WSIS update: APC involvement in the Task Force on Financial Mechanisms
By Willie Currie
NEW YORK, USA, 17 February 2005
APC participated in the deliberations of the Task Force on Financial Mechanisms for ICTD, which was established at the World Summit for the Information Society in Geneva in December 2003. Anriette Esterhuysen, APC Executive Director, was appointed as a member of the Task Force, while Willie Currie, APC ICT Policy Manager, attended the two Task Force meetings as an alternate.
The Plan of Action adopted at the World Summit on the Information Society (WSIS) in Geneva 2003 requested the Secretary General of the United Nations to create a Task Force to study the issue of financial mechanisms for information and communication technologies for development (ICTD) and present a report to facilitate discussions in the second phase of WSIS.
The Task Force’s mandate was as follows:
“While all existing financial mechanisms should be fully exploited, a thorough review of their adequacy in meeting the challenges of ICT for development should be completed by the end of December 2004. This review shall be conducted by a Task Force under the auspices of the Secretary-General of the United Nations and submitted for consideration to the second phase of this summit. Based on the conclusion of the review, improvements and innovations of financing mechanisms will be considered including the effectiveness, the feasibility and the creation of a voluntary Digital Solidarity Fund, as mentioned in the Declaration of Principles.”
In the process of participation, APC registered a number of concerns about how the Task Force’s compressed process was impacting on the content of its findings and conclusions. This led to an exchange of open letters between APC and the United Nations Development Programme (UNDP), the convenors of the Task Force, which can be read in the links below.
There has been much comment negatively contrasting the process adopted for the Working Group on Internet Governance (WGIG) with that of the Task Force. While this criticism is valid, it should be noted that the terms of reference for each group in the WSIS Plan of Action was different. For example, the WGIG’s terms of reference were as follows:
b) We ask the Secretary General of the United Nations to set up a working group on Internet governance, in an open and inclusive process that ensures a mechanism for the full and active participation of governments, the private sector and civil society from both developing and developed countries, involving relevant intergovernmental and international organizations and forums, to investigate and make proposals for action, as appropriate, on the governance of Internet by 2005. The group should, inter alia:
i) develop a working definition of Internet governance;
ii) identify the public policy issues that are relevant to Internet governance;
iii) develop a common understanding of the respective roles and responsibilities of governments, existing intergovernmental and international organisations and other forums as well as the private sector and civil society from both developing and developed countries;
iv) prepare a report on the results of this activity to be presented for consideration and appropriate action for the second phase of WSIS in Tunis in 2005.
The terms of reference for the WGIG create an open space for an engagement of the issue of internet governance by all stakeholders. By contrast, the terms of reference for the TFFM contain no such provisions (see TFFM mandate above). It should be recognized that the TFFM was an invited space. Participants were selected and invited by UNDP – there was no open process of negotiating the conditions of participation or an open nominations process, as was conducted for civil society participation in the WGIG.
This had its effect on the TFFM’s process, making it less open and accessible, less consultative in its deliberations, less transparent and subject to scrutiny and paradoxically more open to lobbying.
Nevertheless, despite these limitations, the TFFM was able to produce a relatively open set of findings and conclusions, which are polyvalent and can take forward the issue of finance for ICTD during the second phase of WSIS. For example, the following findings are insightful and useful:
• Experience shows that attracting investment in ICT depends crucially upon a supportive environment and a level playing field for business as a whole, and on an ICT policy and regulatory environment that encompasses open entry, fair competition and market-oriented regulation. (Finding 3)
• There is evidence to suggest that the broad-based deployment of ICT also depends on a supportive policy environment for ICTD particularly the establishment of national e-strategies and the integration of ICT into poverty reduction and/or other national development strategies and the Poverty Reduction Strategy Papers (PRSP) process. (Finding 4)
• Policy and regulatory incentives and more open access policies are also needed if private investment, civil society organisations (CSO) and community networks are also found to be effective in expanding ICT access to high cost (predominantly rural) and low-income populations to address the “bottom of the pyramid” populations. (Finding 5)
• National Universal Service/Access Fund and other mechanisms to lower costs of delivery to under-served markets and promote community access can play an important role in helping to address ICT access gaps, but may require substantial institutional and implementation capacity to succeed. (Finding 10)
• Regional cooperation, multi-stakeholder partnerships, and seed financing appear to be critical elements for addressing critical infrastructure gaps and can in turn help promote further development of national backbones and last mile solutions in countries where gaps persist. (Finding 11)
• Building human resource capacity (knowledge) at every level is a central requirement for achieving Information Society objectives. (Finding 16)
It is true that the TFFM did not function as a deadlock-breaking mechanism on the issue of a fund for ICTD and this is perhaps its main weakness. The question of whether there should be a new form of global fund for ICTD was not adequately addressed by the TFFM, nor was the case for a new form of fund in the form of the global public good argument (1) taken seriously. In this regard, the refusal of the Task Force to discuss not only the existing voluntary Digital Solidarity Fund (DSF) but even the concept of a mandatory Global Fund, or even to review the success or failures of other global funds for the environment and HIV/AIDS was as irrational as the predominant perspective in the North that African countries were acting irrationally in demanding a DSF without undertaking the necessary research to adequately motivate for it.
At the same time, there was a view in the Task Force that perhaps the underlying reason that existing financial mechanisms were not being fully exploited by developing countries had to do with fundamental information asymmetries regarding how these financial mechanisms worked as well as a lack of coordination in the utilization of the financial mechanisms for ICTD. In addition, it was clear that there were also policy information gaps as between agencies like the World Bank and developing country governments about the purpose of ICT policy and how to implement it.
It was in this context that APC attempted to argue for a combined policy/financial mechanism that would address the financial mechanism knowledge gaps, the ICT policy information gaps as well as create a space for a new form of fund to mobilize additional resources. APC argued that many developing countries had experienced mixed results from the telecom reform policy process, as well as from national ICT strategies, which had become so broad and complex as to be un-implementable in any meaningful way.
These governments needed new incentives if any progress was to be made on creating an enabling policy environment in developing countries. What is required is A NEW MECHANISM THAT CAN PROVIDE DEVELOPING COUNTRIES WITH DISINTERESTED POLICY ADVICE AND UNBIASED INFORMATION ABOUT HOW FINANCIAL MECHANISMS WORK.
In other words, policy and financial advice is often provided by investment and development banks, aid agencies and other international institutions in a context where these institutions have an interest in the outcome of the policy decisions of the governments. The governments are often unable to access independent advice on how to evaluate the information they are bombarded with and can not negotiate as equals. A new policy/financial mechanism could provide this kind of information service as well as assist governments to access existing sources of finance more effectively.
The Task Force concluded:
• Most developing countries are not yet able to leverage the full benefits of these existing (financial) mechanisms. (Conclusion 1)
• There remains a question of whether the existing array of financial mechanisms is “adequate” to “meet the challenges of ICT for development”. (Conclusion 2)
• Greater cross-sectoral and cross-institutional coordination of financing programs and ICT development initiatives would improve effectiveness and make better use of resources. (Conclusion 3)
• The Task Force found that there is both a strong development rationale as well as incentives for governments, private companies, civil society and international and other development organisations to work together on multiple levels to ensure the rapid and efficient mobilization of resources across the spectrum of existing and innovative financial mechanisms, to take maximum advantage of the potential of ICT to facilitate an inclusive society for all and the unique and golden opportunity to contribute to the achievement of critical objectives as outlined in the Millennium Declaration.
Among these coordination proposals in Conclusion 3 are three that may provide a productive way forward along the policy/finance nexus:
• Establishment of a “virtual” financing facility to leverage multiple sources in support of identified investment objectives in key locations (notably broadband, rural and regional projects, and capacity building);
• Creation of a mechanism for coordinating research and analysis into enabling policy environments, to identify best practices and priority needs for shared action by financial actors;
• Development of a “rapid response” policy and regulatory support mechanism to intervene in support of short-term sector policy initiatives.
These proposals from the TFFM need to be fleshed out during Prepcom II in Geneva to provide a new institutional framework on a multi-stakeholder basis that can deepen the focus on ICTD policy and finance and produce something creative from the process of engagement and debate at WSIS. The fight over the fund is at risk of becoming a zero-sum game where no one wins and divisions on the North-South axis become more polarized. New thinking, new policies, new mechanisms are needed to take the important issue of how to connect the world’s population to the global information society forward.
It is worth reading the executive summary of the TFFM’s report which contains its full findings and conclusions. The main text of the report is also important to read as it contains valuable information on the operations of financial mechanisms. Finally, it is important to find creative ways of working with the useful threads of the TFFM’s findings and conclusions to take the process of debate about finance mechanisms further and connect it with a discussion of new policy frameworks for ICT for development in the months ahead leading to Tunis and beyond.
The Task Force report has not provided closure or neat solutions to the problems of financing ICTD. Perhaps that is its strength.
(1) The extension of network infrastructure in developing countries is a global public good that benefits everyone because of the value of network externalities. The value of the global information network increases in value as more national networks and individual users are added.