Development finance

Shifting public and private finance towards the Sustainable Development Goals 

Development Matters Development finance, SDGs , , ,

to build

By Paul Horrocks, Priscilla Boiardi and Valentina Bellesi, OECD Development Co-operation Directorate 

This blog is part of the upcoming OECD Private Finance for Sustainable Development Conference that will take place on 29 January 2020

dev-cooperation-puzzle-handBack in 2015, the international community committed to a shared global vision towards sustainable development – the 2030 Agenda – including 17 Sustainable Development Goals (SDGs).

The Goals identify the areas in which resources are most needed. But with the realisation that meeting the Goals by 2030 would require filling an annual financing gap of 2.5 trillion dollars, the Addis Ababa Action Agenda (AAAA) called upon a broader mobilisation of resources, including private ones.

Five years on, progress remains slow and uneven.

Three critical questions emerge from this context: How can we drive more resources towards the Goals? How can we make sure they are going where they are needed most?

And are they being used in the most effective way?

In order to guide the answers to those questions, we propose a three-step approach: Mobilisation, Alignment and Impact. Continue reading →

A perspective from the financial sector on sustainable business

Development Matters Development finance , ,

LJD

By Professor Angela Sansonetti, Golden for Impact Foundation

This blog is part of a special series exploring subjects at the core of the Human-Centred Business Model (HCBM). The HCMB seeks to develop an innovative – human-centred – business model
based on a common, holistic and integrated set of economic, social, environmental and ethical rights-based principles. Read more about the HCBM here, and check out an event about it here
The HCBM project originated in 2015 within the World Bank’s Global Forum on Law, Justice and Development and is now based at the OECD’s Development Centre.

For too long, the financial system worked on its own set of principles focused on attracting clients and maximising short-term profits. These principles, growth within a capitalist and closed economy, are no longer suitable in a circular and sharing economy focused on customer needs as well as on environmental, social and governance rules. Today, several forces are pushing towards a new framework oriented to sustainable development, social innovation and human-centred approaches based on these rules.

In this transition environment, the financial system, plays a key role in driving economic growth towards values of sustainability based on promoting, amongst other factors, greater environmental responsibility, climate resilience, low-carbon, human rights, gender equality, social inclusion and sustainable economic growth. The financial system results from a long-term evolution related to global economic growth and founded on macro-economic choices as well as defined legal, technological and government rules. However, nothing is irreversible. So, in this changing context, sustainable finance plays a key role to support the shift from traditional economies based on high-impact and high-carbon industries to clean-energy and low-carbon sustainable industries.

Continue reading →

Getting Private Sector Engagement on the Right Track: Four Essential Ingredients

Development Matters Development finance, Private Sector , , , ,

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By Andrew C. Wilson, Executive Director, and Kim Eric Bettcher, Director, Knowledge Management, Center for International Private Enterprise

To learn more about this timely topic explored during
the Private Finance for Sustainable Development Week,
please visit the PF4SD and GPEDC websites.

kenya-private-sector-andrew-wilson
 The Kenya Private Sector Alliance (KEPSA) engages President of Kenya, H.E. Uhuru Kenyatta, in pursuit of an enabling business environment in Kenya.

Developing countries face complex challenges that require solutions from a strong private sector in partnership with government and society. Many in international development are actively contemplating how to move such partnerships forward. Notably, USAID issued a new Private Sector Engagement Policy to “embrace market-based approaches as a more sustainable way to support communities in achieving development and humanitarian outcomes at scale.” As part of Private Finance for Sustainable Development Week, the Global Partnership for Effective Development Co-operation (GPEDC) is hosting a Specialised Policy Dialogue on Private Sector Engagement through Development Co-operation, which will identify actions to scale up private-sector partnerships in ways that effectively use public resources and attract business investments to create shared value.

Business is now starting to make its mark on the Sustainable Development Goals (SGDs) with innovative initiatives for clean energy, water stewardship and green cities, to name a few. Around 80% of United Nations Global Compact companies are acting on the Global Goals. Business has already been an integral part of past development successes, driving economic growth and creating nine out of ten jobs. Still, the current trajectory is not adequate. The business sector has more to do to fulfill its potential as a responsible investor in emerging markets and an effective partner with the development community.

Continue reading →

Getting private resources on board for sustainable development

Development Matters Development finance, Private Sector , , ,

By Royston Braganza, CEO, Grameen Capital India

To learn more about this topic, check out the Global Outlook on Financing for Sustainable Development 2019

Global-Outlook-Cover

GOOOOAAAAAALLLLLL! The frenzied celebration that reverberates across the globe, every time a goal is scored, reflects the seemingly universal passion for football – be it the FIFA World Cup, the Champions League or any other national or local leagues. The game cuts across generations, blurs political boundaries and traverses ethnic divisions. Sadly, some other things do too – hunger, refugee crises, poverty and global warming, to name a few. And yet, everywhere I look, shining examples exist of H.O.P.E.

Holistic approach. Governments, corporations, capital markets, non-governmental organisations need to find integrated solutions. One exceptional example is the catalytic potential of using corporate social responsibility/philanthropic capital to de-risk investment from capital markets. The financial sector can help guide companies to look towards a sustainable future. Grameen Foundation’s Growth Guarantees programme, for example, did precisely that by bringing together donors, international and local banks, microfinance institutions, and poor, vulnerable women borrowers.
Continue reading →

Data: The first step to improving finance in African cities

Development Matters data, Development finance, policy , , , ,

By Astrid R.N. Haas, Manager of Cities that Work, International Growth Centre

This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development

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Hargeisa, Somalia. Photo: Shutterstock.com

Many African cities are urbanising rapidly. Yet, they are unable to adequately service their growing populations with the necessary infrastructure and amenities due to a lack of finance. Furthermore, retrofitting infrastructure on a city that has already grown is significantly more expensive. Improving local government finance is therefore very high on these cities’ agendas.

Cities can improve their finances in various ways. Perhaps one of the most underutilised yet high potential methods is property tax. Why? Rapid population growth is generally accompanied by a construction boom, increasing the number of properties. Furthermore, if demand for properties rises faster than supply, this will also increase property values. And such values will further benefit once public investments in infrastructure as well as improvements in service delivery are made. All these factors have a positive impact on property tax collection, and thus have the potential to unleash a virtuous cycle for local government revenue.
Continue reading →

Raising capital for intermediary cities

Development Matters Africa, Asia, Development finance, Infrastructure , , , , ,

By Jeremy Gorelick, Senior Infrastructure Finance Advisor, USAID’s* WASH-FIN (Water, Sanitation and Hygiene – Finance) Programme, and Joel Moktar, Project Leader, Open Capital Advisors

This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development

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Intermediary cities are the fastest growing cities in the developing world. Often referred to as secondary or second-tier cities, intermediary cities typically have a population of between 50,000 and one million people. They play a fundamental role in connecting both rural and urban areas to basic facilities and services.[1] Driven by population growth and rural-urban migration, intermediary cities worldwide are projected to grow at almost twice the rate of megacities (those with more than 10 million inhabitants) between now and 2030.[2] Of these, the fastest growing cities are in Africa and Asia.[3]

Continue reading →

Development Finance 2.0: From Billions to Trillions

Development Matters Development finance ,

By Harald Hirschhofer, Senior Advisor, TCX [1] 

development-financeAchieving the Sustainable Development Goals (SDGs) will require an enormous increase in external financing flows to developing countries. Development Finance Institutions (DFIs) have gradually started to shift their business model towards de-risking services to crowd in long-term, low-risk private capital. However, the targeted scaling up of private investment from billions to trillions to realise the SDGs contains massive risks for stability. And good macro-policies are needed, in turn, to address such underlying risks. Countries that need the greatest amount of development finance are often those that have domestic financial resource constraints and underdeveloped markets. Financing their growth and investment opportunities makes the management of exchange rate risks, which are inherent in development finance, a critical challenge.
Continue reading →