Sustainable Development Goals to be supported with $400 billion
The institutions—the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, World Bank Group (referred to as the MDBs), and the International Monetary Fund—announced their plans in the lead-up to the Third International Conference on Financing for Development in Addis Ababa, July 13-16.
The SDGs are ambitious and demand equal ambition in using the “billions” of dollars in current flows of official development assistance (ODA) and all available resources to attract, leverage and mobilize “trillions” in investments of all kinds—public and private, national and global.
ODA, estimated at $135 billion a year, provides a fundamental source of financing, especially in the poorest and most fragile countries. But more is needed. Investment needs in infrastructure alone reach up to $1.5 trillion a year in emerging and developing countries.
Meeting the staggering but achievable needs of the SDG agenda requires everyone to make the best use of each dollar from every source, and draw in and increase public and private investment. The MDBs—the engines of development finance—are looking to a range of options for scaling up.
MDB development finance has grown from $50 billion in 2001 to $127 billion in 2015. For each dollar invested by its shareholders, MDBs are able to commit $2-5 in new financing each year. The MDBs’ own direct private sector investments have increased fourfold over this period.
They mobilize an additional $2-5 in private investment for every dollar they invest directly in private sector operations. The vow to increase their contribution to more than $400 billion over the next three years reflects in part efforts to make even better use of their balance sheets.
Additional steps to leverage more resources include the development of new approaches and tools to help developing countries play a stronger role in harnessing national resources. ■