From stormy United Nations climate negotiation meetings in Bonn and London, the world heads to Sevilla, Spain, for the Fourth Financing for Development Conference (FfD4), with hopes of increased development capital flows to Africa and other regions. 

FfD4 opens today with a breath of relief after countries agreed to a set of broad commitments in a 38-page outcome document, Compromiso de Sevilla (Sevilla Deal), following months of fraught negotiations. The deal details actions to bridge the US$4 trillion financing gap to achieve the UN’s Sustainable Development Goals (SDGs). 

It outlines a renewed global financing for development (FfD) framework, including provisions on domestic public resources, domestic and international private business and finance, international development cooperation and development effectiveness and international trade.  

The Sevilla Deal document was approved without the participation of the US government, following its withdrawal from the negotiations. 

Described by its co-facilitators as “achieved through consensus, balanced, ambitious and action-oriented,” the FfD4 outcome document tackles debt and debt sustainability and the international financial architecture, and contains commitments on science, technology, innovation, and capacity building, and on data, monitoring and follow-up. 

Compromiso de Sevilla commits countries to “take concrete actions to enhance fiscal space, address debt challenges of developing countries and lower the cost of capital”, measures that will spur countries to address the critical climate finance issue that will be top of the agenda at the UN climate summit (COP30) in Belém, Brazil. 

Strong foundation 

When I attended the Third Financing for Development Conference (FfD3) in Addis Ababa, Ethiopia, ten years ago, the outcome document, the Addis Ababa Action Agenda (AAAA), aimed to establish a strong foundation for implementation of the post-2015 development agenda that gave birth to the SDGs. 

The then UN Secretary-General Ban Ki-moon said the AAAA was a “major step forward in building a world of prosperity and dignity for all, revitalising the global partnership for development for smart investments in people and the planet where they are needed, when they are needed and at the scale they are needed”. 

The then UN Environment Programme (UNEP) Executive Director, Achim Steiner (until recently UNDP Administrator), said AAAA had the potential to use and unlock significant resources for development. He called for annual channelling of trillions of dollars from multiple sources, including private finance, into more sustainable and equity-oriented investments, and “away from resource-depleting and carbon-intensive investments”.  

However, after ten years, the world is still very far from attaining the much-needed ambitious finance for sustainable development and climate goals so elaborately set out at FfD3 in Addis Ababa.  

That’s why Compromiso de Sevilla has been hailed by African and other developing countries, as it recognises the annual FfD gap of US$4 trillion and launches an ambitious package of reforms and actions to close this financing with urgency, while catalysing sustainable development at scale.  

Last week, ahead of FfD4 in Sevilla, the World Resources Institute (WRI) hosted a webinar, ‘Financing for Development: How Finance Can Support Development, Nature and Climate’. The panellists discussed how FfD4 will grapple with the challenge of accelerating achievement of the SDGs as well as commitments on nature and climate. 

Because it brings together diverse stakeholders from countries, UN agencies, financial institutions and the private sector, FfD4 is uniquely situated to enable other international processes such as the ‘Baku-to-Belém Roadmap’ under the UN Framework Convention on Climate Change (UNFCCC) and the multilateral bank reform process under the G20. 

With trade conflicts, climate impacts and foreign aid cuts on the rise, the financial system needs to evolve to better support countries’ environmental action and sustainable development, states WRI.  

The webinar previewed FfD4 and discussed how nature and climate relate to development, and how financial institutions can act to integrate these themes and fund country transitions in a mutually supportive manner. 

Speakers discussed key developments since FfD3 in Addis Ababa, the headwinds facing sustainable development, mobilising private capital, debt, cuts in overseas development assistance (ODA) and how the world can carry momentum from Sevilla onto other fora for implementation.  

The Organisation for Economic Cooperation and Development (OECD) projects a 9 to 17 per cent drop in ODA in 2025, on top of a 9 per cent drop in 2024. The outlook beyond 2025 remains highly uncertain. The projected decline is driven by announced cuts in four major providers of ODA.  

Funds decline 

For the first time in nearly 30 years, France, Germany, the United Kingdom and the United States all cut their ODA in 2024.  

If they proceed with announced cuts in 2025, it will be the first time in history that all four have cut ODA simultaneously for two consecutive years. 

ODA in 2027 is projected to fall back to 2020 levels. Needs continue to grow, and the projected ODA cuts will impact the poorest countries and vital services hardest. In 2025, least developed countries are projected to see a 13-25 per cent fall in net bilateral ODA. Countries in sub-Saharan Africa could face a 16-28 per cent decline.  

WRI Global Director, Climate, Economics, Climate Change and Finance, Melanie Roberts, recalls 10 years since Addis Ababa and 20 years since Monterrey, Uruguay, the first UN-sponsored summit-level meeting to address key financial and related issues pertaining to global development. 

“A lot has happened, but it has been somewhat of a disappointment where we are today. We are off-track with the SDGs, only on-track for 17 per cent, and nearly a third are going backwards. We are far off the 1.5°C goal committed in the Paris Agreement,” she observed. 

According to Roberts, countries are facing debt with a tight fiscal space, complex trade and a multilateral environment.  

“Addis laid some important foundations on how to harmonise blended finance and domestic finance, moving from billions to trillions of dollars. We have seen some progress in domestic resources mobilisation, but not as much as we would have hoped for. So, there is a tough task for FfD4 in Seville”. 

UN-DESA Director Financing for Sustainable Development Office, Shari Spiegel, said the Seville Deal, though not legally binding, has three strategic steps to implement on sustainable development in the new UN debt process, investments, and a transparent and fair financial architecture to bridge the US$4 trillion development financing gap. 

UN Special Envoy for Financing Sustainable Development, Dr Mahmoud Mohieldin, said FfD4’s big business is to revive the role of the multilateral system in the mobilisation of finance, doing a better job in preventing the harm of debt service eating into resources.  

“Africa is spending more on debt servicing than on health, education and other basic services combined. We must also look at the issue of illicit financial flows, which are more than ODA, foreign direct investment, grants and investments portfolio.” 

Avinash Persaud, special adviser on climate change to the president, Inter-American Development Bank, said: “It is not just a money problem, which is critical and vital for the livelihoods of people, climate and nature in developing countries. There is a need to look at and act on the built-in symmetries and balances in the international financial, development and economic system to close the financing gap. There are no safety nets for developing countries.”