Rodrigo Aguilar is an International Political Economy expert, Author and Founder of The North American Project
The Black Death pandemic that affected Europe between 1348 and 1350, not only caused devastation, but it also served as the trigger for the Renaissance of the 14th Century. Few realize that, besides deriving in a cultural movement, the dire circumstances existing during this period led to the definition of the foundations of modern financing and diplomacy. This could serve as a reference as we face the ripple effects of the Covid-19 pandemic, which could represent the opportunity for the rebirth of today’s financing and multilateralism.
In addition to causing severe disruptions to the health and economy of millions of people, the Covid-19 pandemic initially deepened the mistrust in the capacity of multilateral organisms to collectively solve this crisis, and the future ones to come. The Sustainable Development Goals (SDGs) were affected as nations shaved their GDPs and unemployment significantly increased. However, as Rania Al-Mashat, Egypt’s Minister for International Cooperation, declared “as 2020 progressed, the world realized that it is only through collective action that we will be able to transit the road to reconstruction”. As a matter of fact, the only collective functional actions convened between nations so far in the pandemic have regarded financing, essentially because this crisis was “too big to fail”. As a result, until now, the world’s economies have been impacted but not entirely derailed.
One of the main challenges that remains is to find a way to direct the efforts from the private sector to avoid the deepening of polarization and inequities in the long run. According to Jay Collins, Citibank vice-chairman, close to 2% of financing for development has been sourced by the private sector.
In order to achieve the rebirth of multilateralism in general, and particularly regarding the financing of projects that contribute towards the achievement of the SDGs, it is necessary to focus the discussion on success stories where the mechanisms that facilitate collective action between private financing and development have been created. One of these examples is that of Arab investments in Egypt, which have significantly increased in a diversified way during the last years, contributing towards the agenda of regional and global development. Such cases have shown that a key factor in the equation to impulse and facilitate actions from the private sector is the existence of conditions of stability. This has not been the case in other African nations.
It is in this context that Egypt proposed an international discussion centered in the African continent during last week’s Forum for International Cooperation in Cairo, where multilateral organisms such as the World Bank, the European Bank for Reconstruction and Development (EBRD), the United Nations, the Organization for Economic Co-operation and Development (OECD) and the African Development Bank participated.
The financial gap to achieve the SDGs amounts to 2.5 trillion USD. When considering the Official Development Assistance (ODA) data, which is about $150 billion USD a year, there is no way to fill the trillion-dollar gap unless mechanisms that involve the private sector are introduced. On the other hand, the private sector has been clear and pragmatic stating that there need to exist stable low-risk scenarios in order to invest. As a result, one of the neuralgic subjects of the forum was “blended financing”, which is the strategic use of financing for the development of the mobilization of resources from the private sector.
However, not everything in the conference revolved around sophisticated financial terminology because, at the end of the day, people’s lives and wellbeing are currently at stake. When Netumbo Nandi – Ndaitwah, Deputy Prime Minister of the Republic of Namibia, was asked why she should trust the multilateral framework, after declaring that less than 10% of her country is vaccinated, she did not hesitate to answer: “We must trust multilateralism because it is already there, we’ve become a global village to the point that there is no country in the world that can do it alone. When our countries were forced to shut down, multilateralism helped us to survive by at least keeping the trade flow of goods and services working”. Countries like Namibia are running out of time to mistrust multilateralism.
For this reason, the forum dedicated an entire day to workshops that involved the ample representation of African nation’s governments and focused on capacity building, cooperation sur-sur, sharing experiences, women in business and youth entrepreneurship in Africa, food safety, triangular cooperation, the African Free Trade Agreement and the development of human capital.
The step taken in Cairo last week was the first of many towards the rebirth of multilateralism having involved highly relevant stakeholders in the discussion of modern mechanisms for international cooperation in this region that, for many, remains forgotten. Threats like this pandemic have triggered, at least in the African continent, the need to align priorities and agendas that are usually in competition amongst themselves. Only time will tell if the positive spirit of collective action that prevailed during this forum will translate into the modernization of the multilateral development system for this region.
Will this be the new renaissance?
