Remarks by ASG Oscar Fernandez-Taranco on the funding the UN development system and the implementation of the Funding Compact

These remarks were given by Oscar Fernandez-Taranco, Assistant Secretary-General for Development Coordination at the 2023 ECOSOC Operational Activities for Development Segment (OAS) on 24 May 2023 at Session 6: Funding the UN development system: Implementation of the Funding Compact. 

[Check against delivery] 

Vice President of ECOSOC, 

Excellencies,  

Thank you, Ulrika [Modéer, UN Assistant Secretary-General and Director of the Bureau of External Relations and Advocacy, UNDP], for the introduction. 

I want to focus my presentation around three main ideas:  

First, the objective of the Funding Compact holds true. Adjusting the quantity and quality of funding does have a multiplier effect on the implementation of the SDGs. 

Many Member States have referred over the course of the ECOSOC Segment on Operational Activities for Development to the importance of predictable and sustainable funding and to the value of the RC system in their respective countries. This is also reflected in the surveys of national Governments carried out by the UN Department of Economic and Social Affairs (DESA). 

We have heard examples from many countries of how the Joint SDG Fund can bring UN expertise together to support transformative change. For example, we heard how, with the technical leadership of UNDP, the Joint SDG Fund has been catalytic to co-create financial vehicles for the SDGs through the INFFs – Integrated National Financing Frameworks.  

Through the Joint SDG Fund, 188 million people have received social protection, 69 countries have leveraged SDG financing through Integrated National Financing Frameworks, and 85 UNCTs were able to support Governments facing the impacts of increased costs of living. 

These results do not happen in a vacuum. They can only be achieved through funding adequate expertise in UN development system entities and in UN country teams to provide advice adjusted to country needs and priorities.  

Yet, and this is my second point, the implementation of the Funding Compact commitments remains mixed overall.  

The entities of the UN Development Sustainable Group (UNSDG) have made rapid progress on 83% of the Funding Compact indicators, and Member States on 48% of them.  

Simply put, this means that the promise at the core of the Funding Compact, i.e. that predictable, sustainable and quality funding from Member States would be unlocked though increased transparency, accountability, efficiency and results orientation by the UNDSG, has not fully delivered.  

For example, as the Secretary-General and the Deputy Secretary General have highlighted, we have seen a step change in reporting, transparency, and efficiency gains by the UN development system. 

All UN country teams produce an annual report on the implementation of the Cooperation Framework. UNINFO is now operational in 115 countries, and allows to track activities, funding, partners and locations of UN interventions in country. 71% of UNSDG entities (from 41% last year) now report to their respective governing bodies on efficiency gains, and an efficiency dashboard allows to track specific efficiency gains. 

Where we need a further push is in completing the gender scorecard, allocating at least 15% of development related expenditures to Joint Programmes and developing a common budgetary framework in countries.  

On the Member States side, there are some improvements in the funding mix.  

Some targets on core funding and pooled funding, the importance of which has been stressed by the G77 and China, have been exceeded. For the first time this year, the target of 30% of core funding, when assessed contributions are included, was met (30.7%). Total contributions to development-related pooled funds now account for 12.3% of all non-core funding for development activities and exceed the Funding Compact target of 10% for the second straight year.  

Contributions from host countries have also increased by 14% from 2020 to 2021.  

But overall, trends remain concerning.  

Core and flexible pooled funding remain heavily dependent on only 5 contributors, Germany, Sweden, United States, Norway and United Kingdom, who account for 50% of total core funding.  

The growth of core funding was partly due to an increase in the assessed budget of WHO, and to new multi-year pledges made by Governments to the voluntary core budgets of UNDP and UNICEF. By contrast, the target for voluntary core funding for development related activities (excluding assessed) is not met (21.1% instead of 30%). 

In 2022, UNDP, UNICEF, and UN Women each saw a reduction in core funding, ranging from 6-9% and a widening core to non-core ratio. 

Two-thirds of net contributing countries surveyed by DESA indicated that they had no plans to increase the amount or share of their core funding by the end of 2023.  

Country-level development pooled funds, an instrument that the LDCs highlighted yesterday as essential, decreased by 5% between 2020 and 2021. 

Some of our most critical global funds are underfunded. 

In the Funding Compact, Member States committed to give $290 million annually to the Joint SDG Fund. But we have not been able to reach $290 million cumulatively, with $279 million in total within the past 5 years, instead of the anticipated $1.45 billion.  

Contributions to the Peacebuilding Fund decreased by 12%, from $195 million to $171 million in 2022. 

Some Member States have asked how they can help in uniting the UN development system. It needs to be provided with the appropriate means of implementation. Quality funding like providing adequate core funding to UNSDG entities and prioritizing pooled resources hold the key to ensure a cohesive UN development system. 

Finally, voluntary funding for the Resident Coordinator system reached an historic low in 2022. The shortfall in voluntary funding is in stark contrast with the timely and full payment by all UNSDG entities of their shares and a good performance of the 1% levy. 

The vast majority of Member States – G77 and China, SIDS LDCs, LLDCs, the African Group, MICs and many more –  in fact expressed concern, over the course of ECOSOC, on the need to fix the high dependency of the RC system to voluntary funding. For this year, a funding gap of some $80 million still remains to be filled. To date, into the fifth year of the reform, there has not been one single year where the RC system has been fully funded. We are thankful to those who announced their contributions, doubled their contributions this year, and to all others who have already contributed, sometimes well over what their assessed contribution would be. We also welcome Member States’ readiness to engage in the consultations announced by the Secretary-General to find a definitive solution to funding the RC system in a predictable and sustainable way. 

In short, we have not seen enough progress to fund the UN development adequately, and, on current trends, the prospects may have become even more elusive.  

This leads me to my third point. How do we change this? The Secretary-General outlined two key actions in his report for the consideration of Member States.  

First: spreading the word. Studies have shown low awareness of the Funding Compact in national capitals, where funding decisions are made. We will hear from the Resident Coordinator in Kenya later today how they can deliver on the request of the Secretary-General to hold informal country level dialogues. 

Second: ensuring the Funding Compact is fit for purpose. The UNSDG Chair will launch a dialogue with Member States following this ECOSOC Segment, so that the Secretary-General can present its outcomes in his next report on the implementation of the QCPR.  

I was heartened to hear over the course of ECOSOC so far many Member States, reaffirming their commitments to the Funding Compact, and looking forward to engaging in consultations to reenergize the Funding Compact.  

I hope our discussions today can help identify the initial commitments, and Funding Compact features, that are most critical to building trust and strengthening the case for quality and predictable funding for a UN development system that is fit for the purpose of SDG acceleration.  
 

Download the presentation here and listen to the recording of the session here. Read more about the UN Development System and the Resident Coordinator's results in Egypt, Kenya, Pakistan and St. Vincent and the Grenadines.