G-77 Chair calls for effective implementation of Rio commitments

Washington, D.C. , 8 May 1997 (G-77) - In a message addressed to the United Nations Association of the USA on 7 May 1997 in Washington, D.C., Ambassador Daudi N. Mwakawago, Chairman of the Gorup of 77, said that the Group of 77 is urging developed countries to meet all their financial commitments of Agenda 21, especially those related to the provision of new and additional resources that are both adequate and predictable, to developing countries.

In these negotiations the developed countries tried to argue that ODA transfer which was agreed at Rio as one of the main means to transfer resources to developing countries, was no longer crucial since more resources were being transferred to the South through FDI flows, he said. However, this argument is partially true because a large portion of the private financial flows are only going to a dozen countries that are already growing fast, and very little, or none at all, of the FDI flows are going to Africa and the LDCs which need these resources the most. Furthermore, FDI flows are commercial in nature, and hence cannot be relied for financing sustainable development or building basic infrastructure needed especially in the LDCs, he added.

The Chairman of the Group of 77 argued that while ODA could play a catalytic role in leveraging FDI for sustainable developmen, it is also flawed mainly because it is difficult to ascertain direct linkage between FDI and ODA. FDI is private capital voluntarily invested by companies or financial institutions, whereas ODA is mainly given as untied grant on government-to-government basis for development purposes. As long as donors argue that they don not control FDI flows, it will be difficult to assure that such flows are directly related to ODA. It is also not proper to attach strings such as environmental conditionality to ODA. Furthermore, reliance on “green credit lines”as a major source of funding for environment related project as advocated by some donors is impractical in view of the fact that very few initiatives of this kind exist, he added.

In this context, in view of the fact that ODA flows have dwindled from 0.34 in 1992 to a low mark of about 0.25 presently, the G-77 is urging the developed countries to stop the slide and increase ODA flows to the agreed target of 0.7% by the year 2000. Although the developed countries have shown some inclination to increase their ODA contributions, they argued that putting a specific target to achieve the objective was inappropriate for now, he said.
Concerning the financial mechanisms, it is regretted that donors did not make new commitments beyond that for the replenishment of the GEF. The G-77 stressed that GEF funding should be increased so as to provide adequate, new and additional resources in enhancement of the projects and activities that are directed at achieving global environmental benefits, he concluded.