Financing the SDGs in cities: Innovative new approaches

By Gail Hurley, Policy Specialist on Development Finance, Bureau for Programme and Policy Support, United Nations Development Programme

undp-mumbai.jpg
Mumbai is among a growing number of cities exploring green bonds as an option for financing sustainable urban development.

 “Cities are major drivers of the global economy. Today, cities occupy only 2% of total land but account for 70% of GDP.” (Habitat III, 2016)

Many of the investments needed to achieve the Sustainable Development Goals (SDGs) will take place at the sub-national level and be led by local authorities, especially in urban areas. Massive public and private investments will be needed to improve access to sustainable urban services and infrastructure, to improve cities’ resilience to climate change and shocks, and to prepare them to host 2.5 billion new residents over the next three decades, particularly in developing countries.  If city authorities can meet these challenges head-on, the sustainable development dividends could be immense. This reality underscores the need to recognise and strengthen the capacities of local authorities as major actors in promoting sustainable development.
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Maximising bang for the buck: Risks, returns, and what it really means to use ODA to leverage private funds

By Paddy Carter, Research Fellow, Overseas Development Institute

shutterstock_249974521The idea of using official development assistance (ODA) to leverage private finance is a staple of the financing for development circuit and features heavily in most donors’ strategies. Experienced financiers both from official sector development finance institutions (DFIs) and private investors are, however, still feeling their way into this field’s unfamiliar territory. DFIs for the most part emphasise the importance of providing finance on non-concessional terms to avoid distorting markets and crowding-out other sources of finance. Though some standard elements of their business could fall under the rubric of blended finance, such as grant-funded technical assistance, for the most part DFIs and development banks have treated explicit subsidies to private enterprises as dangerous medicine to be prescribed rarely. Now the pressure is mounting to find more creative ways to leverage private finance using ODA. But how?

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Reaching the last mile: The role of innovative finance in meeting the SDGs

By Judith Karl, Executive Secretary of UNCDF, and Samuel Choritz, Policy Adviser at UNCDF

financesdgsTo meet the SDGs with their emphasis on leaving no one behind, we need solutions that tackle persistent exclusions and inequalities in the local economies and communities where the poor live and work. Targeting the last mile means adapting solutions to the households, localities and small enterprises that are underserved, where development needs are greatest and where resources are scarcest.

Addressing market failures by making finance work for the poor is a critical catalyser to this end. Official Development Assistance (ODA) can be the largest source of external finance in least-developed countries, where private investment often favours commodity and real estate sectors. Disparities in incomes and living standards show that location matters more for living standards in developing countries than it does in developed ones [1]. “Last mile finance” models can use public resources — such as ODA — to de-risk and crowd-in public and private finance, especially from domestic sources, to create virtuous dynamics of inclusion, local growth, resilience, and productive investment. Continue reading

SDG data discussion: what next?

By Johannes Jütting, PARIS21 Secretariat Manager

After months of intense discussions, representatives from more than 190 national statistical offices agreed on a global monitoring framework for the 2030 Agenda and the Sustainable Development Goals (SDGs). The 17 goals and 169 targets of the framework will be complemented by 230 indicators. This is a huge achievement given the complex political and technical challenges that had to be solved to reach a consensus. Now, the United Nations Economic and Social Council and the United Nations General Assembly formally will endorse the framework.

Avoiding a stalemate with this finish line in sight and addressing the framework’s remaining blind spots require urgent attention. The two main points that still need to be addressed are: i) integrating the SDGs into national priorities and strengthening national statistical capacities for that process and ii) improving the indicator set.

Integrating SDGs into national priorities

The following table captures different reporting levels, organizations in the lead and the purpose of the reporting exercises:

SDG monitoring – roles and responsibilities

Global Regional and thematic National
Responsibility for SDG reporting UN Statistics Division based mainly on national data collected by international agencies Regional organizations, UN and other agencies harmonising SDG methodology for regional reporting National statistical systems and third-party providers supplying national and subnational data
Original data sources Country-level Country-level Country-level
Purpose Global monitoring focusing on world progress overall Regional and thematic monitoring focusing on relevant progress National monitoring focusing on national and subnational priorities

The relationship between UN technical agencies, such as WHO, UNICEF and FAO, and national governments in the production of statistics is complex. Much of the data we have currently on poverty, health, education or nutrition comes from large-scale international household surveys run by these agencies in countries. This is done in close collaboration with national statistical offices and often includes a capacity-building component that is very useful. However, involving agencies in the production of data can be problematic too as they have their own thematic agenda that might not align with national priorities or could even contradict those priorities. With the heavy SDG agenda, this risk increases substantially and could lead to a crowding out of national capacities.

Another equally important issue is the measurement exercise’s purpose. Do we focus all our attention on how best to do global monitoring? Or do we also focus urgently on producing national SDG data roadmaps that identify country-specific baselines, data needs and data filling plans for effective country-level actions? We should not forget that the data are supposed to help policy makers make evidence-based decisions and achieve impact. This happens primarily at national and subnational levels.

Improving the indicators

Even with general agreement on the indicator set, the real work remains. The consensus is clear that the indicators will need to be defined further over the coming months and years. Many indicators are yet to be supported by the required data or methodology. National statistical systems will face trouble with certain indicators or simply will lack the incentives to measure them at all. A good example is indicator 10.5.1 that measures the “financial soundness” of national policies: no government will be motivated to report on this aspect if the country is not doing well, especially given the possible impact on foreign direct investment decisions. Or take indicator 16.4.1 that asks for a country’s total value of inward and outward illicit financial flows. Illicit flows by their very nature are clandestine, making only vague estimates possible at best. Another blind spot is the current indicator on corruption: bribery is measured in the public sector whereas the private sector is not considered. Moreover, the indicator set ignores some important problems entirely. Obesity, for example, is not included but is a growing health problem in many middle-income countries, straining public services.

More technical work clearly is needed. But more importantly, the international community needs to provide the financial means to enable national statistical systems to do the job they are asked to do without undermining national priorities and taking into account their current capacity.

Where to go from here

The agenda needs to move now from the global to the national and finally to the local levels. Building partnerships among public institutions – agencies of the national statistical system – citizens and the private sector at the local level is critical. This hopefully will lead to better planning of conventional statistical operations and to building new models that involve citizens, businesses and nongovernmental organisations.

The conclusion is that achieving the SDGs will depend largely on strengthening national and local capacities in a creative synergy of data producers and users. Only then can we hope that policies will be able to reach those who live on the fringes of society. This is how we can leverage data effectively to fulfil the 2030 Agenda’s promise to “leave no one behind.’’

This blog also appeared on The Huffington Post. Click here to read it anew.


This article should not be reported as representing the official views of the OECD, the OECD Development Centre or of their member countries. The opinions expressed and arguments employed are those of the author.

The EU Social Protection Systems Programme – a joint effort towards the SDGs

By Stefano Signore, European Commission, Head of Unit Migration, Employment, Inequalities within the Directorate-General for International Cooperation and Development (DG DEVCO)

Adoption of the SDGs – the new development agenda

In September 2015, the world celebrated the long-awaited adoption of the 17 Sustainable Development Goals (SDGs) by the UN General Assembly. The endorsement serves as a starting point to a new development agenda for the next 15 years with the promising ambition to leave no one behind at its centre. The intention is a real labour of Hercules as we are talking about several groups of 1 billion people: 1 billion that continue to live on less than $1.25 a day, 1 billion aged 15 and above having either no schooling or an incomplete primary education, 1 billion migrants worldwide, and close to 1 billion, who are suffering from malnutrition in rural areas predominantly.

Likewise a new era for social protection

At the same time, the universal and integrated SDG agenda marks a new era for social protection. The shadowy existence that it was doomed to play in the context of the Millennium Development Goals (MDGs), which made no single reference to social protection, has come to an end. The international community now recognizes the importance of social protection’s cross-cutting policy approach to make a real difference for real people. Social protection is placed prominently across the 17 goals. It finds explicit mention, namely in SDGs 1, 5 and 10, when it comes to its main impacts of tackling poverty and inequalities within populations and individual households. Widespread evidence demonstrates that social protection can contribute to the achievement of the SDGs in terms of human capital development, social risk management, social cohesion, macroeconomic resilience and the promotion of inclusive economic growth. Overall, social protection contributes to at least three-quarters of the SDGs.

Social protection recognized within the global context of quadruple A

July’s Addis Ababa Action Agenda (AAAA) likewise assigned an important role to social protection within the global framework for financing development in the SDG era.To be able to deliver by 2030 appropriate social protection systems for all, which notably include poor and vulnerable groups, the conference’s outcome document calls for a new social compact. Its paragraph 12 further elaborates on this point by highlighting the necessary close relationship between social protection policies and their (domestic) sources of financing. It requires social protection systems to be more comprehensive and coherent and to be characterised by effective and efficient programmes and mechanisms and by high-quality administrative and technical services. The paragraph also reminds us of the importance ofcountry-led and owned approaches, requiring foremost national agreements and the common pursuit of values and interests.

Altogether, the emerging positive profile of social protection is highly welcomed, but at the same time it entails an obligation to deliver results. But what exactly is it that the SDGs require us to deliver between now and 2030?

Admittedly, the SDGs are very broad and not easy to attain. Their complex set of targets acknowledges that economic growth as a unidimensional factor for prosperity has proven ineffective in reducing poverty and generating inclusive growth. On the contrary, the world is witnessing increasing inequality with regard to income and other factors. And the majority of the extreme poor today, remarkably, live in middle-income countries.

Social protection and the EU Social Protection Systems Programme have a lot to offer

The September 16th kick-off meeting of the European Union Social Protection Systems (EU SPS) Programme at the OECD in Paris confirmed that these challenges caused by the vague and ambiguous concepts of the SDGs are well-known and a cause for concern in political and academic thinking in the field of social protection. About 100 renowned experts and representatives from academia, development organisations and 10 partner countries[i] in sub-Saharan Africa and Central and Southeast Asia gathered to launch the programme – an EU-funded flagship global thematic project, co-financed and jointly implemented by the OECD Development Centre and the Government of Finland in collaboration with institutions from these 10 beneficiary partner countries. Together, they discussed critical challenges that social protection systems have to overcome to fulfil their potential and contribute to attaining the SDGs.

The event neither intended to deliver, nor is capable of delivering, a blueprint for an implementation strategy on how to strengthen the systematisation of social protection in partner countries. As a major result of the lively debate, however, it became abundantly clear that research, sustainable financing and capacity strengthening represent the initial building blocks for a robust social protection system. To achieve the SDGs, further endeavours will be necessary to leverage the impact of social protection through more joint efforts across sectors.

This implies the establishment of a dialogue on development models and redistributive policies in particular with those governmental entities responsible for macroeconomics and public budgeting. Moreover, strengthened linkages of cross-sectoral strategies and budgets correspond strongly to the cross-cutting character of social protection.

Depending on the sector, social protection can support many policy areas with in-cash or in-kind transfers, which are two of its fundamental instruments. Each has its own raison d’être and specific procedures for effective implementation. In developing economies, cash transfer programmes have attracted the attention of academia, resulting in an impressive volume of evidence in this area. Concerning in-kind transfers in the health and education sectors, or macro-level effects of social protection programmes, more evidence of their impact on poverty and inequalities is needed. Policy makers particularly appreciate externally validated evidence as it provides a solid basis upon which to transform scientific evidence into action.

In this regard, the messages conveyed at the Paris kick-off meeting should inspire the entire implementation phase of the programme. As a final outcome, nationally generated evidence should support the adoption of socially fair and equitable policies and programmes and their effective implementation in all 10 partner countries. Generating greater knowledge for effective implementation of the SDGs precisely matches the demand to fulfill our major promise: to leave no one behind.

[i] Ethiopia, Namibia, Mozambique, Tanzania, Togo, Zambia, Kyrgyzstan, Cambodia, Indonesia, Viet Nam