By Royston Braganza, CEO, Grameen Capital India
To learn more about this topic, check out the Global Outlook on Financing for Sustainable Development 2019
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.
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Achieving 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.
For the second year in a row, the Trump Administration has proposed slashing U.S. development assistance programs by almost a third. Even though strong support on both sides of the U.S. Congress may prevent many – but not all – of these cuts becoming law, it is clear that the best hope for this period may be maintaining current levels of support. As the largest donor country, U.S. leadership on foreign aid is incredibly impactful. For example, based on our experience at Global Citizen, business leaders and policy makers announced 390 collective commitments in response to campaigns we either led or supported between 2012 and 2017. These commitments totaled more than USD 35 billion with nearly half of that, USD 15 billion, coming from just 5 countries, including the United States. And of the total number of new commitments, the United States makes up a nearly a quarter. In fact, the United States has been one of the largest contributors to many of the causes we champion, be it polio eradication, water and sanitation, or food aid.
