Notes Check against delivery

Notes Check against delivery Printed 07/11/2013 09:47 Page 1

Notes Dear colleagues, partners and friends. My intention today is to share information about ongoing preparations for the Compact for South Sudan and why we are pursuing it. Let me begin by charting the course of my presentation today. The starting point is understanding more generally, how fragility can stand in the way of pursuing of key development priorities, projects and programmes. In that context, issues I would like to address include: What is the New Deal for Engagement in Fragile States? Why was such a deal needed? What is the New Deal Compact for South Sudan? Why is such a Compact needed and what do we hope to achieve with it? How is the Compact being developed? Who is involved? I will try to address these questions in 15 slides. Printed 07/11/2013 09:47 Page 2

Notes Check against delivery Let me begin with an overview of the New Deal, before providing more detail: In November 2011, during the Fourth International Forum on Aid Effectiveness in Busan, South Korea, the g7+ group fragile states agreed on a New Deal for better international engagement with more than 24 major donor organizations. In the New Deal, donors for the first time recognized that crisis- and conflict affected states must be allowed to focus on peace- and statebuilding first, before they can achieve more ambitious development goals. In the New Deal, governments and donors also agreed to find better aid solutions for fragile states, based on 4 ideas: 1. Peace- and statebuilding goals (PSGs) should guide the work in fragile states. 2. Governments must FOCUS on overcoming fragility with their own country-led assessments and plans, rather than someone else s. 3. To succeed, more TRUST between donors, gov t and citizens must be built. 4. Country-level Compacts between Governments and partners should underpin the enhanced partnership embodied in the New Deal. Printed 07/11/2013 09:47 Page 3

Notes Check against delivery Before explaining how we implement the New Deal in South Sudan, let me take a step back and briefly trace the broad development history of fragile states. Many less developed countries, in particular in Africa, received their independence in the 1960s. Unfortunately, their progress in the 20 years after independence was often slow. The chart here helps us better understand the story. Using a key development indicator, it shows how real incomes changed in different regions between 1960 and 1985. During that period, rich OECD and East Asian countries were able to double and nearly triple their income per capita. Sub-Saharan Africa, however, made only little progress after the mid-70s. In fact, real incomes there started to decline again in the 1980s. By 1985, they were only 25 percent higher than in 1960. In many cases, economic problems were compounded by civil upheaval. Furthermore, until the late 1980s many countries had focused narrowly on economic growth, rather than human development more broadly. Printed 07/11/2013 09:47 Page 4

Notes Check against delivery By the 1990s, the international community realized that certain programmes had to be prioritised to achieve broad and sustained improvement in people s well-being. The idea of human development emerged, which signalled that development entails more than economic growth. As a result, the United Nations adopted the Millennium Development Goals in 2000. The idea was to pursue eight goals until 2015 that would go beyond the narrow focus on GDP growth. In addition to poverty reduction, the MDGs promoted issues such as education, health, gender equality and environment sustainability. Printed 07/11/2013 09:47 Page 5

Notes Check against delivery However, it became rapidly evident that the most fragile countries were unlikely to achieve many, if any, of the MDGs by 2015. The chart shows the change in the Human Development Indicator of different countries since 2000, many of them in Africa. The indicator combines measures of poverty, health and education. Some countries - such as Ethiopia, Rwanda and Angola - advanced relatively quickly in these key MDG areas. A significant number of countries, however, made only very limited headway. The chart here shows Central Africa, Chad, Nepal, Sudan, Papua New Guinea and Ivory Coast, which all advanced less than other low income countries. As many of you quickly recognize, these countries share a key characteristic: Fragility, primarily related to ongoing or past civil strife, constrains their progress. Increasingly, the world realized that if such countries are to advance meaningfully towards the MDGs, fragility would have to be addressed first. Printed 07/11/2013 09:47 Page 6

Notes As the shared problems became understood, the g7+ group of fragile states emerged. In a nutshell, the g7+ is the interest group of fragile states. From the very beginning, South Sudan took part in its discussions and in 2010 became a founding member. By now, the group has 18 participants, and is currently led by Timor-Leste, a country whose story is similar to ours: A long and bloody struggle for independence, High unemployment and poor social indicators despite oil wealth, Recurrent insecurity post independence, and Politics that were initially somewhat unsteady. In the view of the g7+, fragility is defined by such deficits in political processes, security, justice, economic foundations, public finance and social services. The g7+ advocates for better international support that takes their fragility in account. The New Deal has been the group s most important achievement so far, and in 2011 South Sudan volunteered to be a pilot country for its implementation. Printed 07/11/2013 09:47 Page 7

Handout At the heart of the New Deal are 5 peace- and statebuilding goals (PSGs) for overcoming fragility: 1. Legitimate politics, because political settlements and conflict resolution are very important in fragile states to create the foundations for statebuilding. 2. Security, because it is vital that citizens can live in security and peace. 3. Justice, because injustice must be addressed and all citizens must have an equal chance to defend their rights. 4. Economic foundations, because it is important to diversify economies for sustainable growth, livelihoods and jobs that benefit all, and not just a few. 5. Revenue and services, because Governments must better manage public finances and provide meaningful services that build confidence in the state.. The New Deal is based on the idea that these foundational goals need to be prioritized, rather than only socio-economic targets. Printed 07/11/2013 09:47 Page 8

Handout Another important principle in the New Deal is a commitment to build trust between Government, donors and citizens. Donors, as well as Governments, are asked to change the way they work to encourage country-led transitions out fragility. Five commitments are key, in particular with regard to international assistance: 1. Transparency of aid and budgets, so that citizens know how money is spent. 2. Risk sharing, so that partners stay engaged even when times are volatile. 3. Using country systems, so that more services are delivered through national rather than parallel mechanisms outside Government. 4. Strengthening capacities, so that effective national institutions emerge. 5. Predictable aid, so that national institutions can pursue complex long-term projects with greater certainty. Printed 07/11/2013 09:47 Page 9

Notes This photo shows the South Sudan Economic Partners Forum in Washington in April. Back then, South Sudan proposed to develop a New Deal Compact. Now, some of you may ask: what is such a Compact? Putting the New Deal into action, Compacts are meant to define a better partnership for tackling fragility. They are agreements to create an organizing framework that improves aid effectiveness and focusses Government and donors resources on urgent peace- and statebuiding priorities. You might also ask, how would the Compact be different from the one of 2009? 1. It would create a framework for long-term partnership, rather than just address a short-term funding gap in the MDTF. 2. It would focus on a limited set of benchmarks for Government and donors, rather than a long donor wish lists for Government. 3. It would go beyond a narrow focus on public financial management, based on the insights of the New Deal. 4. It would be associated with a range of innovative financing instruments that promote more effective aid, and 5. Rather than being written by a small team of advisers, its design would be led by Government based on broad consultations with the states. Donors accepted our proposal and we have since worked to develop a Compact. Printed 07/11/2013 09:47 Page 10

Handout Another questions you may have might be: Why is such a Compact needed? Fundamentally, the economic, political and security challenges we have faced after independence demonstrate the complexity of nation-building and the fragility of our progress. In the years ahead, risks and shocks will continue to impact our journey. A strengthened framework of cooperation between South Sudan and its partners therefore makes a lot of sense. As such, the Compact would have a number of benefits: 1. It would put a spotlight on major peace- and statebuilding objectives 2. It would signal long-term international commitment to South Sudan 3. It would create an agenda for dialogue between Gov t, donors and civil society 4. It would create mutual accountability based on clear benchmarks 5. It would facilitate more effective aid that increasingly uses country systems and is delivered in a more coherent fashion. Let me note that, even with the Compact, the Vision 2040, the SSDP and the associated Development Initiative continue to guide us. The Compact will provide a framework for enhanced partnership to facilitate their implementation and put focus on urgent peace- and statebuilding priorities. Printed 07/11/2013 09:47 Page 11

Notes I had mentioned earlier that the Compact would be associated with a range of innovative financing instruments for more effective aid. Let me briefly name some that were agreed in Washington, and that are contingent on the Compact as well as the IMF programme: The EU would send $110 million directly to our Treasury account in two years. IMF, World Bank and AfDB would provide nearly $70 million to the Treasury. The UN would gradually move towards national execution of projects. A new Partnership Fund would strengthen and increasingly use Gov t systems. Such support mechanisms are new and unprecedented in South Sudan. Let me stress that these financing mechanisms should not be seen as separate from the budget. Rather, they will help us shape and fund the budget. They are testament to our progress, and the strength of our partnership. Immediately following the launch of the Compact on the 3 rd of December, we are also jointly holding an International Private Investment Conference in Juba. Page 12

Handout Let me talk very briefly about the Compact development process. The chart shows a simplified timeline. Following Washington, we constituted a Technical Committee of Government, donors and civil society, and a high-level Steering Committee to oversee the work. In June, we began consultations with Gov t, donors and civil society in Juba. Unlike on many occasions in the past, we also made sure to consult Government and civil society in all States directly. In these consultations we essentially asked stakeholders: what needs to change in the way Government and donors work so that we overcome fragility? The answers defined the commitment areas for Government and donors in the Compact, as endorsed by the Council of Ministers in early October. Since then, 15 joint working groups have worked on benchmarks for 2014. We are currently collating all the inputs and are designing the draft documents. Once approved by the Council of Ministers and other key stakeholders, we plan to launch the Compact on the 3 rd of December in Juba. Printed 07/11/2013 09:47 Page 13

Notes Check against delivery I had mentioned the consultations. The pictures here are meant to give you a first flavour of their extent. Printed 07/11/2013 09:47 Page 14

Notes Check against delivery Let me also share some statistics to illustrate the effort we have made in reaching out to as many stakeholders among Government, civil society and donor agencies as time and resources allowed. Since May, we have organized more than 75 events, meetings and consultations on the Compact. That is one event every second workday. A team of Government, civil society and donor colleagues has travelled to all 10 states over the course of September and October. In each location, we brought together 40 to 90 stakeholders, including Governors, their Deputies and Ministers, members of parliament, commissioners, army, police and civil society. The team did not bring answers from Juba, but took them from States back here. In nearly all locations, the team was able to respond to questions on the radio. In total, more than 1,000 stakeholders provided direct input to the Compact often through individual votes on priorities and hundreds more were exposed to it. In many ways, it has been the largest outreach on a development policy since independence, and I understand it sets us apart from similar efforts in other countries. Printed 07/11/2013 09:47 Page 15

Notes Check against delivery Concretely, what should the commitments from Government and donors cover? In peace- and statebuilding, 10 benchmarks would aim at: 1. National reconciliations 2. Elections 3. Security sector capacity and reform 4. Protection of civilians and human rights 5. Access to justice and judicial capacity 6. Accountability and anti-corruption 7. Infrastructure 8. Agriculture and economic diversification 9. Public financial management and 10.Local service delivery. With regard to aid effectiveness, 5 benchmarks would address: 1. Better aid reporting 2. Joint planning, management and oversight of aid 3. Increased use of Government systems in aid delivery 4. Better support for sub-national capacity, and 5. More predictable aid Printed 07/11/2013 09:47 Page 16

Handout Given that we are still working on a draft, it would be premature to talk about specific benchmarks. Let me assure you though that we asked all working groups to make proposals that are relevant, realistic and easy to report on, before the benchmark proposals are submitted to decision-makers in Council and partner headquarters. Before I conclude, let me mention some of the practicalities around the Compact. The document we are working on will have two parts: 1. A concise 4-page umbrella document that sets out overall ideas, principles, goals and modalities for the Compact until 2016. 2. A policy matrix with 15 benchmarks for Government and donors in peace- and statebuilding, as well as aid effectiveness. In many cases, these benchmarks will be derived from existing policy frameworks. We do not want to reinvent the wheel but strengthen what s already there. Progress against the benchmarks will be regularly reviewed with Government, donors and civil society representatives, but at least every 6 months formally. Once a year, we will revise the benchmarks for the next year, via the 15 working groups, involving national Government, states, donors and civil society. Some of the details are still being hashed out. I look forward to updating you all once that is done. Printed 07/11/2013 09:47 Page 17

Notes Check against delivery Let me conclude with a very brief summary. As a young and fragile nation, South Sudan still has to create solid peace- and statebuilding foundations, before it can pursue more ambitious goals. Our journey over the coming years will not always be smooth or without challenges. An enhanced partnership framework therefore makes a lot of sense. The New Deal helps us understand what needs to be done to build foundations in politics, security, justice, economics, finances and services, and aid effectiveness. As a member of the g7+ and New Deal pilot country, we are forging a Compact with our partners to create an organizing framework for resources, accountability and dialogue around these issues, focussed on nationally-owned benchmarks. I believe that the Compact will send a signal of Government resolve and donor commitment to overcome fragility in South Sudan for the benefit of our people. I look forward to our discussion today and in the months ahead. Thank you very much. Printed 07/11/2013 09:47 Page 18