What a remarkable and busy six weeks!
There has been a tremendous re-energizing globally to explore and identify ways to finance the proposed Sustainable Development Goals (SDGs). The international recognition that the SDGs need to go even further than the previous Millennium Development Goals has prompted discussion of how to get from billions to trillions of dollars to achieve sustainable and inclusive development.
During April’s World Bank Group/IMF Spring Meetings, we at the World Bank Group, together with other multilateral development banks (MDBs) and the IMF, put forth an early vision of how our institutions collectively can contribute. While many may think that this is business as usual, it wasn’t. For the first time ever, all of the MDBs joined forces to produce one visionary statement.
As I’ve blogged before, a combination of global, regional, national and private groups will make the real difference in post-2015 financing.
With new thinking needed, we convened a group of key influences and decision-makers from around the globe from the public and private sectors In Rotterdam last week for the 2015 Development Finance Forum: From Billions to Trillions - What Will it Take? Our goal was to figure out how they can play a role in scaling up public and private investments. Rotterdam was a fitting setting for our meeting as it was the home of the Renaissance humanist philosopher Erasmus, where he wrote one of his most famous works, In Praise of Folly. His ability to look at traditional things in unique and different ways, offering alternative perspectives, was the same frame we wanted for our discussions.
Representatives of government, the private sector, foundations and CSOs all rolled up their sleeves for an intensive day and a half of work. We looked at the roadblocks preventing countries from meeting their own development needs as well as unlocking private finance to invest now.
The development world is changing the way we think about finance.
The World Bank Group, IMF and regional multilateral development banks committed in Rotterdam to using their knowledge and finance better to help governments and companies transform. Working together as partners, we will build the long-term sustainability and resilience needed to serve the interests of future generations.
Building on existing global development commitments, we can make smarter use of grant resources, leverage strong and effective partnerships, utilize digital technology and increase transparency and accountability to better target our policies and investments.
How do we do this?
First of all we must ensure that the precious $135 billion in annual official development assistance — a number we hope will grow each year — is used as efficiently and effectively as we can, especially in the poorest and most vulnerable countries.
To achieve the SDGs, countries need to dramatically improve their access to health care, electricity, roads, communications systems, education and much more. Long-term investment in infrastructure and innovation is essential. And better-targeted public investment will provide for basic needs and public goods.
We have a dual challenge:
- Increase funding by strengthening domestic resources, private sector investment for the poorest countries and new and better instruments to increase the range of financing solutions available to all developing countries
- And, these funds must work for everyone — for businesses large and small, for investors, for those working hard to send remittances back home, and most importantly, for people living in extreme poverty.
There is no denying the magnitude of the financing challenge far exceeds the capacity of any one organization. We need to transform our institutions to maximize our capacity to leverage each other and create better partnerships. And, we know these partnerships for development finance can work.
There are many wonderful examples of diverse players coming together to make groundbreaking improvements in the lives of millions. I’ve mentioned previously the Global Infrastructure Facility created last year. This innovative funding approach is mobilizing private investment for infrastructure projects. Initiatives like this can reverse the declining infrastructure investment in emerging markets by directly addressing the concerns of investors to engage in these more complex, riskier and long-term infrastructure projects. Another example is from the IFC, the World Bank Group’s private sector arm, which leveraged $8 billion by raising $1.2 billion from sovereign and institutional investors through its Asset Management Company to invest in the Global Infrastructure Fund for projects in developing countries.
The last six weeks are a testament by the global development community of a desire to do things differently.
And now we have six weeks to the 3rd Conference on Financing for Development in Addis Ababa (July 13-16) to agree on a framework for financing development through the year 2030.
What else can we do to shape a different development financing model? It’s a question that we at the World Bank Group and others continue to work on. While the answers vary, two constants drive us:
The decisions we make this year will have an impact for generations to come.
The world’s poor are waiting.
This blog post originally appeared on LinkedIn.