The pros and cons of ethical debt instruments

12 Sep 2017 by Gail Hurley, Policy Specialist, Development Finance, Bureau for Policy and Programme Support, UNDP

A man stands in front of a damaged house and a large fallen tree in the aftermath of Hurricane Irma in Dominican Republic.Ethical financing tools include "state-contingent" debt instruments that allow servicing payments to fall when times are bad, for example, when a natural disaster strikes. Photo: UNDP in Latin America and the Caribbean
In May, the World Bank issued the world’s first bond linked explicitly to the UN Sustainable Development Goals. Labelling them “SDG bonds”, the bank raised 163 million euros from institutional investors in France and Italy with the proceeds to be channelled into projects that aim to eliminate extreme poverty, in line with Goal 1 of the SDGs. The initiative — which aims to capitalize on a rising number of investors interested in positive social and environmental impacts, in addition to financial returns — has been heralded an innovation in investment products and can be added to a growing list of innovative debt instruments that are marketed as “ethical” or socially and environmentally responsible. Other examples include: green bonds, a multibillion dollar market in which the proceeds of a bond issue are tied to environmentally friendly investments such as renewable energy and clean transportation; blue bonds, a newer debt instrument championed by the Seychelles to fund investments in sustainable ocean industries; vaccine bonds, where funds are raised from international capital markets for immunization programs in developing countries with bondholders repaid by future streams of donor development aid; and social and development impact bonds, where impact investors provide upfront financing for social or development interventions and are repaid by governments and/or donors when specified results are achieved). … Read more

Impact investment to close the SDG funding gap

13 Jul 2017 by Mara Niculescu, Partnership Development Analyst, UNDP Europe and Central Asia

A look at the current state of development funding shows a stark contrast between the price tag to eliminate poverty and protect the planet by 2030, and the actual financial resources that are available. The United Nations Conference on Trade and Development (UNCTAD) says achieving the Sustainable Development Goals (SDGs) will take between US$5 to $7 trillion, with an investment gap in developing countries of about $2.5 trillion. At the same time, the most recent OECD DAC report shows that in 2016 the total official development assistance reached a peak of $142.6 billion, which is one order of magnitude smaller than the needs. Who is going to cover these gaps and how? The days of “funding” (out of a moral imperative) are over; instead, “financing” is seeing good investments for your money, while contributing to positive development. … Read more

What does ‘risk-informed’ development finance really look like?

15 Jun 2017 by Gail Hurley, Policy Specialist, Development Finance, Bureau for Policy and Programme Support, UNDP

The aftermath of Hurricane Ivan. Grenada has since negotiated a ‘hurricane clause’ with some of its debt held with some of its creditors, which allows for a 12-month pause in debt repayment in the event of a hurricane. UNDP photo
How to tackle various forms of risk – from extreme weather events to commodity price shocks, disease outbreaks and over-indebtedness – was high on the agenda of the 2017 Financing for Development (FfD) Forum at the UN. The Forum’s outcome document underscores the challenging nature of the global environment. Economic challenges, such as difficult macroeconomic conditions, low commodity prices, subdued trade growth and volatile international capital flows are compounded by natural disasters, climate change, environmental degradation, humanitarian crises and conflicts. … Read more

Not just more, but better – effective financing of the SDGs

22 May 2017 by Magdy Martínez-Solimán, Director of the Bureau for Policy and Programme Support.

Photo UN Sylvain Lechti - A woman in Goma greeting the Technical Support Committee of the Peace, Security, and Cooperation Framework for the Democratic Republic of the Congo and the Region. Photo: UN Sylvain Liechti.
As discussions begin this week at the ECOSOC Forum on Financing for Development (FfD) Follow-up, we will no doubt be reminded that the costs of financing the Sustainable Development Goals (SDGs) are enormous and that inadequate resourcing of the agenda is critically hindering progress. While the sum needed to achieve the 2030 Agenda for Sustainable Development is unprecedented, the international community should remember there is no silver bullet to fund the SDGs. Bankrolling sustainable development cannot happen through global financing agendas alone, but should instead be built from a bottom-up, holistic and context-driven approach. As countries strive to manage increasingly complex financing flows at the national level, as domestic public and private resources increase, and as the sources of external resources diversify, we need urgent and targeted solutions. How then, given such a complicated landscape, can governments effectively mobilise and manage money for real development results? … Read more

Dollars and 'sense': Paying for our planet

22 May 2017 by Midori Paxton, Senior Technical Adviser, Ecosystems and Biodiversity

Tigers in IndiaIn India, a 2015 study valued six tiger reserves at US$24 billion and US$1.2 billion per year. People travel half the globe to see tigers. Photo: UNDP
As today’s celebration coincides with the International Year of Sustainable Tourism, it is worth noting the role biodiversity and ecosystems play as the backbone of tourism in many places, and equally worth noting the crucial role that the tourism sector can play in conserving biodiversity. This is undeniably a nexus to pursue, particularly for financing effective conservation. … Read more

How do you inspire entrepreneurship in a conflict-affected region?

12 Apr 2017 by Janthomas Hiemstra, UNDP Ukraine Country Director and Sofiya Oshchebska, National Coordinator - Crowdfunding Academy, UNDP Ukraine

71 year-old Pavlo, blacksmith from Lugansk, opened his workshop in the Kharkiv region. Photo: UNDP Ukraine
The armed conflict in eastern Ukraine has not only disrupted everyday life in the regions of Donetsk and Luhansk but also led to staggering unemployment. Out of 23 major enterprises in Luhansk region, 19 are currently not operating, while half of the enterprises in the Donetsk region have lost about 950,000 jobs. Supporting employment is challenging in the best of circumstances and far more so in conflict situations. How do you talk about the benefits of entrepreneurship to people who lost everything and, after being displaced, are just trying to find their place in a new community? At UNDP Ukraine’s Recovery and Peacebuilding Programme, we have an ambitious goal: to promote entrepreneurship in Donbas, inspire people who worked all their life in mines and factories to step into the unsure path of entrepreneurship, and make them believe in themselves and their country again. So we decided to start by showing the joy of creating and developing your own business through the stories of ordinary people. Stories of people like us, who, despite all the difficulties, have succeeded. … Read more

Ukraine: Humanitarian assistance, recovery and development need to go hand in hand

10 Jan 2017 by Janthomas Hiemstra, Country Director, UNDP Ukraine

A metalware factory in Kramatorsk provides critical jobs for displaced people and local workers after being rebuilt through UNDP Ukraine's co-financing programme. Photo: UNDP Ukraine
The conflict in the Ukraine is, without doubt, a humanitarian crisis. Almost 10,000 people have been killed in the eastern region of Donbas alone. Among the victims, some 2,000 people were civilians. Another 22,000 people have been wounded, millions are displaced and living dangerously close to heavy fighting. This crisis has affected millions, despite repeated ceasefires. The Ukraine crisis is also a crisis of development. Amid the human tragedy, concerns about development are often easy to overlook. But the impact can be devastating in the long-term. Basic infrastructure is put under enormous stress in a conflicts like this one, and that stress can lead to economic decline, eventually weakening the delivery of crucial social services in regions like Donbas. If we do not address human welfare and social development concerns, the impact of the conflict is likely to worsen dramatically. The burden will fall particularely on the elderly, the disabled, the poor, women and youth. This is why UNDP has set up its presence in Eastern Ukraine. for the past two years, UNDP has made its priority to contribute in finding solutions to everyday problems affecting the local population. … Read more

Why I have hope for my country, Haiti

20 Dec 2016 by Barbara Calixte, Project Manager, Poverty Reduction Unit, UNDP Haiti

My name is Barbara Calixte. I want to tell you about my people, the Haitian people and why we have hope for our country. I joined UNDP after the 2010 earthquake. Seeing such extensive destruction and damage, I knew I wanted to help rebuild my country. With reputation of working hand-in-hand with the Haitian people, UNDP was, for me, an ideal place. It was without a doubt one of the most important decisions of my life. After the earthquake, UNDP supported the government in relief and recovery work. We empowered communities to rebuild smarter and strengthened their ability to respond to future disasters. We talked to people who lost practically everything but who still had pride, will and hope that Haiti could get back on its feet. … Read more

Why should you care about public procurement reform?

15 Dec 2016 by Doyeun Kim, Communications Focal Point, UN Development Business

Public procurement accounts for more than 30 percent of GDP in developing countries and 10 percent to 15 percent in developed countries, according to the International Trade Centre. Photo: UNDP
Public procurement reforms have been rolling out since the 1990s in Africa. Targeting better efficiency – but also more accountability and integrity – in the management of public resources, these reforms can shape procurement into a powerful agent for development. In the past year, Cote d’Ivoire, Uganda, Somalia, Malawi and Zimbabwe have benefited from projects financed by the World Bank and the African Development Bank in which procurement reforms were part and parcel of larger public sector management goals. Internal efforts, as well as assistance from international development agencies, are focusing on professionalizing and building capacity in national procurement systems. These efforts are consistent with the goals of good governance and prevention of corruption in the use of public funds, and they are also increasingly being linked to the Sustainable Development Goals, because public procurement can be used as a tool for achieving and sharing prosperity. What is public procurement? Public procurement, or the purchase of goods, works or services by public institutions, accounts for more than 30 percent of GDP in developing countries and 10 percent to 15 percent in developed countries, according to the International Trade Centre. It also accounts for a large percentage of government expenditures, in some countries covering more than half of government spending. Its economic significance is evident. … Read more

To leave no one behind, Least Developed Countries need new financing tools

14 Dec 2016 by Pedro Conceição, Director of Strategic Policy, UNDP Bureau for Policy and Programme Support and Philippe Orliange, Director of Strategy, Partnerships and Communication, AFD

To leave no one behind, the least developed countries need new financing toolsLike other Least Developed Countries, Zambia has pursued major structural reforms to attract the investment needed to finance sustainable development. UNDP photo
At the UN General Assembly last September, 193 countries adopted the Sustainable Development Goals (SDGs), an ambitious new agenda for sustainable development to be achieved over the next fifteen years. The central aim of the so-called “2030 Agenda” is to “leave no one behind”. And while it will be a challenge for all countries to meet the targets of the 2030 Agenda, it is clear that it will be especially difficult for the 48 Least Developed Countries (LDCs) most of which are in Sub-Saharan Africa. These are countries where levels of deprivation are acute, infrastructure is inadequate, economies are vulnerable and capital is in short supply. To enable the transformation of these countries to middle-income status, considerable investments will be required within a short time-frame. Many LDCs have made considerable social and economic progress over recent years: poverty has declined, more children are now in school, health indicators have improved and many have enjoyed sustained periods of unprecedented economic growth. At the same time, considerable challenges remain. For example, LDCs remain very vulnerable to shocks and stresses, such as extreme weather events, fluctuations in commodity prices, and disease outbreaks – as the recent Ebola crisis in West Africa demonstrated. Shocks can cause significant development setbacks. … Read more