At the World Bank Group we have been at the forefront of the so-called Financing for Development (FfD) agenda to leverage public, private, international, and domestic sources of capital to help reach the global goals. A short primer on our efforts--which builds on the 2015 Development Committee paper Billions to Trillions - Transforming Development Finance--can be found in the brochure entitled Financing for Development at the World Bank Group.
Ultimately, countries own the responsibility for achieving the SDGs: raising more domestic revenue (and doing so more efficiently), addressing spending inefficiencies, and mobilizing private capital (as the world economy is facing potentially slower growth and political friction). These will not be easy challenges.
As a structured finance specialist in the World Bank Treasury, I work on a trading floor and talk to banks, investors, and development partners daily, so together we can find cost-effective and sustainable solutions to address climate change.Climate is now a key consideration in all our development projects, and we have committed to ramp up adaptation financing to $50 billion over FY21–25. However, the public sector alone cannot finance the trillions of dollars needed for green infrastructure. Enter: bonds and the power of the capital markets.
West African Economic and Monetary Union (WAEMU) -- Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo – where demand for decent housing far outstrips supply.
The tool is the $2.5 billion IDA18 IFC-MIGA Private Sector Window (IDA PSW), launched in July 2017 to help catalyze private sector investments and create jobs in the lowest income countries eligible for financing from the World Bank’s International Development Association.
Institutional investors increasingly hold the world’s purse strings, with a growing share of private savings. What will it take for financiers to allocate more of that capital in ways that align with development goals—in the long-term investments, particularly in infrastructure, that are needed to help lift more people out of poverty and boost shared prosperity?
To answer that question, the World Bank Group and the Government of Argentina convened the first ever Investor Forum on the eve of the G20 Summit in Buenos Aires. The Investor Forum brought together investors holding over $20 trillion dollars of assets, finance experts, government representatives, and development partners for a frank and practical conversation.
“Private capital is often an important source of sustainable finance. Public finance alone may not be sufficient to meet the demands for sustainable finance as the global economy continues to grow and poses increasing burdens on our resources and ecosystems. Mobilizing private investment in areas such as sustainable infrastructure, sustainable technologies and business model innovations, among others, can deliver substantive environmental, social, and economic benefits.”
This summary from the G20’s Sustainable Finance Synthesis Report was at the heart of the discussion at the Investor Forum, which was held on the sidelines of the G20 Summit in Buenos Aires in November. The event – hosted by the World Bank and the Government of Argentina – brought together investors holding over $20 trillion of assets as well as stakeholders and representatives from G20 governments. The goal was to identify steps for boosting long-term, sustainable, private-sector investments that tackle development challenges and promote economic growth in parts of the world that need it most.
Sustainability is the holy grail of development. There are many interventions that yield positive results in the short term but somehow fail to be sustained over time. This is why the experience in Guatemala that we are about to describe is worth paying attention to. In short, it shows that behavioral insights can lead to lasting change.
It all began in 2012 in the United Kingdom, with simple changes in the reminder letters sent to taxpayers that were late in their income tax payment. The changes were very successful, inducing payments of 4.9 million pounds (around $6.5 million) in a sample of almost 120,000 delinquent taxpayers, which would not have been raised without the intervention. The then-nascent institution called the "Behavioral Insights Team" (BIT) became known around the world with this effective and very low-cost intervention that was based on modifying the messages of the letters sent to delinquent taxpayers. The message that was most effective said: "Nine out of ten people in the U.K. pay their taxes on time. You are currently in the very small minority of people who have not paid us yet."
The first green bond issued by the World Bank 10 years ago created the blueprint for today’s US$500+ billion labeled bond market. This blog post looks at how green bonds changed investor and issuer behavior and how the same model can be applied to help achieve the Sustainable Development Goals.
The capital markets have evolved over the last 10 years from a market where investors knew - and cared - little about what their investments were supporting, to one where purpose matters more than ever.
The green bond market has grown from a market dominated by issuers like the World Bank, an international organization owned by 189 countries with the sole purpose of eradicating extreme poverty and boosting shared prosperity, to one that includes a broad range of issuers - from private companies and banks, to utilities and governments.
investment in quality, sustainable infrastructure helps finance the transition towards a low-carbon, more environmentally friendly economic model. This happens notably in the renewable energy and low-emission transport sectors. Given the scale of resources needed to address the infrastructure investment gap, mobilizing the private sector for this goal has become imperative, especially in countries where financial transactions in banking and capital markets follow Islamic law (or shari’ah) principles.
They define an asset-oriented system of ethical financial intermediation built on the principles of risk-sharing in lawful activities (halal) rather than rent-seeking gains. This “entrepreneurial” approach by investors requires a high degree of transparency and creates incentives to monitor projects more carefully, which, in turn, strengthen the efficiency in building and operating infrastructure.
But every year, in countries across the world, too many dreams are cut short: more than 5 million mothers and children die from preventable causes.
In this age of rapidly advancing technology, where there is a growing demand for complex cognitive skills and problem-solving, this crisis should be a wake-up call.
The IMF/World Bank Group Annual Meetings is an event you won't want to miss. Join us for a week of seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world's financial system. This year's events will take place in Nusa Dua, Bali, Indonesia, October 8-14, 2018.
Find out why the World Bank, countries, and partners are coming together to try to close the massive human capital gap in the world today.
The World Bank Group, the International Monetary Fund, and the Government of Indonesia are also co-sponsoring a first-ever technology fair to bring innovation to the heart of the Annual Meetings.
This three-day “showcase” will feature 28+ innovators – companies from around the world – who will demonstrate the powerful role that technology can play in spurring development, strengthening financial development and inclusion, and improving health and education outcomes. The 2018 Innovation Showcase will run from October 11-13 in the Bali International Convention Center.
So, We've got you covered on Facebook, Twitter and Instagram!