FINANCING FOR DEVELOPMENT
A Guide to Sustainable
Development Goals (2016-2030)
Manuel Ancizu Beramendi [email protected]
09/Dec/2015
1) Motivation, Target Audience and Main Purpose of this document 2) Basic Starting Point 3) From Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs)
4) We are all engaged in Development 4.a) The role of Public Sector 4.b) The role of Private Sector 4.c) The role of Multilateral Development Banks (MDBs) and International Monetary Fund (IMF)
5) Key words to remember
Table of Contents
1) Motivation, Target Audience and Main Purpose of this document
Document’s Main Purpose
Target audience
Motivation This document is elaborated as part of an assignment included in online course “Financing For Development” led by World Bank Group on Coursera Platform.
General Public in my country of origin. It is an informative document..
Inform general public about the highlights of Sustainable Development Goals (SDGs) in a concise and clear way.
Raise awareness and spread ideas, as many of the problems and issues explored during the course are known within specific community but may not be well understood by the general public.
Make general public conscious of the challenges foreseen and explore some of the action lines opened to reach the Sustainability Development Goals (SDGs).
2) Basic starting point The world is global and connected. Development, peace and human rights must be aligned.
Development
Human
Rights Peace
Sustainable Development Goals (SDGs)
3) From Millenium to Sustainable Development Goals From Billions to Trillions to Action
Millennium Development Goals (MDGs)
2000 - 2015
8 goals
Very practical and concrete, focused on social issues: nutrition, health, education…
Public financing as baseline. Top-Down structure, leaded by public
institutions.
Sustainable Development Goals (SDGs)
2016 - 2030
17 goals
General approach, cover from social to infrastructure to climate action…
Public-Private Partnership (PPP). Public to catalyze private resources.
We are all engaged in development, citizens are key to achieve the ambitious goals.
Sustainability as a key word: Development without compromising future generations
Sustainable Development Goals
Image by: World Bank/CC BY-NC-ND 2.0 license
Each of the 17 SDGs has guidelines, action plans and specific indicators to measure and evaluate its performance.
4) We are all engaged in development Paradigm shift: Public and Private together. There are enough funds available worldwide but they need to be conveniently channeled.
Smarter and strategic use of public resources financing, innovations to generate greater flows and catalyze private sector (crowd in) to
development challenges are key to achieve SDGs.
New approach: Public Sector, Private Sector
and Multilateral Institutions
together.
New economic map: new countries
emerge
Massive global crisis: budget constraints,
less public resources available. Banks
reduce loans.
4.a) The role of Public Sector
How to mobilize more public resources for development given the current budget constraints?
Let’s analyze these three public financing resources.
Domestic Public Finance
International Public Finance
National Development Plans
50% to 80% of resources needed to finance the SDGs are estimated to come from domestic resources.
The role of Public Sector
Domestic Public Finance
Domestic Resource Mobilization
¿How can the government increase collecion? Is there any money generated but not collected?
Efficiency of Public Spending
How can the government spend smartly the available resources?
What individuals, companies, and governments.
Tax policy and tax administration are linked. A good diagnosis and implementation can achieve increasing tax collection without raising taxes to citizens.
Central and subnational governments objectives
need to be alligned in decentralized systems. Challenges that erodes DRM are informal
economy and illicit financial flows (corruption and tax evasion).
• Improving the design and management of public programs
• Cutting low priority or poorly-designed spending (Smart investing).
• Both methods increase development impact and free up resources (fiscal space) for additional development-focused outlays.
+
Strong performance metrics, effective monitoring, better policies, reforms in procurement and in subsidy regimes help to create higher quality, sustainable results.
The role of Public Sector
International Public Finance
Official Development Assistance (ODA): 135 Billions per year
Challenges
Definition
Flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions which are: 1) Provided by official agencies, including state and local governments, or by their executive agencies; and 2) Each transaction of which: a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and b) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent)
ODA:
135B not enough
Crowd-in private sector
Greater impact
1 usd invested by public sector can be multiplied by
6-7 if attracts private sector.
Smart use of ODA, focusing on Least
Developing Countries
The role of Public Sector
National Development Plans
Government Development
Strategy
Resources focused on key areas
More impact in
development
A national strategy can establish new legislations and policy frameworks to mobilize more resources and apply them to the Development Goals defined.
Everything is done to achieve a National Goal, no efforts or money wasted in non-
priority fields.
4.b) The role of Private Sector
How to attract private sector to invest in long-term development?
Let’s analyze these private financing resources.
Drivers of private finance
Sources of private finance
Innovation and partnerships
Risk and Return are key for Private Sector in decision making process.
The role of Private Sector
Drivers of Private investment
PRIVATE INVESTMENT
Stable economy and
legislation
No uncertainties
expected
Reduce bureaucracy
Rule of Law
Risk
Return Trade-Off between risk and return. Public sector measures should either decrease perceived risk or increase anticipated returns.
Governments have a fundamental role in providing a conducive investment climate: through supportive governance structures; competition policy; hard and soft infrastructure; and instruments that foster healthy, commercially sustainable markets
Doing Good and Doing Well: Achieving economic while pursuing social objectives.
The role of Private Sector
Sources of Private investment
PRIVATE INVESTMENT
Institutional Investors (pension,
sovereign funds)
Private companies
Banks
Citizens
Remittances
All actors are necessary to invest in the long term and achieve the challenge to pass from Billions to Trillions to Action.
4.c) The role of Multilateral Institutions
Multilateral Development Banks (MDBs) International Monetary Fund (IMF)
Objective: Work with public and private sector to multiply the development impact.
Public Sector
Private sector
MDBs
Financing development Co-investing Guarantees Share risks
Technical advice Blended finance
5) Key words to remember
Blended Finance
Sustainability
Doing Good and Doing Well
Long-term investments
2016 - 2013 Paradigm shift
Public resources to catalyze and crowd in private investments
All actors engaged in development
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