Today’s post is by Johannes Jütting, Manager of the Partnership in Statistics for Development in the 21st Century (PARIS21), which promotes the better use and production of statistics in developing countries. PARIS21’s new report, A Road Map for a Country-led Data Revolution, sets out a detailed programme to ensure developing countries can monitor the Sustainable Development Goals and benefit from technological and other innovations in data collection and dissemination.
Tradition tells us that more than 3,000 years ago, Moses went to the top of Mount Sinai and came back down with 10 commandments. When the world’s presidents and prime ministers go to the top of the Sustainable Development Goals (SDGs) mountain in New York late this summer they will come down with not 10 commandments but 169. Too many?
Some people certainly think so. “Stupid development goals,” The Economist said recently. It argued that the 17 SDGs and roughly 169 targets should “honour Moses and be pruned to ten goals”. Others disagree. In a report for the Overseas Development Institute, May Miller-Dawkins, warned of the dangers of letting practicality “blunt ambition”. She backed SDGs with “high ambition”.
The debate over the “right” number of goals and targets is interesting, important even. But it misses a key point: No matter how many goals and targets are finally agreed, if we can’t measure their real impact on people’s lives, on our societies and on the environment, then they risk becoming irrelevant.
Unfortunately, we already know that many developing countries have problems compiling even basic social and economic statistics, never mind the complex web of data that will be needed to monitor the SDGs. A few examples: In 2013, about 35% of all live births were not officially registered worldwide, rising to two-thirds in developing countries. In Africa, just seven countries have data on their total number of landholders and women landholders, and none have data from before 2004. Last but not least, fast-changing economies and associated measurement challenges mean we are not sure today if we have worldwide a billion people living in extreme poverty, half a billion or more than a billion.
Why does this matter? Without adequate data, we cannot identify the problems that planning and policymaking need to address. We also cannot judge if governments and others are meeting their commitments. As a report from the Centre for Global Development notes, “Data […] serve as a ‘currency’ for accountability among and within governments, citizens, and civil society at large, and they can be used to hold development agencies accountable.”
So data matters. Despite this, blank spaces persist in the statistics of many developing countries. And they persist even at a time when the world is experiencing a “data revolution” – a rising deluge of data matched by ever-increasing demand for data.
Despite the challenges, we are optimistic that all countries, including the poorer ones, can make quick, dramatic progress in meeting their data challenges. Firstly, there is not only a growing awareness of the problems countries are facing but also a growing willingness to do something about it. Statistical offices in almost 40 developing countries have signed up to our Data Declaration, in which they state that “the time is now to bring the data revolution to everyone, everywhere”.
Second, new technologies are already helping to revolutionise the world of data. PARIS21’s Innovations Inventory has compiled hundreds of ways in which technology is making it easier and less costly to collect data and providing new sources of data, like “big data”. Examples abound, from NGO to private sector initiatives. As part of its Data for Development (D4D) challenge, Orange Senegal opened up its mobile-phone call-log data for researchers to generate insights into health, transportation, demographics, income inequality, and more. Another truly “Big Idea” comes from Restless Development, a youth-led development agency that equips young people with knowledge, skills, and platforms necessary to effectively interpret data in order to mobilise citizens to take action.
Third, we are optimistic because we want to build on what is already there – existing national statistical systems. Clearly, many are far from ready to join the data revolution; a colleague recalls visiting one national statistical office that couldn’t pay its power bill and had to negotiate with a neighbour to string an extension cord from his home to the office. That may be an extreme example, but other challenges – including technology gaps, shortages of trained staff, weak data dissemination and poor relations with users – are all too common. Nevertheless, national statistical agencies are the only entities with the expertise and legal frameworks to play the lead role in collecting, processing and disseminating data. It is on them that the data revolution for development for sustainable development must be built.
Of course, our Road Map for a Country-led Data Revolution is only a start. Much else needs to happen. This includes designing pilot projects, finding better ways to integrate new sources of data in existing national systems and – unsurprisingly – finding extra funding. But here again we are optimistic. We don’t accept that the cost of monitoring the SDGs will be “crippling”. With our colleagues in the UN Sustainable Development Solutions Network, we have calculated that additional donor funding of $200 million a year, matched by a similar rise in domestic funding, would enable the 77 IDA countries (“The World Bank’s Fund for the Poorest”) to successfully monitor their progress the SDGs – yes, even the proposed 17 goals and 169 targets!
We don’t yet know if that will turn out to be the final number of SDG “commandments”. But here’s something we do know – developed and developing countries are on the cusp of a huge and dramatic change in how they collect and disseminate. True, unlike Moses, we don’t live in a time of miracles. But with the aid of a clear road map, strong political will and “miraculous” technologies, we really are much closer to the promised land of better data than we realise.
Informing a Data Revolution – PARIS21
Watch the launch of A Road Map for a Country-led Data Revolution at the Cartagena Data Festival on Monday 20 April from 1700 hours UTC (noon in Cartagena, 1pm in New York, 6pm in London, 7pm in Paris, 2am in Tokyo).
Today’s post is by Markus Schuller, Panthera Solutions
The trends we discussed in Part 1 are influencing how we structure financially feasible pension systems. EU28 pension systems are well researched by European institutions and the OECD (here, here and here for example) They are rather moderate in their conclusions as these tend to carry politically explosive messages, notably: the first pillar is becoming more and more an anti-poverty provision, leaving it to the second and third pillars to secure an adequate retirement income. So how can we stimulate Pillars II and III? (The “three pillars” come from a 1994 World Bank publication describing: “a publicly managed system with mandatory participation and the limited goal of reducing poverty among the old [first pillar]; a privately managed mandatory savings system [second pillar]; and voluntary savings [third pillar]”).
A total of EUR 1 717 billion (gross) was spent across the EU on pensions in 2012, representing approximately 13.3 % of the EU GDP. Expenditure varies considerably between countries. Greece spent 17.5 % of GDP on pensions in 2012, more than any other country, while three others (Italy, France and Austria) also spent over 15 % of GDP. Estonia, Ireland and Lithuania, meanwhile, spent 7.9 %, 7.3 % and 7.7 % of GDP respectively on pensions (see EUROSTAT Social Protection Statistics).
The EU Commission and EU regulators are increasingly taking on the task to regulate and stimulate the use of Pillars II and III. On January 30th, 2015, the European Insurance and Occupational Pensions Authority (EIOPA) published a statistical database for occupational pensions in the European Economic Area (EEA). This publication represents an important financial stability data source allowing EIOPA to better monitor developments in the market and identify at an early stage trends, potential risks, and vulnerabilities. Currently 21 of the 28 EU jurisdictions have provided information for this database.
In July 2014, the EC called EIOPA for advice on the development of an EU single market for personal pension products. The original timeline, as mentioned in an EIOPA presentation from October 2014 has changed. EIOPA will now publish a consultation document on how a single market for personal pensions could be created in July 2015. As EIOPA’s Task Force on Personal Pensions has not yet drawn final conclusions, no documents are publicly available yet. Stakeholders will be asked to respond to the issues raised in the consultation document between the beginning of July and the beginning of September 2015 during a public consultation. EIOPA will then answer to the Commission’s Call for Advice by 1 February 2016.
In short, the European Commission and EIOPA are currently trying to understand the market for personal pension products. The EC is asking the right questions in this document, from a push towards an EU-wide framework, over solving principal-agent issues to a push for multi-pillar diversification. In order to support the EU institutions in their orientation phase, I suggest the following for the third pillar.
- Include Single Market for Personal Pensions in Capital Markets Union (CMU) Framework
The European Commission’s Green Paper on establishing a Capital Markets Union until 2019 currently focuses on 5 aspects to facilitate capital market based debt financing for SME and infrastructure investments. Rightly so. Having said that, ensuring adequate income in retirement through direct capital market exposure is equally important. So far, the Green Paper does not even mention the third pillar. It only touches the second pillar lightly in two short paragraphs. The hopefully bold proposals from the “EIOPA Task Force on Personal Pensions” in Q1-2016 on how to strengthen the third pillar in EU28 need to be added as priority to the CMU framework.
- Product Structures in the Client´s Interest
Up to now, third pillar products like the Riester Rente (Germany) or the Private Pensionsvorsorge (Austria) are based on the belief of the Greater Fool Theory. Product managers and distributors hope to find an even greater fool that signs up for a fee-overloaded, inflexible, intransparent and strategy-constrained financial instrument. Consumers are taking the bait of a minor government subsidy while ignoring the significant downside of those products. And it works (see here, here and here). Instead, consumers need to be offered a low-cost, transparent, flexible and strategy-unconstrained vehicle to participate in the long-term rise of the global capital stock. US FinTech providers show the way. Traditional capital market access via costly gatekeepers like IFAs, Banks and fund managers needs to be avoided.
- Regulatory Approach
Personal pension plans (PPPs) are covered by many sectoral EU-laws, or none (21 out of the 80 PPP’s surveyed in the EIOPA database have no EU legislation applicable). PPPs should have their own simple and clear regulatory approach. It should facilitate competition amongst financial services providers to offer a low-cost, transparent, flexible and strategy-unconstrained PPP-vehicle. It also needs to overhaul incentive structures to solve currently pressing principal-agent issues.
- Capital Markets Education & Cultural Change
Without educating the private investor on capital markets know how, PPPs will not achieve the reach and level of acceptance required. This education needs to take place in a cultural environment in which capital markets are not demonized by governments. This is a rather self-evident insight, though not necessarily followed by continental European politicians. Even if education and societal sentiment are in place, the inequality momentum will restrain large parts of the population from being able to sufficiently save money for capital market investments. Governments need to offer more significant tax shields – e.g. by automatically transferring parts of the paid income tax to the third pillar account of the citizen.
- Civil Society Research Support
Despite significant research being conducted on EU28 first pillar pension systems, the databases and research publications on PPP are nascent. In addition to EIOPAs current effort to establish the research infrastructure, civil society support should be facilitated to help conduct research and raise public awareness. Is it via lobby-like institutions like a TheCityUK for PPP topics or by installing a “Kapitalmarktbeauftragten” (capital markets commissioner) like in Austria – where a good idea failed due to political reasons. Such a commissioner could be appointed by the parliament and equipped with sufficient freedom and budget to promote the topic through new initiatives.