Written by Mukhisa Kituyi, Secretary-General of UNCTAD
Back in 2002 at the 1st Financing for Development Conference in Monterrey governments were grappling with an extra $50 billion per year to pay for the eight Millennium Development Goals (MDGs). Stakes have risen substantially since then.
At the 3rd International Conference on Financing for Development next week in Addis Ababa, $2.5 trillion per year will be the sum on everyone’s minds. UNCTAD estimates this is the outstanding gap in financing needed in developing countries to achieve the 17 Sustainable Development Goals (SDGs) that world leaders are expected to agree on this September in New York.
It’s no surprise that governments are calling on the private sector, philanthropic organizations, civil society groups and individual citizens to help foot the bill for the SDGs. The more ambitious agenda requires even more ambitious actions from all stakeholders. Governments must make good on their commitments, but private investors can make worthwhile investments in the SDGs, as well.
In the current global environment, with low interest rates and private companies holding significant cash reserves on their balance sheets, the private sector has an important role to play. A main challenge is incentivizing private investment with attractive risk-return rates, while making sure the investment goes into sectors and countries that need it most.
Renewable power generation, climate change mitigation and adaptation, transport, and water and sanitation are a few infrastructure-related sectors that will support SDG achievement. Education and health services, in addition to food production, will also be key.
But public and private sector investment must complement, not substitute for, one another. Most SDG sectors by their very nature are sensitive or of a public service nature, and thus care must be exercised to allow private investors to earn a return on their investment, while protecting the public interest.
Attracting private investment into SDG sectors requires strong global leadership that provides clear direction and basic principles of action, sets objectives and targets, and ensures an inclusive process.
There is no single all-encompassing solution for increasing the engagement of the private sector in raising finance for, and investing in, sustainable development. Yet, while there is a range of policy ideas and options available to policymakers, a focused set of priority packages, as laid out in Chapter IV of UNCTAD’s World Investment Report, 2014, can help shape the call for SDG investment.
UNCTAD’s Action Plan for Private Investment in the SDGs offers suggestions on how to mobilize private sector investment in SDG sectors. As the post-2015 era begins, UNCTAD provides a platform for ongoing engagement on these investment issues through its biennial World Investment Forum, and online through the Investment Policy Hub.
With the challenge of sustainability, the stakes for international development may have increased. But our collective will to come to innovative solutions has increased as well. Investing in the SDGs is investing in our future – in the world we want to live in 2030. The Addis Ababa conference marks only the beginning.
