The Dual Imperative: Access and Efficiency in Development Finance in Small Island Developing States

Striking a twin strategy of achieving accessibility and efficiency is crucial for advancing sustainable development in SIDS

December 19, 2023

SIDS can align with global benchmarks by embracing digital transformation within their public services, fostering better collaboration among institutions, refining public investment management, and implementing rigorous anti-corruption measures.


Small Island Developing States (SIDS) grapple with significant financing challenges, further exacerbated by recent global crises and geopolitical tensions, pushing over 40% of them into unsustainable debt or the brink of it.

Persistent financing challenges present a significant obstacle to the realization of the Sustainable Development Goals (SDGs). The 2023 SDG report for SIDS underscores a significant gap in SDG achievement, with a Multidimensional Structural Vulnerability Index of 61.3, contrasting with 65.4 for the global average. This situation calls for effective remedies. Striking a twin strategy of achieving accessibility and efficiency is crucial for advancing sustainable development. Accessibility pertains to the ease with which the SIDS can obtain financial resources while efficiency relates to how effectively these financial resources are used to ensure that each dollar invested minimizes waste and maximizes its development impact on the ground. 

As discussions progress on the urgency to rethink the relevance of the global financial architecture to deliver the accessibility strategy, this blog highlights the importance for these nations to concurrently introspect and promptly devise innovative measures for enhancing resource utilization and management. In what follows, we explore four entry points.

Digitalizing the public sector. 

The emergence of the fourth industrial revolution (4IR) holds immense promise for efficiency. Yet, many SIDS are falling below global averages in key indicators crucial for maximizing benefits, with exceptions like Singapore and a few others showcasing promise. A fundamental need lies in enhancing the institutional capacities of SIDS to embrace this transformative revolution. By doing so, SIDS stand to not only catch up with global benchmarks but also revolutionize service delivery, empowering governments to become more agile and responsive, while strategically allocating resources in line with national objectives. The UNDP - Digital Strategy 2022-2025 supports countries to harness the clear opportunities presented by digital technologies, ensuring that the associated risks and mitigated along the way.

Strengthening public sector coordination.

In many developing countries, including SIDS, the challenge of duplicated efforts within public institutions looms large, increasing fiscal distress. A recent global report on improving public sector performance highlights that working on similar objectives independently leads to overlaps in funding, inefficiencies in resource utilization, difficulties in coordinating and monitoring progress, and significant delays in programme implementation. Enhanced coordination could optimize the utilization of available resources and ensure that programs reach the intended beneficiaries more efficiently. Harmonizing efforts among institutions involves establishing clearer communication channels, aligning strategies and objectives, and creating mechanisms for joint planning and monitoring. It is essential to identify areas of overlap and devise strategies to consolidate efforts. 


Many SIDS are falling below global averages in key indicators crucial for maximizing benefits, with exceptions like Singapore and a few others showcasing promise.


Closing the efficiency gap in public investment management. 

A recent review of public expenditure and financial accountability in SIDS identified opportunities for growth through enhancing Public Investment Management (PIM). Recognizing the potential for improvement, strengthening PIM systems holds the promise of bridging the existing efficiency gaps by a margin of over 60%. This transformation is not solely about financial gains; it holds the promise of fundamentally altering the landscape of public investments. By bolstering reliability and maximizing impact, enhanced PIM systems can empower SIDS to pursue purpose-driven, impactful, and sustainable investments, fostering greater prosperity and progress.

Tackling Corruption: Safeguarding the Islands Treasury

Corruption continues to drain an estimated 5% of the global GDP, amounting to $4.5 trillion.  Unfortunately SIDS, just like other developing nations, grapple with this challenge. Despite an average Corruption Perceptions Index CPI) score 46.75 in 2022, slightly higher than the global average of 43, most SIDS still face significant challenges. It is crucial for governments to adopt and rigorously implement robust anti-corruption measures to ensure that every dollar allocated for development fulfills its intended purpose. 

As SIDS navigate the complexities of global financing, the focus should be on investing in solutions within their reach. By embracing the proposed strategies, these nations can pave the way for sustainable development and a brighter future. UNDP's scaled-up offering for SIDS, utilizing its network of multi-country and stand-alone offices within these regions, harnesses a wealth of expertise and South-South networks to effectively address the diverse challenges and opportunities encountered by SIDS.