Tag: Development finance

Development finance
Reviving multilateralism

Four ways to make development finance fairer and more effective

By Harald Hirschhofer, Senior Advisor, TCX

Low-income country debts are mostly owed to multilateral and bilateral official lenders. Unfortunately, these development institutions’ default practice is to lend – from a borrower’s perspective – in foreign currency, i.e. USD, Euros or Yen. As they are risk conservative, they put the currency risk on the shoulders of low-income country borrowers. Although on concessional terms, such hard-currency development finance frequently turns out to be more expensive than borrowers can afford. The true costs of borrowing are hidden behind a veil of currency risk.  

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Development Matters
Green transition

COP26’s moment of truth: High time for good food finance to enter the climate action menu

By Olav Kjørven, Senior Director of Strategy, EAT

Two sectors will be decisive for the rapid and successful decarbonisation of our economies: energy and food. Energy gets a lot of attention. Food is another story. Decarbonising food production and consumption is just as urgent as the energy transition, but so far little is happening. Recent Intergovernmental Panel on Climate Change (IPCC) reports and the UN Food Systems Summit in September have helped raise awareness. The EU Farm to Fork Strategy is a sign of hope. But at COP26 in Glasgow, we need real, concrete resolve to make food system transformation a climate action priority.

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Development Matters
Development finance, Reviving multilateralism

Donor countries should use IDA20 to address a blind spot in development finance

By Creon Butler, Research Director, Trade, Investment and New Governance Models, and Director, Global Economy and Finance Programme, Chatham House and Harald Hirschhofer, Senior Advisor, TCX

Developing countries need external finance on a very large scale to meet the Sustainable Development Goals; the COVID-19 pandemic has not only increased the amount they need but also made it harder to access private funding. This makes public Development Banks more important than ever, especially to catalyse investments by pension funds and other institutions in socially productive assets.

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Development Matters
Africa, Building resilience, Français, Reviving multilateralism

Enjeux et défis du financement du développement dans la zone de l’Union économique et monétaire ouest-africaine post-COVID-19

Par Alain Tchibozo, Chef Economiste, Banque Ouest Africaine de Développement – BOAD

Endettement accru par les dépenses liées à la Covid-19

Le recours à l’endettement pour financer les plans de riposte et de relance économique explique principalement le fait que le déficit budgétaire des pays de l’Union Économique et Monétaire Ouest Africaine (UEMOA) se soit accru. Au plan des finances publiques, même en tenant compte d’un redémarrage de l’activité autour de 5.5% cette année (contre 1,5% en 2020), le déficit budgétaire global représenterait en 2021 près de 5,0% du PIB, après 5,4% en 2020. L’accumulation de déficits publics liés au financement de dépenses de fonctionnement des États apparaît de fait comme le principal facteur d’endettement public. Or la détérioration des finances publiques restreint l’accès futur des États à de nouveaux financements. En 2021, le service de la dette intérieure (paiement des intérêts et amortissement du principal) représentera plus de 50% du service total de la dette dans sept des huit États membres de l’UEMOA. En outre, la part des recettes publiques consacrée au service de la dette représente depuis 2020 plus d’1/3 des recettes totales dans sept États. Aussi, la question de la soutenabilité de la dette sera un enjeu crucial pour les États de la zone ces prochaines années.

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Development Matters
Africa, Development finance

Mapping development assistance to small arms control: why does it matter?

By Giovanna Maletta and Lucile Robin, Stockholm International Peace Research Institute (SIPRI)

Small arms, large impacts

Widely available and easy to conceal, small arms and light weapons (generally referred to as SALW) are easily trafficked and acquired both in times of war and peace. This can negatively impact the development of a country in many ways. Among the most directly identifiable effects are the deaths and injuries they can cause, which can increase financial pressure on households, communities, and health systems. In Zambia, treating a patient for gunshot wounds costs more than $100, which represents approximately ten times the cost of treating a patient with malaria. Small arms proliferation can also indirectly fuel conflicts and armed violence, force displacement, reduce economic opportunities, and limit access to healthcare and education.

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Development Matters
Covid-19, Development finance

Mobilising investment to sustain economic recovery: what can impact investors do?

By Alberto Bernardini, Sustainable Finance Director, GreenWave

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

Private investment in sustainable development has been on the rise in recent years. Impact investments differ from traditional investments as they aim to generate positive, measurable impacts on society and on the environment, in addition to being financially profitable. According to the Global Impact Investing Network’s (GIIN) annual impact investor survey, close to 300 impact investors worldwide collectively managed USD 404 billion of impact investment assets in 2019. This is almost double the USD 228 billion worth of assets under management by 200 impact investors in 2017. Moreover, the rapidly growing impact investment market could provide the capital needed to address the world’s most pressing challenges in areas like sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services such as housing, healthcare, and education. 

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Development Matters
Development finance, SDGs

Public development banks: gateways to transformative SDG financing

By Maria Alejandra Riaño, Research Fellow, Governance Programme, Institut du Développement Durable et des Relations Internationales IDDRI

Public development banks around the world can play a vital role in minimising economic decline, supporting recovery and financing structural transformation. To fulfil this role, they need to fully capture the interconnected and transversal nature of the 2030 Agenda and align their practices, operations and investments accordingly. It is not just a matter of marginally adjusting strategies and processes – public development banks need to deeply reshape behaviours and investment practices.

Scaling up public development banks’ alignment with the 2030 Agenda

Public development banks have certain advantages that position them at the forefront of the vast network of actors responding to the socio-economic impacts of the COVID-19 crisis and seeking to chart a course towards a transformative recovery. Public development banks have become an essential and complementary voice for traditional co-operation and commercial investors due to their detailed knowledge of the specific context in each region or country, and unmatched flexibility in the design of concessional loan programmes.

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Development Matters
Covid-19, Development finance

The Future of Financing for Development

By Mahmoud Mohieldin, United Nations Special Envoy for the 2030 Agenda, and Benjamin Singer, Economic Affairs Officer, United Nations

This blog is also a part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries
finance-development-covid-19

Before the pandemic started, developing countries had been increasing their debt levels since the 2000s. By the end of 2019, 44% of IDA-eligible countries were already considered at high risk of or in debt distress. Debt servicing costs of least developed countries (LDCs) and low-income countries increased twofold from 2000 to 2019 to reach 13% of government revenue. A growing proportion of this debt was privately owned, or commercial.

Then the pandemic hit, sending countless public health systems, many already under pressure, into disarray. Up to 1.6 billion livelihoods – half the world’s workforce – have been lost. Health and unemployment benefit expenditures skyrocketed at the same time as the release of some US$9 trillion worth of stimulus packages.

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Development Matters2 Comments
Covid-19, Development finance

Remittances during COVID-19: Reduce costs to save livelihoods

By Paul Horrocks, Manager, Private Finance for Sustainable Development; Friederike Rühmann, Policy Analyst; and Sai Aashirvad Konda, Consultant at the OECD Development Co-operation Directorate

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_1729484149
Mumbai, India – Migrant workers return home during a nationwide lockdown due to COVID-19, on May 2020. Photo: Manoej Paateel / Shutterstock

The COVID-19 crisis is severely affecting migrants’ ability to send money home to their families.

The World Bank predicts a decline in global remittances by about 20 percent in 2020 due to the economic downturn caused by the COVID-19 pandemic. This decline threatens the livelihoods of millions of households in developing countries, and the international community must urgently invest in innovative, resilient, and cost-reducing solutions to support developing countries amid the crisis and in their recovery.

Impact of COVID-19 on remittances

Remittances serve as an important source of income for millions of households in developing countries and act as a safety net in times of emergencies, natural disasters and crises. In 2019, the flow of remittances reached a record flow of $554 billion to low-and middle-income countries. Continue reading “Remittances during COVID-19: Reduce costs to save livelihoods”

Development Matters2 Comments
Development finance, SDGs

New Approaches to Scaling Private Sector Funding for Sustainable Development

By Sonja Gibbs, Managing Director & Head of Sustainable Finance, IIF

This blog is part of the
OECD Private Finance for Sustainable Development Conference

Welcome to 2020–the “Decade of Delivery” for the 2030 Sustainable Development Goals (SDGs). While the international development community remains hard at work on solutions, success over the next decade will require addressing an “SDG financing gap” of $5-7 trillion per year, with emerging markets making up $2.5-3 trillion of that.  This will create tremendous opportunities for the private sector across the spectrum of investment vehicles—including foreign direct investment, listed and unlisted equity and private equity, in addition to the wide variety of debt instruments.  Indeed, given the massive buildup of debt over the past two decades—to over 320% of global GDP, from around 230% in 1999—a shift towards more non-debt financing could be a more sustainable approach to closing the gap.

With fewer than 10 years left to achieve the SDGs, many low-income countries remain very far off-target. At slightly above 50, the low-income countries median on the composite SDG index—which measures country-level performance in achieving the SDGs—remains well below that of either mature or emerging markets (though there is substantial variance among low-income countries). Continue reading “New Approaches to Scaling Private Sector Funding for Sustainable Development”

Development Matters3 Comments