mr. ARILDSSON described the “internet of things” as a network of sensors that would send data to a central system that would process the information and send back commands, such as opening doors and turning on lights. With sensors poised to outnumber mobile phones, he said his company was moving away from communications and into the internet of things. He presented several examples of how sensors could be used in agriculture, including planting one in the stomach of a cow, making it possible to more accurately monitor its health over its lifetime and immediately alert farmers to problems. Sensors could also be used for soil monitoring, thus helping to determine when fields needed fertilizer, pesticide and irrigation. “We can do a whole lot more than we are doing,” he said, adding that the benefits would affect many people.
Mr. POLIDORO, recalling his organization’s roots in the cooperative sector in United States agriculture, described produce storage as a binding link between the various Sustainable Development Goals. With a warehouse receipt system, he said, farmers would take their commodity to a licenced warehouse, get it graded and stored, then obtain a receipt that could then be used as collateral for loans. Local context and scale mattered, he added, saying that in places that lacked infrastructure, it could be hard to get the basics in place. Having a regulatory infrastructure in place was incredibly important. Benefits would include reduced post-harvest losses, better quality, market price stability, improved food security and more formal agro-business practices.
Mr. BVUMBE, focusing his remarks on challenges faced by agriculture in Africa, said subsistence farmers could not be expected to connect with agro-business when they were still using hoes in the twenty-first century. Most land tenure systems in Africa did not support financial inclusion; without security of tenure, problems would continue. He went on to emphasize the need for skills development and support to farmers, as well as the effects of droughts and climate change. Turning to financing, he said it was critical to look into de-risking lending to smallholder farmers in Africa.
In the ensuing discussion, a representative of the FAO emphasized the need to shift to more sustainable, inclusive and resilient agricultural and food systems in order to fulfil the Sustainable Development Goals’ promise of leaving no one behind. She added that smallholders required better infrastructure in order to access markets.
Thailand’s representative described measures being taken in her country, such as the creation of water retention areas that stored rain-season water for use in dry seasons, thus mitigating the effects of drought. She added that infrastructure development needed to go hand in hand with capacity-building so as to provide farmers with the knowledge, expertise and skills they needed.
The representative of Ethiopia asked what policy measures could be taken to encourage the private sector to invest in long-term projects.
The representative of the International Fund for Agricultural Development (IFAD) asked about the challenges involved when a single large buyer of agricultural produce had to buy with many smallholders.
The representative of Mexico asked to hear more about productivity chains.
Responding, Ms. DRIER said policy measures to incentivize long-term investment depended on the type of investment. One that involved a new seed variety might be different from another required for a processing plant. Given the broad variety of incentives that could be employed, she suggested that Governments maintain a dialogue with the private sector to discuss policy barriers and how they might be addressed.
To the question posed by the IFAD representative, she said that, from the experience of the World Economic Forum’s New Vision for Agriculture, it appeared that private-sector companies were not accustomed to including smallholders in their value chains. They considered doing so to be risky and expensive. Others, however, were finding ways to engage smallholders to be part of a larger value chain while providing technical expertise to meet quality standards.
Mr. BVUMBE said that, whatever the policy, clarity and consistency were important for the private sector, especially with regard to land tenure. Dialogue was also critical. He also described how, in India, smallholders had come together at the village and community level, thus reducing transaction costs when dealing with buyers.
Mr. ARILDSSON said it was a matter of building ecosystems — something that businesses did all the time. For farmers, such ecosystems would be different in each country, but it was important to ensure a win-win situation at all levels.
Mr. POLIDORO said that not all smallholders were created equal. Sometimes, warehouse receiving systems could be brought down by incorporating too many smallholders too fast.
General Discussion
REMONGAR T. DENNIS (Liberia), speaking on behalf of the African Group, said industry was an important driver of economic transformation and growth, job creation and human development. The Action Plan for Accelerated Industrial Development in Africa, included in the African Union Agenda 2063, emphasized that prosperity depended on the development of a robust industrial sector. The continuing gap in productive industrial capacities on the continent stemmed from many linked factors, including a lack of related finance and investments and technological capacities, inadequate entrepreneurship, energy and infrastructure bottlenecks, small and fragmented markets, low purchasing power and limited demand. Financing remained the main challenge.
Welcoming the General Assembly’s declaration that 2016 to 2025 was the Third Industrial Development Decade for Africa, he said the previous two decades had never been translated into concrete projects. “If we are to expect different results, we need to avoid repeating the same mistakes,” he said, emphasizing that predictable financing and resource mobilization were key to realizing industrial development. The new Decade and its promoters must establish inter-agency mechanisms for coordination and for the strategy’s implementation. Efforts should also focus on bankable projects and helping Member States mobilize donors for specific programmes while harnessing regional integration for industrial development.
Underlining the importance of increasing investment and improving the quality and productivity of existing and new investments, he said more public funding should catalyse private investment. Africa’s contribution to the global value chain must be raised because almost 70 per cent of it occurred in developing countries. Since developed countries’ investments in Africa included high value-added activities such as research, innovation, design, sales and marketing in their headquarter countries, priorities must include promoting domestic manufacturing capabilities in high value-added sectors or technology-intensive sectors. In that regard, the role of Governments and adequate policy space were essential.
He said additional efforts must focus on enhancing domestic resource mobilization to create fiscal space to boost public investment in infrastructure. At national, regional and international levels, attention must be paid to curb capital flight, including through preventing tax evasion and illicit cross-border capital transfers. As such, rules must be introduced to ensure that multinational companies did not shift profits across borders to avoid taxes. He encouraged the United Nations development system, bilateral and multilateral partners and private-sector operations to join hands in translating the Decade from a statement of intentions into concrete actions.
Session III
The Council’s final session for the day on “Building capacities and mobilizing resources for infrastructure, industrialization and innovation” was moderated by Ms. Dreier. It featured presentations by Tadeo Garcia Zalazar, Mayor of Godoy Cruz, Argentina; Marcos Bonturi, Organization for Economic Cooperation and Development (OECD) Special Representative to the United Nations; and Paul Winters, associate vice-president, a.i., Strategy and Knowledge Department, International Fund for Agricultural Development (IFAD).
Ms. DREIER said the dialogue would focus on Sustainable Development Goal 9, to build resilient infrastructure, promote sustainable industrialization and foster innovation, and how to bridge the financing gap with a view to achieving that objective.
Mr. ZALAZAR said Godoy Cruz, a municipality facing vulnerabilities, including climate change consequences and seismic activity, had aimed at building its resilience. Sustainable development activities included building resilient infrastructure and joining an innovative network of 200 municipalities geared towards taking climate action such as reducing greenhouse gas emissions. The city had also promoted sustainable industrialization, established a high-tech park and using renewable energy. Solar panel tax breaks were available for homes and businesses and a social housing project had mixed public-private investments, acting as a model for future sustainable development programmes. Streamlining public policies had also worked to ensure a budget balance with local participation. Moving forward, it was important to move from theory to practice, he said, emphasizing that Godoy Cruz had already taken steps to do that.
Mr. BONTURI asked why, if investment in infrastructure was so beneficial, it was not more common. Donors had provided $60 billion a year for infrastructure projects in developing countries, but there was still an infrastructure deficit. In OECD countries alone, $80 trillion in assets were held, with a small percentage used for infrastructure, primarily for member States. Collaborating with the Group of 20, OECD had worked to help all Governments learn how to mobilize public finance and leverage private finance. Attracting private investment must take into account the business climate, he said, noting that a study examining 60 countries had found barriers, including that energy and transport were the most restrictive sectors. In other cases, public procurement was not transparent and green technology was highly regulated, posing additional barriers for the private sector. But, money did not always guarantee success. What was critical was good governance, which must work to involve the right stakeholders and ensure smooth operations while fighting corruption.
Mr. WINTERS said farmers were business people who invested. That could be seen in results of recent FAO and United Nations Children’s Fund (UNICEF) reports on projects that had provided cash transfers to farmers, who had spent funds investing in their communities. Unleashing their potential could be helped by providing them with innovative opportunities. Such initiatives included helping farmers organize to build sustainable irrigation systems. Another project saw the construction of 2,000 kilometres of roads to bolster economic growth dairy farmers. Urban bias in some countries had tended to ignore rural areas. In resource mobilization, efforts had been made to ensure a balance in that regard with a view to promoting development in both urban and rural areas.
During the ensuing discussion, speakers raised concerns and examples of how they had addressed national or regional challenges. A speaker from the Economic Commission for Africa (ECA) said the private sector had said investment was too risky on the continent and regulations were not ideal. In response, a continental model law governing areas such as procurement and project ownership had been drafted and was now ready to be adopted domestically. If the private sector said there was a problem, ECA wanted to address it, he said.
Providing a national perspective, Zimbabwe’s representative said resource mobilization challenges had led to efforts to release resources to targeted projects. Special economic zones had been created to attract the private sector. To eradicate the perception that African projects were white elephants, Zimbabwe had created one-stop investment shops to attract investment.
Mr. ZALAZAR, responding to a question posed by the representative of Chile, said networks of municipalities had focused on concerns by pooling responses and approaches. Networks focused on different themes. His network addressed climate change and took action by crafting tailored plans because a one-size-fits-all approach did not work. Answering a question posed by Argentina’s delegate, he said public-private partnerships had been addressed in a local law. A smart fiscal approach had been taken to respond fully to the Sustainable Development Goals by local municipalities for issues including roads and green spaces.
Mr. BONTURI, responding to a question by the representative of the Republic of Korea, said blended finance included complex projects that had taken years to establish. OECD was not designed to provide technical cooperation, but it worked with the United Nations and other partners in that regard, including with regard to domestic resource mobilization.
Mr. WINTERS, answering a query made by Chile’s representative, said money was available for microfinancing and then for projects with $1 million price tags, with little in between. The African Development Bank was working around the $1 million level, but there was a gap in the middle-level and efforts should be made to address that.
Closing Remarks
Mr. WU, Under-Secretary-General for Economic and Social Affairs, said it was clear from today’s speakers that economic growth and job creation largely depended on enhanced productivity and upgraded industrial sectors. However, those two factors were being held up by persistent infrastructure gaps which curtailed opportunities for progress on poverty eradication and sustainable development, especially in developing countries. Both hard infrastructure, such as energy, transport and industrial networks, and soft infrastructure, such as institutions and capacities, were mutually supporting and reinforcing, underlining the need for integrated action in pursuing the 2030 Agenda, he said.
Citing the recent report of the Inter-Agency Task Force on Financing for Development, he said investment in productive sectors and sustainable infrastructure, among other areas, could spur growth, support climate-smart economies and energy, and move the world closer to the Goals. Much was known about what worked in each area. The challenge was the sheer scale and breadth of resources and technological know-how needed to deliver. One finding from that report was the need to better align investment incentives with long-term funding, he said. That would require bringing together all relevant actors. The two initiatives announced today by UNIDO and FAO indicated how incentives could be better aligned with the new demands of 2030 Agenda. Their potential at the national level was exciting, he said, adding that he looked forward to hearing more about their implementation and result.
Mr. SHAVA (Zimbabwe), Council President, said a key message that had been reinforced during the day had been the importance of keeping people at the centre of discussions on Goal 9. “Ultimately, our objective should be to build societies where everyone can thrive, aided by infrastructure, industrialization and innovation,” he said. In many developing countries where the potential for industrialization loomed large, advances in science, technology and innovation in sectors had the potential to promote employment and income growth. Developing key infrastructure would also foster achievement of the entire 2030 Agenda and help to bolster people’s ability to meet their basic needs and fully participate in society.
Although there was broad agreement that infrastructure, industrialization and innovation were essential for poverty eradication and sustainable development, he said, gaps existed in investment, capacities and policy frameworks. “We know the scale of the challenge,” he said, noting that the 2030 Agenda provided a road map for addressing those challenges and complemented the Addis Agenda as a framework for overcoming obstacles for investments. Progress would also be made through the various partnerships and frameworks that had been formed as a response to those challenges, he said, expressing hope that all participants would commit to proposals that had been announced today with a view to maintaining the impressive momentum in support of infrastructure, industrialization and innovation.