LEAVE NO ONE BEHIND: Can the private sector fulfill this ambition? And why this was the wrong question

Véronique Faber, Cercle de Coopération and Magali Paulus, Collectif Tax Justice Lëtzebuerg –

When the principle of Leave No One Behind (LNOB) was first introduced in the discussion of the United Nations (UN) Post-2015 Development Agenda – today known as Agenda 2030 for Sustainable Development -, it was an opportunity to change the way we address poverty and (in)equality issues.

According to Oxfam’s calculations, in 2020 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 % of the planet’s population.[1] The number of billionaires has doubled in the last ten years and the gap between rich and poor is widening. COVID-19 has accelerated this trend.

Inequality has serious negative impacts on health and health spending, on educational performance and on the work force and can lead economies to instability and to bad performance.

“Leave no one behind (LNOB) is the central, transformative promise of the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). It represents the unequivocal commitment of all UN Member States to eradicate poverty in all its forms, end discrimination and exclusion, and reduce the inequalities and vulnerabilities that leave people behind and undermine the potential of individuals and of humanity as a whole.”^[2]

In short, inequality will put more people into long-term poverty and must therefore be addressed if we claim to be serious about eradicating poverty. So where should one begin?

“LNOB compels us to focus on discrimination and inequalities (often multiple and intersecting) that undermine the agency of people as holders of rights. Many of the barriers people face in accessing services, resources and equal opportunities are not simply accidents of fate or a lack of availability of resources, but rather the result of discriminatory laws, policies and social practices that leave particular groups of people further and further behind.”^[3]

This is a strong statement. The root causes of inequality, and thus poverty and discrimination, are to be found in justice, in politics and in wealth distribution.

The conclusion is that initiatives and policies need to be put into place that address these root causes.

This will come at a cost. In the 2015 Addis Ababa Action Agenda on Financing for Development, the UN members turned to the private sector in an effort to mobilise “all available resources »^[4]. The private sector should become an “important driver of productivity and therefore of economic growth and job creation” and thus contribute to achieving the SDGs.

The Cercle’s working group “Forum Politique” brings together representatives from NGOs that are engaged or are interested in political and advocacy work. From 21 – 22 April the working group initiated an online conference that engaged all the development cooperation stakeholders in a dialogue to discuss LNOB, what it means for development work and the role that the private sector could play in achieving the SDGs.

Here are some of the authors’ conclusions from that conference.

1. LNOB is not an option but essential if we are serious about tackling poverty and discrimination

The principle of LNOB is one of the three universal values of Agenda 2030 – the other ones being the Human rights-based approach and Gender equality & Women’s empowerment. Nonetheless, the final document of Agenda 2030 mentions LNOB only six times and its underlying issues such as the concentration of wealth and other root causes of inequality are not addressed at all.

The COVID-19 pandemic has wide-reaching economic and social consequences, with an estimated 100 million more people being pushed into extreme poverty. Upholding the LNOB principle is therefore more important now than ever.

“Trickle-down” economics, where benefits and tax breaks for the rich will eventually trickle down to the poor, do not work. The richest 1 per cent of the population in 59 out of 100 countries with data became richer between 1990 and 2015, according to the UN World Social Report.^[5] Furthermore, the widening inequality gap has caused a loss of economic growth, as the OECD already found out in 2014.^[6]

This means that development practitioners and others should go beyond project design and implementation and look at measures and changes that are necessary to address the root causes of inequality and poverty.

One way to ensure that no one is left behind is to support strong and cohesive societies by providing community-based safety nets to the most vulnerable and by facilitating self-empowerment.

LNOB is a declaration of intent, a pledge to reach those furthest behind first. It invites us to reconsider whether our actions and projects are reaching the people with the fewest development opportunities first.

2. The public sector needs to take off these rose-tinted glasses when ogling at the private sector

The private sector is not a homogenous group and there are different forms of engagement within the context of development aid. Companies can take the role of financier, implementer, target group, reformer or participant.

It is important to clarify what type of private sector engagement will add value to a project before engaging so as not to get caught in a trade-off situation between social and profit-driven incentives.

It is also necessary to identify the sectors that are the most relevant for private sector engagement. Health and education are public goods and are the basis for more equal and fairer societies. It seems obvious that they should be excluded.

In European countries the private sector is primarily valued as a key driver for job creation, and job creation has therefore become an important indicator for successful private sector engagement. However, we know very well that the root causes of poverty cannot be solved simply by providing employment opportunities.

Donors often fail to ask for standard development principles and human rights criteria to be integrated in private sector engagement in developing countries that is funded or co-funded with public money. This results in poor monitoring and understanding of how such initiatives contributed to development objectives. This is why many civil society organisations and even a number of private companies are in favour of a law when it comes to guaranteeing human rights in the private sector.^[7]

The primary objective should not be private sector engagement but rather to understand how donors and NGOs can best support partner countries and local NGOs, and only then see whether the private sector can bring value to the table and deliver development impact.

3. The focus on private funds needs to shift away to other revenue sources.

The current narrative with regard to private sector engagement places an excessive emphasis on private finance. Public and private funds are very distinct and not substitutable.

To believe that a lack of public funds can simply be complemented by private funds, or that public funds can even be used to leverage private funds ignores the fact that they follow different rules and objectives. Public funds aim to provide services for all and targeted support to the most deprived by following a pro-poor financing strategy that aims to invest in the sectors most needed by the poorest. These are rarely the sectors that private funds invest in, as their objective is to earn a return that is higher than the initial investment, no matter how minimal. Sectors that have the biggest impact on the poorest, like health and education, bring negative returns (unless, of course, you make the poor pay for basic public goods, which happens all over the world and is a really cynical practice).

Nonetheless, a lot of effort goes into finding ways to leverage private funds. “Thus far, the “billions to trillions” vision is not coming to fruition. The greatly expanded private capital flows that people hoped for, especially for SDG-related infrastructure and for low-income countries, have not materialized.” ^[8]

Other areas are more promising. Bearing in mind the fact that only 4 cents in every dollar of tax revenue come from the rich, working towards tax justice seems like an obvious option. If public sector resources are not sufficient, more fiscal space at national level is critical, especially for developing countries.

Tax havens are affecting low-income countries and thus their fiscal space. In terms of policy coherence for development, not looking at tax justice and closing in on tax havens reduces promises and commitments towards development goals to mere lip service.

Furthermore, many countries of the Global South are restricted in their ability to provide basic services to their populations due to the burden of external debt repayments to development and private banks. All eyes were on the recent G7 meeting in the hope of a declaration of support, especially as governments worldwide face high levels of expenditure: “People cannot access healthcare or the vaccine, they are witnessing devastating changes to their way of life from the human-made climate crisis, and some face increasingly unaffordable taxes to cover the costs of their governments’ debt.”^[9]

Footnotes:

[1] https://www.oxfam.org/en/press-releases/worlds-billionaires-have-more-wealth-46-billion-people

^[2] https://unsdg.un.org/2030-agenda/universal-values/leave-no-one-behind

^[3] https://unsdg.un.org/2030-agenda/universal-values/leave-no-one-behind

^[4] https://cooperation.gouvernement.lu/en/partenaires/secteur-prive.html

^[5] https://www.un.org/development/desa/dspd/world-social-report/2020-2.html

^[6] https://www.oecd.org/newsroom/inequality-hurts-economic-growth.htm

^[7] https://www.initiative-devoirdevigilance.org/

^[8] https://www.cgdev.org/topics/private-finance

^[9] https://jubileedebt.org.uk/news/the-g7-ducks-the-challenge-of-the-debt-crisis