Achim Steiner, UNDP Administrator, Speech on EU External Investment Plan – Mobilizing investments for the SDGs

Sep 20, 2017

Achieving the SDGs is the most effective way to stimulate demand for public and private goods, and to make the investments that meet these demands. Credit: UNDP

As prepared for delivery.

It is a pleasure to co-host today’s launch of the EU External Investment Plan – an ambitious and innovative plan to mobilize investment for the Sustainable Development Goals (SDGs).

For the first time in history, all countries share a common, universal development agenda. The 2030 Agenda and the SDGs represent people’s aspirations to transform our world, in the way we live, work, and do business.

At Monday’s High level Event on Financing for Development, the Secretary General highlighted the critical importance of finance to the success of the 2030 Agenda and the fact that at the moment, the abundant resources already available in the world are not getting to where they are needed the most.

Overall, the 2030 Agenda is facing an estimated $2.5 trillion per year financing gap. Indeed, despite the availability of ample global savings and a rise in savings-GDP ratio across a swathe of developing countries, public finances, official development assistance (ODA), and private sector finance are not sufficient or adequately aligned to secure the necessary investments and interventions to achieve the SDGs.

This must change. And as I emphasised at Monday’s event, the United Nations development system has a key role to play in fostering this change by linking its development results to more and better aligned financing for the SDGs. 

We need to bring two global conversations together. There is a conversation on international economic and financial policies to maximize global growth with stability that takes place in Basel, in the G7 and G20, and in global financial hubs. There is a conversation about securing private and public finance, including ODA, to achieve the SDGs.  

Uniting these conversations involves recognizing that the SDGs are, in fact, the global strategy to maximize inclusive, balanced, and sustainable growth. Achieving the SDGs is the most effective way to stimulate demand for public and private goods, and to make the investments that meet these demands. This virtuous economic cycle will deliver the desired optimal, sustainable global growth. 

While traditional types of development financing will remain critical to SDG achievement, particular for the poorest and most vulnerable countries, private and blended capital will be central. There is currently $256 trillion in private wealth in the global capital markets. Attracting just 1% of this amount would meet the financing gap for the SDGs. 

At the 2015 Financing for Development Conference in Addis Ababa, we agreed on an “Action Agenda” for financing the SDGs, including a commitment to a smarter, more effective use of ODA to leverage private capital.  Allocating only 10% of annual ODA for blended finance solutions could leverage $100 billion annually of private capital for developing countries.

The SDGs are also an interesting proposition for the private sector. According to the Business Commission for Sustainable Development, investing in the SDGs in just four economic systems could open up $12 trillion of market opportunities. 

There is also clear evidence of growing and impressive private sector interest and engagement in supporting this agenda - for example from Japanese business leaders I met last month in Tokyo.

Yet, private sector investment continues to be highly concentrated, mostly in resource-rich countries, extractive industries and capital regions. Only a small – albeit growing - share of private capital is invested in SDGs. 

The good news is that we see some success in diverting private capital towards the SDGs through innovative financing instruments such as impact investing and green bonds. Latest data from the Global Impact Investing Network (GIIN) estimates that the total size of the social impact investor market reached $77.4bn in 2016, a growth of over 70% since 2014.  

The European External Investment Plan – An innovative approach to mobilising finance for the SDGs

The European Commission has long been at the forefront of using innovation to foster private sector engagement in development, including by leveraging private capital through blended finance. 

The European External Investment Plan takes this commitment even further. 

We welcome the EIP as an ambitious approach to trigger investments from and for the private sector in those regions most in need. It is a promising tool to boost private sector activity, stimulate job creation and provide critical infrastructure, including in fragile countries.

The Plan reflects in many ways UNDP’s own thinking around innovative financing for development and is in line with our approach in engaging with the private sector and International Financial Institutions.

UNDP’s offer

UNDP is fully engaged with helping countries identify additional financing and innovative partnerships for SDG implementation – in particular with the private sector.

Indeed, building on our near universal presence, as well as long-established relationships and trust at the country level, we are very well placed to convene partnerships across the public and private sector to deliver on the SDGs.

Through platforms such as the UNDP-hosted Business Call to Action, hundreds of companies - from multinationals to social enterprises, have advanced business solutions to benefit the poor and advance the SDGs.

An important part of our efforts is also supporting governments to put in place the enabling environment needed to catalyse and attract, private sector investment. 

To this end, for example, we launched in 2013 the Derisking Renewable Energy Investments (DREI), a framework to help attract private investment in reliable and affordable renewable energy solutions. 

We also work with partners to develop innovative blended finance instruments that use ODA to leverage private investments for sustainable development. 

In Malawi, UNDP has partnered with UK aid and KFW to establish the Malawi Innovation Challenge Fund, a $15 million blended finance facility that provides grants for promising private sector initiatives. Since 2014, it has helped to raise incomes of 33,300 households and create nearly 1200 jobs.

These are only a few examples of how UNDP is tapping the potential of innovation and private sector engagement to make the 2030 Agenda a reality.

Conclusion 

The launch of the EU External Investment Plan marks an important milestone in our common efforts to unlock the flow of private capital towards the SDGs. 

Let me congratulate the EU for this initiative and assure you that we are committed to support you in its implementation. 
 

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