Maximizing finance for development works

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People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank
People in Saint-Louis, Senegal. © Ibrahima BA Sané/World Bank


Massive investment is needed to meet the ambitious goal of ending extreme poverty and boosting shared prosperity by 2030.  By some estimates it could cost as much as $4.5 trillion a year to meet the Sustainable Development Goals (SDGs), and obviously, we will not get there solely with public finance. And there’s the rub: Countries will only meet the SDGs and improve the lives of their citizens if they raise more domestic revenues and attract more private financing and private solutions to complement and leverage public funds and official development assistance. This approach is called maximizing finance for development, or MFD.

Recently, I heard five stories from project teams that made the case for this MFD approach with real-world experience and development impact. These stories span the globe from Colombia to West Africa to the Solomon Islands, and they made me hopeful. I want to share two examples that really resonated.
 
West Africa Housing. We all know that families that own a home invest more in education over time and are healthier and wealthier. In reality, however, housing is often unaffordable for poorer families. In the eight francophone countries that make up the West African Economic and Monetary Union, housing is scarce, demand is skyrocketing, and costs are high.  Building a house in Senegal costs more than in India or China. Housing finance needs are estimated at $122 billion, compared to an estimated GDP for the entire zone of $115 billion. Clearly, the housing needs outstrip the resources of governments, and private sector solutions are needed to address this issue. Using the MFD approach, the World Bank Group strengthened the regional mortgage financing company, expanded access to housing finance, and crowded in 5$ of private finance through the bond market for each $1 invested by the WBG. The results were positive: housing supply increased, the mortgage industry expanded, and 200,000 more people have housing, which has created 250,000 new jobs.
 
Solomon Islands Fisheries: Fisheries provide a striking illustration of the advantages of MFD, where governance and private sector investment go hand in hand.  This is particularly true in vulnerable countries and small island states. In the Solomon Islands, 70 percent of the population is under the age of 29, and most of the people depend heavily on ocean resources for their livelihoods and food. SolTuna is the largest private sector employer in Noro, a town in the Solomon Islands about 1800 miles from Sydney. It has close to 1,900 employees, 66 percent of whom are women. Using the MFD approach, the WBG has been supporting SolTuna to increase the company’s processing capacity, expand opportunities for women employees, and improve its health and safety standards. The results are encouraging: Public revenues have increased, and we are supporting the Solomon Islands to sustainably manage its fisheries and associated habitats.
 
Here’s my take on MFD:

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rabiu kabir
February 25, 2018

" . . . Countries will only meet the SDGs and improve the lives of their citizens if they raise more domestic revenues and attract more private financing and private solutions to complement and leverage public funds and . . . "
Quad Erat Demonstratum! This is the stark reality as far as Y2K is concerned, but not yet Uhuru; in as far as the endemic corruption in sub Saharan Africa is sustained.
Perhaps, The WB; UN and other development bodies should strive more towards changing the mindset of the citizens and advocating transparent governance.
By and large, MDF is a welcome development

Dr Sudha Mavuri
February 27, 2018

In country like India private sector projects (MFD) in development especially in affordable housing is costrained by availability of infrastructural facilities like connectivity, transport, etc for housing in the exteded cities and leading to slum development.

rabiu kabir
February 25, 2018

" . . . Countries will only meet the SDGs and improve the lives of their citizens if they raise more domestic revenues and attract more private financing and private solutions to complement and leverage public funds and . . . "
Quad Erat Demonstratum! This is the stark reality as far as Y2K is concerned, but not yet Uhuru; in as far as the endemic corruption in sub Saharan Africa is sustained.
Perhaps, The WB; UN and other development bodies should strive more towards changing the mindset of the citizens and advocating transparent governance.
By and large, MDF is a welcome development

Gloria
February 27, 2018

Debe ser supervisado todo proyecto financiado para poder evaluar el triple beneficio

Dr Sudha Mavuri
February 27, 2018

In country like India private sector projects (MFD) in development especially in affordable housing is costrained by availability of infrastructural facilities like connectivity, transport, etc for housing in the exteded cities and leading to slum development.

Kingebeni kiosi ley
February 27, 2018

Nous sommes d'accord en terme de réflexion mais nous devons savoir que les pouvoirs publiques ont les moyens nécessaires pour loger la population mais Le goulot d'étranglement se situe au niveau des allocations des ressources. On affecte les ressources dans les secteurs qui n'ont pas d'effet détonateur en économie . En depis de toutes les ressources que nous avons pour construire de logement conséquent qui répond à l'écosystème . Le logement est l'une de fonction régalienne de l'état.
La création d'emploi n'est qu' une conséquence de la production. Nous avons besoin d'une Afrique où les droits des uns et des autres sont respectés. La production est La conséquence d'une politique incitative aux affaires. Le secteur privé à besoin d''un climat des affaires paisible. donc resolvont d'abord la question de sécurité en Afrique subsaharienne avant tout investissement privé.

Arsene Konan
March 14, 2018

Maximiser les investissements, les accroître aussi est plus que important et même capital pour atteindre les ODD. Mais, les pouvoirs ne peuvent le faire car ils n'investissent la où il le faut. Comme on peut le dire il y a les priorités. Aujourd'hui nous devons penser à nos populations voir comment réduire le seuil de pauvreté ou même l'éradication totale de ce fléau. Croire que les pouvoirs Publiques le peuvent c'est une grande interrogation. Attirer les investisseurs faciliter leurs installation,les faire intégrer dans le système l'objectif à atteindre. Combattre la corruption, faire face à une vraie démocratie.
Enfin, beaucoup de défis reste à relevé nous sommes là pour décrier ses maux.

Rakotomalala Jeffrey
June 04, 2018

A Madagascar, tout argent passé par l'État sera perdu. Les banques privées poussent comme des champignons avec des bénéfices collossales.
Soit vous confiez les prêts à travers les banques. Soit vous ouvrez un comptoir pour prêts et remboursements.
C'est le secteur privé qui fait bouger l'économie