Progress since 2015 in promoting SDG investment in developing economies now at risk due to COVID-19

SDG Investment Trends Monitor (Issue 3)

International private sector investment flows to developing and transition economies in sectors relevant for the sustainable development goals (SDGs) fell by one third in 2020 because of the COVID-19 pandemic. The value of newly announced greenfield investments in relevant sectors shrunk by 33% and that of international project finance (used for large infrastructure projects requiring multiple investors) by 36%.

The COVID-19 pandemic has more than undone the increase in SDG investment since 2015 – the year the SDGs were adopted. Greenfield investment in SDG sectors in developing and transition economies is now almost 20% lower than before 2015, international project finance is more than 30% lower. The progress made in promoting and facilitating SDG investment is at risk.

Full year data for 2020 shows that, except for renewable energy, where growth in new projects continued but was cut to less than one fifth of the pre-COVID rate, investment activity fell sharply across all SDG sectors. In infrastructure and infrastructure industries (including utilities and telecom), international project finance announcements were 60% lower in value. Greenfield project values across food and agriculture, water and sanitation, health and education were all one to two thirds lower than in 2019.

The decline in SDG-relevant investment was much larger in developing and transition economies than in developed countries. In the latter group, gains in investment in renewable energy and digital infrastructure are a first sign of the asymmetric effect that large-scale public support packages in developed countries will have on global SDG investment trends.

Among developing and transition economies, the impact of the pandemic is more pronounced in the poorer regions. SDG-relevant investment fell by 39% in Africa, 40% in Latin America and the Caribbean, 23% in Asia and 28% in transition economies. In contrast with significant falls in other regions, however, international project finance in developing Asia only declined by 13%.

The decline in the least developed countries (LDCs) is of particular concern. There were 31% fewer greenfield project announcements in SDG sectors in LDCs, and the number of project finance deals decreased by 23%.

The outlook for investment in the SDGs is highly uncertain: future developments will depend on the duration of the health crisis and on the effectiveness of policy interventions to mitigate its economic effects. Policy measures to facilitate investment in SDGs (UNCTAD’s SDG Policy Monitor, December 2020), as well as development cooperation and financing support to developing countries will be important in determining the trajectory of investment in the SDGs. WASH and health sector investments, both weak before the pandemic and severely affected by it, look set to receive increased attention.

Progress since 2015 in promoting SDG investment in developing economies now at risk due to COVID-19 - SDG Investment Trends Monitor (Issue 3)  (UNCTAD/DIAE/MISC/2021/3)
12 Apr 2021