Discussion
17 Jun - 2 Jul 2021

Development Financing (Keeping People out of Poverty)

Samantha Happ • 9 June 2021

Welcome to this discussion on Development Financing (Keeping People out of Poverty)!

The second discussion in the ‘keeping people out poverty’ series is on development financing, with the reflection paper as a starting point. The discussion aims to capture the impact of the COVID-19 outbreak and the associated social and economic crisis on development finance and UNDP’s direct and collaborative responses in assisting countries to manage these impacts and articulate forward-looking risk-informed measures and strategies. It will also collect insights on more recent developments and UNDP’s role in the development finance space. In 2021/2022, IEO is conducting a formative evaluation of UNDP’s contribution towards financing the pandemic recovery, and your contributions to this discussion will help inform it. We welcome your inputs, insights, comments, insights, and lessons learned are welcome until 2 July 2021!

DISCUSSION QUESTIONS

Overall Lessons Learned

1. Have you come across similar lessons to those in the Reflections paper on Development Financing in your work? Feel free to share lessons around what worked and why.

UNDP and UNCDF Development Finance Support

2. Please share innovative examples of UNDP or UNCDF’s work in development finance (e.g., digital, INFF, national SDG financing framework, local development finance,  SDG budgeting, financial inclusion, tax and debt instruments, mobilising private capital, risk finance and insurance etc.), including what worked and why with regard to programme design, partners, institutional arrangements.

3. Are there capacity building initiatives supported by UNDP to improve policy for better development financing options?

Country Typology: Specific Development Finance Support Needs

4. What are the challenges specific to different country typologies (such as MICs, LDCs, SIDS, conflict countries) in attracting and scaling up development finance? How can UNDP better use its efforts to address these challenges, including by helping countries in their efforts to mobilize more resources domestically as well as tap into innovative financing options?

Private Sector SDG Finance and Involvement

5. How can UNDP increase its engagement of the private sector and promote its alignment with sustainable development at national and the local levels? How can UNDP assist governments in their efforts to attract investment in priority areas for the SDGs and engage regional and international private investors for sustainable development? Any examples, including, as regards effective tools, methodologies, and approaches to facilitate engagement on addressing policy bottlenecks?

UNDP Fiscal Policy Support

6. Rising debt levels across a wide range of countries in the wake of COVID-19 posed a significant constraint for countries to deliver services to the poor and finance inclusive recovery plans as well with regard those hit hardest in restructuring their debt portfolios in ways that could release fiscal space for priorities. What has been UNDP’s role assisting governments in these areas, including in respect to national and local budgets, and what can it do to enhance the impact of its support?

7. What efforts did UNDP take to assist governments in their efforts to boost the national revenue base? What are the challenges and opportunities?

Please indicate which question(s) you are responding to in your comment. 

Comments (56)

Vijayalakshmi Vadivelu Moderator

On behalf of UNDP and the Independent Evaluation Office (IEO), we warmly welcome you to this e-discussion on Development Financing, as part of IEO’s larger series on learning from past evaluations. I will be one of your moderators for this discussion, in addition to Thomas Beloe and Radhika Lal, with support from Andrew Fyfe at UNCDF.

Your comments, reflections, best practices, and lessons learned are most welcome here, and will inform the IEO Thematic Evaluation on Financing the Pandemic Recovery, which will be presented to the Executive Board in 2022. You may comment on your overall thoughts, or you may respond to the specific questions in any order (please include the questions number you are responding to in your comment).

Thank you and looking forward to our fruitful discussions this week!

Best,

Vijayalakshmi Vadivelu, Senior Evaluation Advisor

Ana Rosa Monteiro Soares

Silvia Morimoto and Stefan Liller, I saw your countries have launched the First Southern Cone Report of Sustainable Finances and Impact Investment in post COVID 19 recovery. May I ask you join the conversation and share some of your lessons and expectations. As you know we are now in the process of evaluating UNDP efforts on recovery financing, Richard Jones is our lead evaluator. It would be great to hear from you. Thank you

Thomas Beloe Moderator

Marcos Neto Sahba Sobhani Jan Kellett Sebnem Sener Marcos Mancini Mariana Gonzalez Luisa Bernal Orria Goni Nergis Gulasan Suren Poghosyan Vito Intini 

Radhika Lal and I are looking forward to working with Vijayalakshmi Vadivelu and Andrew Fyfe to moderate this discussion. The Reflections paper provides us with a helpful assessment of our past work on development finance. this e-discussion provides us an opportunity to bring together examples of our current initiatives and growing engagements on SDG Financing, and as you help us do this, your contributions will inform the IEO’s formative evaluation on Financing the Pandemic Recovery to the Executive Board in 2022. The stories of the last decade are still relevant, but the story has moved on at pace, as we move to accelerate and scale up our work on SDG finance in the decade of action. Please activate your networks and let’s bring into this discussion some of the initiatives that are defining our role on SDG financing. We’re eager to have you join the conversation in the comments below!

Vijayalakshmi Vadivelu Moderator

Hi colleagues, can you please share examples where basket or pooled financing is used in COVID-19 response.  UNDP Nigeria is facilitating a basket fund along USAIDS.  Mohamed Yahya can you please share more information on this Deqa Ibrahim Musa .

Radhika Lal Moderator

Dear Vijayalakshmi Vadivelu and colleagues at IEO. Thanks for sharing the reflections paper and organizing this discussion to gather additional insights and reflections. In response to Q2 Innovative examples of UNDP or UNCDF’s work in development finance (e.g., digital, INFF) and Q1,  I want to pick up on Lesson 8 Fragmented COVID-19 response will weaken efforts to address SDGs reversals posed by the pandemic and more specifically on "Concrete areas need to be identified for enabling specific development financing solutions.  It is also important to pay sufficient attention to long-term solutions such as increasing domestic revenue as the pandemic provides opportunities to strengthen revenue generating systems and processes."  This is absolutely true and it is what the 70 odd Joint SDG Fund supported component 1  joint programmes (where UNDP serves as the technical lead) in support of Integrated National Financing Frameworks seek to address by focusing on the various building blocks (including development finance assessments [DFAs], formulation of action oriented financing strategies, governance arrangements and M&E) to assist governments in more effectively utilizing and tapping into both public and private resources in an integrated way in support of recovery plans and/or new national development plans as the case may be. As these were initiated in 2020 they would not be captured in any evaluation but are important as the next-gen approach to  financing - which go beyond traditional approaches to aid coordination to encompass a variety of financing flows and actors. Colleagues on the frontlines at country level can share insights on new approaches to enhance resource mobilization for key development priorities and also engage private sector (For Asia Pacific, e.g. Ranjit Kumar Chakraborty and  Linda.Germanis@undp.org for Bangladesh with regard to the national development plan or colleagues at the Fiji MCO, e.g., Moortaza Jiwanji  who are making the linkages of the DFA process with the recovery plan.) Hoping colleagues from the various regions can contribute, including Thomas Beloe and Tim Strawson who have both deep knowledge and birds-eye views. thanks

Radhika Lal Moderator

Hi again, also with regard to question 1, but picking up on lesson 7 Adequate consideration of the alignment between the needs of environment vertical funds and government is essential for mobilizing development financing. There are a number of important threads here ranging from vertical funds to energy to climate finance, so hoping  various colleagues in the NCE team, e.g., Akiko Yamamoto Marcel Alers and Milou Beerepoot , could come in and tag others on but also hoping to hear from colleagues focused on the governance of climate finance (with a public finance focus) , e.g., Asad Maken and others can come in to reflect on the ways that UNDP has been supporting governments to integrate climate change into the various stages across the budget cycle. The latter is important because for many countries, domestically mobilized resources, and not international climate finance, remain the largest source of climate financing. Also hoping colleagues from the Ghana CO for example, Paolo Dalla Stella and Stephen Kansuk ,  can come in on the support that UNDP has been providing to ensure alignment of GCF projects and the various types of engagements with the private sector in the context of clean energy.

Sebnem Sener

@David Mueller @David Sanchez @Devahuti Choudhury @Sara Lisa Orstavik @Nergis Gulasan

Regarding discussion question 5 - UNDP SDG Impact has been engaging with the private sector stakeholders since its inception and has been working aligning and catalyzing private sector capital towards the SDGs- both at global and country level. Indeed, SDG Impact launched in 2018 as a flagship initiative of UNDP’s Finance Sector Hub focused on eliminating barriers to and driving integrity for SDG-enabling investment at scale. While a growing number of investors and business leaders see the SDGs as their guideposts for what it means to be sustainable, responsible, and inclusive, there is a lack of clarity in how to translate the SDGs into investment practice and opportunities. UNDP is unique to lead private sector on this respect and it is the added value of UNDP as SDGs are not the focus of other IFIs and DFIs. SDG Impact fills this gap by providing the clarity, insights, tools, and capacities that investors require to support and authenticate their contributions to achieving the SDGs. The initiative enables private sector investors to identify and strengthen their contributions to the SDGs through three pillars of work:

Impact Management

The SDG Impact Standards are a set of frameworks for internal decision-making that organizations can apply to help build a more sustainable, inclusive, and resilient world. The Standards close the gap between current investment practice and the practices needed to achieve the SDGs, promoting continuous improvement, integrity, and accountability. An assurance framework and certification, in the form of a SDG Impact Seal for investors and enterprises that can demonstrate adherence to the Standards, is under development and will launch in late 2021.

Impact Intelligence and Facilitation

SDG Investor Maps and Facilitation events produce country-level insights on investment opportunities that can advance the most pressing SDG-needs, aligned to a country’s national development priorities, while producing financial returns offered through market intelligence encompassing data points across impact and business considerations. The Facilitation events gather investors and businesses to discuss the investment opportunities and to spark investment decisions on specific investment opportunities.

The three pillars come together in the Global SDG Investment Platform- which is a concrete achievement, which was launched on April 14th 2021. The Platform provides investors with immediate, intuitive access to data from SDG Investor Maps on SDG-aligned investment opportunities and the regulatory and policy environments that facilitate investment, to the SDG Impact Standards and online guides, to IMM trainings, networking opportunities, and other data, news, standards, frameworks, and relevant knowledge products. The SDG Investor Platform is a joint product of UNDP SDG Impact and of the Global Investors for Sustainable Development Alliance (GISD).

As to concrete examples:

  • The New Development Bank in China just issued a bond making use of the SDG Impact Standards and the UNDP China taxonomy.  The China CO has been working with NDB and had an agreement in place to pilot the standards and taxonomies (which SDG Impact team had input into), and includes some opportunity to develop and share lessons from the process. @Qing Xu 
  • Argentina Financial Regulator included as recommendation of good practice the UNDP SDG Impact Standards to align funds classified as ESG, Green, Sustainable or Social in the Argentina capital markets;
  • Bancolombia has been working with the UNDP CO and SDG Impact team to design its investment strategy, with a focus on renewables, leveraging the Colombia investor map. Bancolombia CEO committed to realize an investment using the results of Colombia map during the SDG investor Platform launch. The team is working with Bancolombia team to realize this. @Lina Fernandez Pizano @Alejandro Pacheco you may want to comment on this.
  • Standards Chartered and EBRD reached out to Istanbul Center for Private Sector Development  after the Turkey facilitation event to be connected to some of the businesses that presented. UNDP is informed that both EBDR and SC is in ongoing conversations with the businesses identified. @Funda Suzer you mention in your comments.

 

  •  
Suren Poghosyan

Building on Radhika's reflections on Lesson 8 on systems challenges from the governments side and bringing in a particular example how to address the challenge.

Governments have their own systems and processes, including on budgeting. changing/improving those processes sometimes take decades. As COVID-19 emerged, governments consolidated resources (systems, finance) to address those in the short-term. However, whatever is good as a short-term solution does not necessarily work efficiently in the long-run and governments now need more systemic solutions rather than ad hoc mobilization of resources (not only financial but other resources too). What we see now is an emerging need from the governments to help them addressing non-traditional (cross-cutting) topics in their governance and budgeting systems. COVID is a good example of that, but is not the only one - climate change, green economy, poverty, gender, biodiversity are amongst those. Budgeting for SDGs from UNDP offers solutions to those, including via integration of SDGs into the chart of accounts (the source-code of the budgeting process). Penetrating into this area is very challenging, at the same time, the traditional budget classifications (chart of accounts) do not host neither the COVID nor most of the SDGs, so the budgeting system is "blind" towards these and other cross-cutting topics until you change the systems. So we have a demand on one hand but understandable resistance to penetrate into the source-code on the other hand. Hence UNDP offers softer solutions in this transition until the demand becomes solid and is generated not only from the budget units but from parliaments and other influential groups. An example of such gradual approach comes from Armenia where UNDP promoted and then supported a simple amendment to the Budget Circular which now addresses both SDGs and COVID-19 cross-cutting issue by requesting ministries to present their budget proposals using simple tagging mechanism so the central units and decision-makers can consolidate the information by the topic they need.
Simple, yet effective solution as a first step towards the Budgeting for SDGs!  

Tiana Randriantsoa

That is to complement Suren's comments and also in reply to question 3. Are there capacity building initiatives supported by UNDP to improve policy for better development financing options?

Indeed, UNDP is known for its convenor role within both TWIB initiatives (tax administration) and PEFA framework (with particular focus on either gender and / or climate change components) which may be combined together with the aim at aligning finance ecosystems challenges, in connection with APADT- Paris 21 like statistical planning tool to define SDG tracker data requirements programme replicability ??

A good entry point example comes from a partnership between ILO and WHO with the emerging and implementation of SPPOT (Social Protection ¨Policy Options Tool) methodology in Togo 

 

Funda Suzer

Sahba Sobhani Gulcin Salingan Sebnem Sener Seher Alacaci

Regarding the Question 5, UNDP IICPSD has been providing support to the COs particularly in connection with the Lesson 6: Addressing policy bottlenecks and using new and alternative financial instruments to enhance private sector engagement will increase development financing. As UNDP’s global policy center on private sector engagement for the SDGs, Istanbul International Center for Private Sector in Development (IICPSD) provides research, technical assistance and advocacy support under several thematic focus areas, one of which is impact investing. Working closely with the Finance Sector Hub, IICPSD delivers various activities to advance and diversify sources of SDG financing across the world.

IICPSD’s impact investing team supports COs in delivering two flagship methodologies to analyze the impact investing ecosystems and SDG-anchored investments in developing and the least developed countries:

  • Impact Investing Ecosystem Study: In 2019, IICPSD developed the “Impact Investing Ecosystem Stakeholder Mapping and Preliminary Market Analysis” methodology to promote impact investments as significant SDG enablers especially in developing and least developed countries. Built on a comprehensive desk research and in-depth interviews with major stakeholders, this methodology showcases opportunities in a market for international and local impact investors, identifies high-potential areas and provides policy recommendations to foster an impact investing ecosystem. The methodology was piloted in Turkey as IICPSD published The Impact Investing Ecosystem in Turkey in 2019 in partnership with UNDP Turkey CO. One of the outcomes of the study was establishment of the Impact Investing National Advisory Board (NAB) in Turkey, which is also referred in the IEO Reflections report. The Center is currently implementing the ecosystem studies for Morocco, Ukraine, Tunisia, Djibouti and Afghanistan.
  • SDG Investor Maps: IICPSD also provides technical support to COs in implementing SDG Investor Maps, which have been developed by SDG Impact to identify market proven “Investment Opportunity Areas” aligned with national policy priorities and SDG needs in countries. IICPSD developed the SDG Investor Map Turkey on behalf of UNDP Turkey, which was launched in 2021. For the launch, IICPSD organized a Policy Dialogue Event to share the findings of the SDG Investor Map Turkey with a broader spectrum of audiences and to facilitate the dialogue between private sector and the government for the SDG-anchored investments. The President of the Republic of Turkey, Mr. Recep Tayyip Erdogan and UNDP Administrator, Mr. Achim Steiner delivered keynote speeches acknowledging the importance of the Map for the investment landscape in Turkey. The Summit had outstanding media coverage: 209 different news pieces were published about the event. For reference, the event and the keynote speeches may be viewed through the video provided on the IICPSD Youtube Page. 

The Center also hosted an Investor Convening Event bringing together international and domestic investors and private sector companies operating in 3 priority sectors identified in the SDG Investor Map Turkey: (i) Infrastructure, (ii) Renewable Energy and (iii) Healthcare. Companies and investors in each session delivered 2-minute presentations on their SDG-aligned business models and investment strategies. International investors such as EBRD, Standard Chartered, International Fund for Developing Countries (IFU) and Capria Ventures along with domestic investors participated to listen to SDG-anchored companies’ business models and share their investment strategies in Turkey. As Sebnem has also mentioned, Standards Chartered and EBRD reached out to IICPSD after the Turkey facilitation event to be connected to some of the businesses that presented. Both EBDR and SC is in ongoing conversations with the businesses identified.

The Center is currently supporting the COs in Ukraine, Morocco, Tunisia, Djibouti and Afghanistan for the implementation of the Maps.

Alongside conventional impact investing, Islamic finance can also be considered as a strong and non-traditional source of financing for the SDGs. With global assets estimated to reach $3.2 trillion USD in 2020, Islamic finance has a footprint in Asia and Middle East; is ripe for growth in South America and Europe; and has future markets in North America, Central Asia and Australia. Given its emphasis on risk-sharing, linkages to real economic activities, partnership-based and equity-focused approaches, widened geographic reach and the rapid expansion of its global assets in Muslim and non-Muslim countries, Islamic finance can serve as a potent and yet untapped source to finance the SDGs. Its major principles– financial stability, financial inclusion and shared prosperity– can be instrumental in the successful implementation of policies on ending poverty (SDG-1), achieving food security (SDG-2), ensuring healthy lives (SDG-3), achieving gender equality (SDG-5), and promoting peaceful and inclusive society (SDG-16). IICPSD also works on strengthening the synergies between impact investing and Islamic finance. To this end, the Center established the Global Islamic Finance and Impact Investing Platform (GIFIIP) in partnership with the Islamic Development Bank (IsDB) to leverage Islamic finance resources for social and environmental impact. Engaging the private sector, governments, and key stakeholders operating in the Islamic finance and impact investing markets, the platform aims to promote market-based solutions to sustainable development challenges by creating a collaborative working space.

 

Vijayalakshmi Vadivelu Moderator

Thank you colleagues. I know it is early days, but are there any examples where support to SDG Investor Map increased private sector investment.

Sebnem Sener

Funda Suzer - just to add. IICPDS and SDG Impact established a partnership and working in coordination and together to develop the SDG Investor maps in some of the countries where CO prefers IICPDS assistance to develop the maps.

Tony Muhumuza

To add my voice on Sebnem’s submission, the discussion on impact interments is gaining traction in Mauritius with UNDP support. On Monday this week, UNDP had a constructive engagement with the Senior Management Team of the Executive Development Board-the lead Agency responsible for investment promotion in Mauritius. Following the informative presentation by David Mueller-our SDG Investor Map Specialist for Sub-Saharan Africa, the Government of Mauritius has demonstrated commitment to partner with UNDP in undertaking the investor map exercise. Emphasis will be on directing private sector investment in areas identified as priorities for the country, mainly in energy, food security, financial services, real estate and ocean economy.  We are excited and looking forward to the engagement in the coming couple of months.

Luciana Trindade de Aguiar

Regarding Question 5. How can UNDP increase its engagement of the private sector and promote its alignment with sustainable development at national and the local levels? How can UNDP assist governments in their efforts to attract investment in priority areas for the SDGs and engage regional and international private investors for sustainable development? Any examples, including, as regards effective tools, methodologies, and approaches to facilitate engagement on addressing policy bottlenecks?  

We can highlight different experiences implemented by Business Call to Action (BCtA), a UNDP multistakeholder platform recognizing business models operating in low-income markets and engaging 280 companies in 82 countries. According to DfID independent evaluation on BCtA Project Completion Review (2016), BCtA received ratings of A until 2017 and was considered as “a model for donor coordination and sharing of best practice around the responsible business agenda, and a business network with good links to both corporate and other organizations in the inclusive business space.” they have further noted that “it is important that any future ‘calls to action’ or business ‘pledging sessions’ learn lessons from BCtA.  

 BCtA:  

  • Promotes and leverages private sector inclusive business activities towards SDGs contribution: Donor contributions catalyse additional activities (including both financial investment and non-monetary contributions) from the private sector in pro-poor inclusive business for achieving the Global Development Agenda.  
  • Helps build a body of evidence to support IB mainstreaming especially around impact: With the expanding membership of BCtA and improved methodologies around measurement and reporting, the initiative offers a rich source of data on inclusive business. This includes both insights on the aggregate targeted results of member companies' vis-a-vis the SDGs, as well as insights into the relationship between certain management practices and business performance, and finally the role of government action in hindering or furthering performance. In sum, the initiative delivers evidence-based insight on some of the most critical open questions in the inclusive business domain to date.  
  • Drives the scale-up of inclusive business impact: Increases the impact of inclusive business to the SDGs through various levers. Provides guidance and incentives to member companies to establish good management practices. Identifies high-impact models and raises awareness of them to advance replication. Finally, enables public sector support to companies through validation, improving conditions for scale-up at the national level.   

On Impact Management and Measurement (IMM), BCtA has implemented an offer tailored to different company sizes:  

  • MSMEs: Train trainers on IMM to Microfinance Banks in Sudan and Jordan that streamline this knowledge to smaller banks in their networks.  
  • Startups: Training on IMM in partnership with business accelerators, Thailand, Philippines, Turkey, Armenia COs for capacity-building to their cohorts of startups. One-on-one support on startups’ impact theory of change.  
  • Large Companies and Corporations: In partnership with Thailand CO, training to the country’s Securities and Exchange Commission’s top 25 companies  
  • Community of Practitioners: 2 cohorts of companies from several geographies (India, Colombia, Kenya, Turkey, Bhutan, and more) that have undergone an in-depth and end-to-end IMM capacity-building program over 1 year that included data collection. To showcase the results of these programs, impact case studies were written in collaboration with the companies.  

IMM training of BCtA is conducted by the Accredited IMM team to train trainers at the global level (SVI and SDG Impact), video tutorials to reach wider audiences and promote adoption with MSMEs. The IMM program is implemented with the support of the Impact Lab, an online tool created by BCtA that allows for companies to track, report and manage their impact and contributions to the SDGs. This online tool counts with:   

  • simplified modules with digital tools to collect and systematize data.  
  • available in 5 languages: English, French, Spanish, Arabic, and Turkish.   
  • portfolio view for investors and business accelerators  
  • Integrates globally accepted taxonomy, standards, and ratings, such as IRIS+, IMP and is integrating the SDG Impact Standards.   

On SDG reporting, BCtA has developed the SDG Corporate Tracker offer in partnership with the Colombia CO, GRI, and the Colombian Government.   

SDG Corporate Tracker is an impact reporting tool that measures the contribution of the business sector to the SDGs on an online platform that enables the collection of information to identify this progress. Specifically, it i) collects data in a standardized method for the analysis and monitoring of the contribution to the 2030 Agenda; ii) develops tools that capture information using GRI Standards as a reference that also guide the company’s reporting exercise; iii) launches an online platform to report information and manage knowledge about companies' sustainable practices and iv) prepares analysis reports using the information gathered. The SDG Corporate Tracker integrates the social, economic, and environmental modules on sustainable development and COVID-19 sensitive indicators. With this initiative, the private sector is invited to restate its commitment to the 2030 Agenda and acknowledge its role as strategic partners for its implementation at the national level and aligned with the Voluntary National Reports. The tool has been replicated by the Peru CO.   

BCtA is now supporting the development of a pipeline of innovative business models, through Inclusive Innovation Journeys at the country level that also includes IMM in its program in Colombia and Tunisa:  

BCtA supports governments to deploy market-proven solutions through inclusive innovation processes, thereby serving increasingly poor populations in shrinking fiscal space while mitigating the risk inherent in innovation. BCtA’s program on inclusive innovation deals with facilitating the replication and adaptation of global innovation processes. Benefiting from its inclusive business network, BCtA helps to bridge the gap between the public and private sector by supporting governments in integrating innovative solutions developed by local entrepreneurs in which enterprises are trained on how to manage their impact.  

The solutions developed by these entrepreneurs go through an adaptation process facilitated by BCtA. Through this adaptation process, the Inclusive Innovation Journey stimulates the development of investable projects by local entrepreneurs connecting them to investment opportunities previously identified by the SDG Investor Maps and/or other mechanisms for investments aligned with the SDGs. 

 

Vijayalakshmi Vadivelu Moderator

During the webinar Sukhrob Khojimatov shared lessons from engaging private sector in  competitiveness and energy efficiency areas. Colleagues from UNDP Turkey Seher Alacaci can please share your best examples. 

Jan Kellett

I'd like to offer some thoughts on UNDP's work on Insurance and Risk Finance. I'd see this as relating to points 2 (innovation), 3 capacity building, 4) bespoke support to countries and 5) private sector engagement.

The most critical partnership we have is what is called the Tripartite Agreement, and the initiative includes all these points.

Signed at the UN Secretary General’s 2019 Climate Summit, by UNDP (the Administrator himself) the German Government and Insurance Development Forum, the Tripartite Agreement focuses on the systematic delivery of technical assistance to 20 priority countries exposed to climate risks by 2025. It does this through significant financial commitments from the German Government, matched with risk-finance solution capacity of the insurance industry, and project management, convening and long-term governance-focused expertise of UNDP. This public-private-partnership, which we see as unique in terms of size and scale of joint country-level operations, also includes partnership with ten of the largest insurance companies in the world, which have together pledged US$5 billion of risk-capital alongside their technical support.

The Tripartite Agreement provides partner countries with access to unprecedented coordinated support on risk financing, blending private sector and development sector expertise over a two to three year period. In addition to the development of a risk-financing solution developed by industry, UNDP complements this by embedding insurance and risk finance into long-term governance and development, especially development financing, which includes a strong focus on inclusive insurance.

To date, progress has been substantial, (even though the development work started off just as COVID-19 broke out into a pandemic). Five projects are likely to start in the summer, and another four by the end of 2021. This has involved significant work by and with Country Offices, where we now have joint industry/UNDP working teams, supported by ourselves centrally. 

And it is this initiative, now financed to about US$43 million that is allowing UNDP to develop and launch the Insurance and Risk Finance Facility, its first dedicated resource to country offices across programme development, technical capacity, resourcing, partnerships, networking. 

 

But apart from the status of this initiative, its the journey to get that they is also relevant, because it has taken significant time and effort. I'll attempt a rough timeline:

1) Political Champions for Resilience: Led by.leaders (ECHO, OCHA, UNDP, DFID) it attempted to shift the balance of rhetoric, funding and programming towards resilience, away from humanitarian aid. UNDP acted a secretariat of sorts (if I remember). Within this work was a track on insurance that had little traction.

2) The Sendai Framework: As this process moved forward, UNDP's messaging sharpened to focus on risk-informed development, away from previous messages of DRR/M, and here financing of risk started to become relevant.

3) FFD: In preparation for this conference, we wanted to focus on finance, and it quickly became evident that there was almost no mention at all of risk within the early drafts of the FFD document. We put together a cross-organisation team, public and private, development agency, banks and IMF, as well as academia to advocate for the centrality of risk within FFD documents. This was a very successful advocacy campaign, and within this came the realisation that insurance industry and development sector shared some considerable shared opinions about risk, finance and development. See the advocacy research piece prepared for the process here: https://odi.org/documents/5277/10664.pdf

It was at the FFD that UNDP and industry decided to push for the development of an upgraded model of interaction, one with more sustainability. Securing the support of the Administrator at the time for critical for industry on its side, to shift support from a technical engagement to a leadership one.

4) The Insurance Development Forum: This took shape over the next months, and was formally launched at the Paris COP, now with an industry chair, and co-led by UNDP Administrator and World Bank, mirrored at the operational level. A very senior steering committee was formed, all CEO level. Commitments to work at the country level were made. From this five working-groups were formed. UNDP worked on all of this development work with industry throughout. 

5) Programmatic Partnership: It took another three years of discussions, negotiations and developing work for financing to be secured to make the commitment of the IDF a programmatic reality. For UNDP, this meant negotiations with the German Government over more than a year, with agreements slowing building, 6.9 million euros, 10 million euros, 20 million euros. On industry side, the sovereign and humanitarian working-group worked hard to pull in some of the largest insurance companies in the world to work with UNDP and governments, in a way that very much outside of their experience.

6) The Tripartite Agreement: Born at the Climate Summit, as above, the IDF to an extent came of age, with the German Government also offering co-financing industry to incentivise working in a range of countries that may be outside their usual experience, supported throughout by UNDP. See the attachment for the text of the agreement. 

In summary, some 6 years of work have brought us to this strong position, and it has taken some effort externally to develop the initiative, to finance the initiative, and internally, to convince colleagues that the work of insurance and risk finance was critical to our work, and critical to our development narrative and work.

Tiana Randriantsoa

To add on Jan's comments regarding Insurance and Risk Finance,

- Indonesia issued a green bond within Green Sukuk initiative with the objective to support Indonesia's goal in its green house gas emissions reduction, based on Islamic Law Principles, reviewed by CICERO as an international reviewer.

Source of finance for mitigation action : central government, local government for investment financing allocated between 2008 and 2012, government tax subsidies for geothermal and biofuels

Eligible green projects must fall into one out of nine eligible sectors : renewable energy, sustainable management and natural resource, energy efficiency, green tourism, resilience to climate change and disaster risk reduction, green buildings, sustainable transport, sustainable agriculture, waste to energy

- Nigeria issued a climate bonds certified sovereign green bond to finance projects related to afforestation and renewable energy

- OGP open government partnership: 2017 Voluntary National Reviews conducted by national governments transparency international partners (Argentina, Afghanistan, Brazil, Chile, Costa Rica, El Salvador, Honduras, Jordan, Maldives, Nigeria, Portugal and Peru)

to advance anti corruption reformsin in six sections' priority issues including whistleblowing, transparency in political financing, interest declarations, contracting, lobbying, beneficial ownership

Orria Goni

Dear Vijayalakshmi Vadivelu and colleagues,

Thanks for sharing the reflections paper and organizing this discussion. After reviewing the reflection paper, and in response to question 1, I realized it provides an interesting oversight of UNDPs work on development effectiveness and how it transitioned into the pre FSH days of our work on Financing for development. In this sense, it is interesting to note how all the 8 recommendations considered in the reflection paper are in great syntony with the existing Finance Sector Hub offer, which my colleagues have previously presented in their comments. Just for to be more “visual” about it, I have drafted the below graph to see the linkages of the recommendations with our FSH service offer, which is indeed currently being implemented at country, regional and global level through different programmatic interventions (in the Africa Region covering 36 COs).

FSH wheel with IEO recommendations

So, if we follow the logic of the FSH financing wheel, regarding the point 4 – which is looking into conducting analysis to provide development financing options, our current Development Finance Assessment (DFA) is directly aiming at responding to this need. Regarding the point 8 - about the fragmented responses, and thus the need to promote further integration into the responses in the COVID context, and the point 3 – about the relevance of simultaneously financing humanitarian as well as development efforts through an integrated framework, these are precisely the vision of the Integrated National Financing Frameworks, to promote better alignment, coordination and integration from the planning and financing perspective, but also from the public and private collaboration and a whole-of-government and a whole-of-society approach to the SDG financing. Within a number of INFF, we are precisely putting stronger emphasis on issues related to Fiscal Decentralization and encouraging the SDG financing dialogues at local level, as the work that it is happening in Ghana, Sierra Leone, Namibia and Mozambique, for example. This is very much aligned with the Point 5. In all these processes we are working to ensure we build from the ongoing work on Development effectiveness (framed under the GPEDC) and promoting stronger synergies with the ongoing Action Dialogues at country level, which responds to the point 2 - strengthening country-level capacities support to improve avenues of development financing. Interesting to highlight here the connection on the INFF agenda and the Development effective dialogues synchronizing the work in countries like Kenya and DRC.

The DFAs, being used in the Africa region by 26 of the countries operationalising an INFF (with 8 completed and 12 currently underway) provide an initial overview of the different financing flows, including key opportunities where financing flows can be leveraged – this is the case of looking into the climate finance, which responds to the point 7 and opportunities of key financing mechanism (including through ODA), which related to the point 1.

But, after looking into the broad set of recommendations, and comparing it with our current existing FSH offer and ongoing portfolio there is an important angle missing, this is the whole private sector, private investment alignment with the SDGs related work where through different interventions and particularly the SDG Impact investors mapping, shared by Sebnem, Tony and Funda already, where we are looking into the mobilization of private capital in the SDGs according to national priorities – of particular important to note the success of the ongoing SDG Investors maps extracting investment intelligence to convene private sector behind national priorities (and the COVID-19 recovery) and the focus of adopting business practices that move communities toward inclusive and sustainable development, with the several initiatives being undertaken by the IICPSD. Noting the note might be also missing the whole agenda of the work on Risk and insurance, which Jan already presented in his comment, that has been very much triggered in the COVID-10 context, as well as the work on Digital finance, which in collaboration with UNCDF we are delivering at country level, particularly through the Digital Finance Ecosystem Assessments and its consequent Digital finance strategies. Same with the ongoing portfolio of support to SDG budgeting, and the expansion of the successful TIWB agenda, where, beyond the tax audit work, we are aiming at extending the work to set up SDG aligned fiscal/tax policy frameworks. 

Perhaps, it would be interesting to hear from the work that our colleagues in COs are undertaking, particularly some of the leading COs on the financing agenda such as Cabo Verde, Cameroon, Ghana, Namibia, Nigeria, Rwanda, Tanzania and Uganda. Some of these COs, as we know now for the case of Ghana, will soon undertake their country office programme evaluations, where we hope we can distil additional and updated front line information on the ongoing financing for development work that UNDP is delivering. So, over to you colleagues!

Best, 

Orria

Ahtesham Khan

Thank you, colleagues, for sharing your insights.

In terms of Fiscal Policy Support (points 6 and 7), UNDP working together with OECD through the Tax Inspectors Without Borders (TIWB) Initiative is supporting developing countries to augment taxation revenues and simultaneously build capacity. The UNDP Tax and TIWB project also support countries in undertaking reform of tax and fiscal policies to augment DRM and leverage fiscal policies to achieve the SDGs.

With a unique learning-by-doing approach, TIWB experts support tax administrators in improving their knowledge and skills in various aspects of taxation. UNDP Country Offices are playing a key role in implementing TIWB programmes.

TIWB has been hugely successful and with programmes in 48 countries has supported governments raise more than 1 billion in additional taxation revenues.

In Mongolia, where the extractives sector contributes more than 24 percent of fiscal revenues, TIWB has been working to strengthen the capacity of the Mongolian Tax Administration. Working with partners TIWB supported Mongolian Tax Administration collect 228 million in additional revenues.

Beyond the brilliant results in terms of revenue, National Tax Administrations report positively on capacity building. In the linked videos the tax administrators from Senegal, Liberia, Jamaica, Ivory Coast, and Georgia share their experiences.

With COVID-19 restrictions on the travel of tax experts, TIWB has accelerated and scaled up remote support and continued to provide technical assistance through 87 virtual missions during the past year. During the same period, 12 new programmes were launched virtually, and 21 new requests were received.

Building on the demand from countries TIWB is also supporting countries to tackle the menace of Illicit Financial Flows and helping strengthen the integrity of financial systems.

The important role TIWB is playing in being increasingly noticed at the global forums. At the High-level Financing for Development in the Era of COVID-19 and Beyond process at the United Nations TIWB was recognized as an important policy tool available to countries to tackle Illicit Financial Flows.

Best,

Ahtesham

Moortaza Jiwanji

Thank you Thomas Beloe, Radhika Lal and colleagues for initiating this discussion. Here are some reflections based on UNDP’s work in the Pacific around financing climate change adaptation:

Focus on ‘accessing’ finance can compromise impact: UNDP, with the Pacific Forum Secretariat and the UK government, recently conducted a rapid assessment of ‘climate finance’ approaches that have mobilized some $2.2bn in the Pacific over the last decade. Systems mapping (with thanks to the UNDP AccLab) allowed us to ‘surface’ issues that moved beyond calls for greater access to financing. First, climate finance appears to have been relatively ‘disconnected’ from longer terms community resilience. Second, climate financing has led to a plethora of ‘projects’ leading to high administrative burden and challenges in achieving more programmatic and sustained outcomes. Third, the volume and complexity of accessing and managing climate financing is ‘distracting’ attention away from a focus on people and outcomes. Finally, major drivers of these types of symptoms are largely embedded within a political imperative to fund climate action. The iceberg model (below) neatly depicts some of these surfacing issues and is layered according to different levels of a ‘systems map’.

Iceberg model

Invest in ‘systems change’ not climate change. In-country systems reform focusing on more effective use of public finances can not only help to leverage other sources of financing but can also lead to better impact. This can include the integration of climate change into wider national development planning and financing frameworks such as the INFFs; stronger institutional structures linking planning and budgeting for domestic public financing; enhancing the quality of ‘bankable’ pipeline based on more programmatic, human-centred and evidence-based programming; and stronger oversight and accountability mechanisms. Pacific island countries are already taking significant steps in this direction, including i) the integration of climate into the INFF process in Solomon Islands and Vanuatu; ii) new functions dedicated to managing climate risk into PFM systems e.g. a Resilient Development Financing Division in Tonga and a Project Development Unit in Fiji: and iii) stronger pipeline and funding mechanisms that address climate risk at the local level in Solomon Islands and Fiji (through a potential partnership between UNDP and UNCDF). These reform measures are not only showing better prospects for climate financing, but for more effective development financing overall (blog).

Tim Strawson

Dear colleagues,

I’d like to share a few thoughts in relation to question 2 on UNDP’s work in relation to integrated national financing frameworks (INFFs). UNDP is a key partner at the national level supporting governments that are pursuing an INFF, and in facilitating regional and global support and exchange on INFFs.

There are 71 countries in which governments and their partners are pursuing an INFF and UNDP is the lead supporting agency in more than 60 of these countries. Under the guidance of cross-governmental INFF oversight committees, which are typically led by the Ministry of Finance, these INFFs are bringing the policymakers responsible for public and private financing policies together with representatives of the private sector, civil society, development partners and others. They are being used to shape more integrated approaches to financing recovery and medium to long term sustainable development that are embedded within the planning and financing policy functions of governments.

Currently the majority of countries are in the inception phase of the process and are carrying out assessments, diagnostics and dialogues to shape INFF Roadmaps that lay out the steps which government will take to fully operationalise an INFF, and financing strategies which sit at the centre of the INFF approach. While a few countries have articulated INFF Roadmaps and started working on their financing strategies, most will be developed through the rest of 2021 and into 2022.

To help shape the inception phase of the INFF processes, UNDP is deploying a range of its finance sector hub services. Notably development finance assessments (DFAs) are being used by 67 countries to inform and help shape the inception phase of the INFF process. The DFA methodology was revised in 2020 to account for the effects of the covid-19 pandemic and to help governments and their partners use the INFF approach to shape robust approaches to financing for recovery. 18 countries pursuing an INFF have completed their DFAs (for example Benin, Cameroon, Namibia, Sierra Leone, Solomon Islands, Timor-Leste, Uzbekistan) while they are ongoing or in the early planning stages in another 49 countries. At the centre of the DFA process is a series of financing dialogues which is used to socialise and shape analysis across the financing landscape and financing policies, and to inform the INFF Roadmap. These financing dialogues also help the DFA to connect with other services that UNDP is offering in relation to specific areas of financing policy, as well as wider financing processes at the national level. DFAs are being carried out alongside and in close connection with many of the services noted above in many countries. For example, in the Asia-Pacific region, among the 17 countries that are using DFAs to shape the early stages of an INFF process, UNDP is also supporting work on SDG costing in 7 countries, SDG or climate budgeting in 10 countries, tax policy reforms in 2 countries, SDG investor maps in 5 countries, and impact measurement and standards work in 2 countries. DFAs are also helping build connections with other partners at the country level. In Indonesia, for example, UNDP is working closely with the government, RCO and partners such as the European Union to use a DFA to shape an INFF Roadmap in close connection with a UNDP-led SDG Investor Map process, work on private financing by ESCAP and UNCTAD, ADB work on SDG costing, and work on medium-term revenue strategy and budgeting by the IMF and World Bank.

As INFF processes progress we anticipate growing support for FSH services. UNDP carried out an INFF in early 2021 to which responses were received from more than 70 responses were received.  These showed that governments in 31 countries are using the INFF approach to establish a financing strategy for the first time. In 27 countries it is being used to strengthen an existing financing strategy, typically broadening the approach to bring a wider range of public and private financing policies in line with the national development plan and/or building broader ownership around the financing strategy. As noted above UNDP is the lead technical agency supporting the governments in the majority of these countries. 44 countries provided details of the financing innovations that they are exploring and working toward through INFF processes. They highlighted more than 220 innovations to financing policies, regulations, instruments and institutions which are being explored through INFF processes, with a roughly even split across public (35% of reforms being explored), public-private (28%) and private finance (37%). Many of these will take shape and be articulated in the INFF Roadmaps and financing strategies agreed over the next year or so, with high demand anticipated for UNDP’s support to implement them.

While INFFs are a country-led and country-level approach, UNDP is also active at the regional and global levels, providing facilitation to help governments and other partners in national INFF processes learn, connect and share their INFF experiences. At the regional level, for example, UNDP hosts the APFIN secretariat, a country-led facility providing technical assistance, peer to peer learning and knowledge generation for countries across Asia and the Pacific to support their INFF processes. UNDP has partnered with ESCAP, UNITAR and DESA to offer INFF training in the North and Central Asia region and across Asia-Pacific as a whole, with over 290 and 380 participants respectively. Further training is being developed for other regions. UNDP has been working closely with UNDESA as part of the Inter-Agency Task Force on Financing for Development (IATF) who led the development of the INFF methodology and incorporated many of the lessons from UNDP’s engagement at the country level into this guidance. UNDP supported UN Women to develop guidance on mainstreaming gender equality into INFFs and is working with ILO and UNCTAD to develop further deep-dive guidance on certain aspects of INFFs. UNDP was commissioned by the Italian Presidency of the G20 in 2021 to undertake a stocktake of INFFs for the G20 development working group (DWG). This has informed dialogue in the DWG and is leading to a Development Ministers’ communique supporting the greater uptake and operationalisation of INFFs, and a G20 framework of support for INFFs emphasising policy dialogue, knowledge exchange, technical assistance and capacity building.

UNDP has also worked closely with the EU, DESA and UN to develop the INFF knowledge platform. This was launched in April 2021 and is managed by UNDP. It provides a forum for practitioners to learn about INFFs, connect with other countries and share their experiences on INFFs. The knowledge platform also hosts the INFF Dashboard which provides timely information on how INFFs are being used and implemented at the country and regional/global levels. A global briefing from the latest survey can be found here (regional briefings are under development).

Hans Baumgarten

Dear Colleagues,

Thank you for the opportunity to join this e-discussion on development finance. As Private Sector and SDG Specialist for Paraguay’s CO, I would like to share some of the lessons learned in this area under the leadership of @Silvia Morimoto and @Allfonso Fernández de Castro.

Question 1

Paraguay’s CO is promoting the fledgling sustainable finance and impact investment ecosystem in the country. It has conducted a diagnostic study – a first of its kind – to understand the strengths and challenges to develop this segment of the financial market and its main findings and recommendations are aligned to some of the Reflection paper on Development Financing.

Namely, the enabling environment needs a more catalytic thrust to de-risk and troubleshooting efforts to blend local and foreign private capital with concessional funds and that new and alternative financial instruments for facilitating development financing needs full government support to be successful.

Question 4

For a MIC like Paraguay, the specific challenges observed are that ODA and concessional capital are diminishing and, while they still play an important role to test alternative financial instruments and mechanisms and to incubate social entrepreneurs and impact-centered startups, they are insufficient by themselves to accelerate the development of the domestic financial market, which is still not sophisticated enough to provide with blended or mezzo finance options to help scale up these sustainable projects or enterprises. Local investors are quite “traditionalists,” still concerned with maximizing financial returns and adverse to invest in alternative sustainable finance instruments thus far.

UNDP Paraguay is focusing on promoting innovative financial instruments and targeting potential early adopters that may lead the domestic market by example but requires further support from the SDG Finance Hub and the organization’s global networks.

Question 5

In its integrator role, UNDP is working with public and private partners to mainstream sustainable finance and promote inter-sectoral dialogue, developing market intelligence tools to accelerate impact investment through the SDG Investor Map and promoting innovative sustainable financial instruments such as SDG bonds and social impact bonds.

Question 6

UNDP Paraguay has conducted a COVID-19 socioeconomic impact report and a fiscal sustainability report analyzing future scenarios and contingency plans to manage the negative effects of the pandemic and guide public policy in the recovery. It has also presented the sovereign SDG bond as an option to optimize public debt for sustainable development goals, borrowing from Mexico’s experience in the region.

Question 7

UNDP Paraguay is supporting the Ministry of Finance in conducting a thorough analysis of government expenditure for sustainable development to identify the financing gaps to achieve the SDGs. This exercise lead by the Ministry, and with the technical support of SDSN, should inform fiscal policy looking forward with a focus on optimizing public expenditure for sustainable developmental goals and exploring other sources of financing for development. This exercise could be a precursor to a full INFF and the CO could use the support from regional and global teams to push this agenda forward.

Amarakoon Bandara

Good to join the discussion. Let me add some reflections on UNDP Nigeria’s work on SDG Impact.

Through the SDG Investment Mapping exercise, the Nigeria CO has established new partnerships and strengthened existing relationships with both the public and private sector. UNDP Nigeria is now a member of the National Advisory Board for Impact Investing, exploring ways to promote impact investing and sustainable finance initiatives across the country. The Investment Opportunity Areas identified during the mapping exercise has formed the basis of several private/public dialogues aimed at addressing some of the identified policy and institutional gaps limiting private sector participation in the country. Additionally, Nigeria’s SDG Investor Map attracted interest from the Central Bank of Nigeria in the grain storage investment opportunity – an in-depth assessment of the country’s grain storage infrastructure and practices is ongoing. The Nigerian Stock Exchange has also expressed interest in the possible application of the SDG Impact Standards.

 

Nigeria also completed the DFA process under the INFF and the work on the integrated financing strategy is underway. The expression of interest from different stakeholders including sub-national governments in the INFF process has been impressive. Consultations are currently ongoing with different Ministries, Departments and Agencies (MDAs) to design a National Financing Strategy. This will hopefully be cascaded down to sub-national levels to ensure holistic coherence across all governance structures. Policy dialogues are also being organized to explore the application of the INFF, including identifying mechanisms for sustained development financing flows, and strengthening strategic partnerships to further address sustainable development in the country.

 

Jan Kellett

One of the interesting things to see for late 2021 and into 2022 Amarakoon, is how the incoming work on insurance and risk finance can find a strong locus also within the INFF process. Nigeria likely one of the first country offices to tread this path! 

Karanraj Chaudri

Dear Colleagues, 

Sharing some thoughts on our work at the India CO. 

Starting out with Q2 on innovative examples of work in development finance. Just picking on some areas of work below: 

In 2020 UNDP partnered with the Department of Economic Affairs, Ministry of Finance to launch the ‘Sustainable Finance Collaborative’, a platform that brought together 250+ experts across 150 organisations to ideate on the policy support to galvanise sustainable finance in the country. This covered 6 streams of work including roadmaps/ frameworks, ESG and impact investing, innovative and blended finance, taxonomies, enhancing corporate disclosures and building resilience against climate risks in the financial system. A key recommendation was the formation of a government led task force on sustainable finance, which was instituted by the Ministry of Finance earlier this year with UNDP appointed as Secretariat. The task force has a number of working groups and is developing a Sustainable Finance Taxonomy as well a Roadmap/ Action plan and a regulatory framework on sustainable finance. 

 

UNDP India has also partnered with the Pimpri Chinchwad Municipal Corporation (PCMC), a leading municipality in Maharashtra state, for the launch of India’s first Social Impact Bond. A pay for success instrument that aims to crowd in private risk capital to support the build out of the municipality’s healthcare infrastructure and systems in light of COVID-19. The work with PCMC builds on the strategy the CO has developed to provide pointed support to government agencies and departments for the rollout of SDG aligned financing instruments in the form of design funding/ early stage technical assistance. 

 

On Q5, around engagement with private sector the country office partnered with Invest India, the national investment promotion agency to jointly work on the development of the SDG Investor Map for the country which identified 18 investment opportunity areas across a number of sectors including healthcare, education, renewable energy and financial services. This effort brought widespread attention on SDG aligned investing and led to the CO hosting an ‘Impact Facilitation’ event that brought together leading investors and enterprises. 

An important learning that is emerging is that at a global level, the UN system must work towards ensuring that the ‘providers of capital’ (sovereign wealth funds for example) should align their investing activity towards the SDGs, this would have a huge trickle down effect as capital providers invest huge pools through intermediaries/ funds of funds etc., it would then act as a catalyst for all those downstream to also align themselves to SDGs. 

The CO has also been working with the Securities and Exchange Board of India providing support for the development of India’s Social Stock Exchange, making the case for SDG alignment of enterprises which was also referenced in the final report of the High Level Committee on the Social Stock Exchange. 

A formal request for UNDP support has also been received from the Government of Haryana which is considering a potential bond issuance aligned to SDGs. Another area where our work on the Standards will prove useful. 

Mauricio Ruiz - COL

Dear all, please find below inputs for this discussion from the perspective of UNDP-Colombia and the INFF team, and mostly focused on the conversations around SDG financing.

#2 UNDP support - innovative examples: UNDP has supported UNCT in strengthening a joint UN approach to SDG financing through INFF. By providing tools to support INFF alliances with PUNOs as well as government, INFFs have strengthened coordinated UN work. Two examples for that are (i) the technical guidance note to mainstream gender equality in INFFs and (ii) the joint UNDP-OECD Impact Standards, which provide more specific support on how to align private sector to the financing of SDGs. UNDP supported INFF-Colombia by using its global outreach, which helped in navigating global discussions, and in building bridges to other IFIs and to experts on SDG-financing that have contributed to strengthening ongoing work.

 
#3 UNDP support - capacity building: By implementing INFFs in 2020-21, UNDP has provided capacity building initiatives to improve development financing policy, specifically by increasing awareness among government stakeholders for total SDG financing (including development cooperation and private sector), and by echoing the unfortunate increase in convergence times towards SDGs both before and as a consequence of COVID-19. These messages generated increasing interest from government counterparts, which led to fruitful conversations on how to strengthen government optics for SDG-financing.
 

Ricardo Nunez

Dear Colleagues, from UNDP Cuba we will like to share our experience regarding the lesson 4: Political economic analysis enables addresing policy and other bottlenecks and the adoption of concrete development financing options, in connection with the on-going Joint Program (PC) National Integrated Financing Framework, supported by the SDG Fund and implemented jointly by ECLAC and UNDP.

In order to promoting / strengthening an institutional framework for financing development key elements are considering:

- The relevance of the Cuba UN cooperation framework and UNDP CPD that recognizes development financing as one of the results to be achieved for the period 2020-2024.

- The value of trust and close cooperation among ECLAC - UNDP and national authorities with a mandate to make decisions in the financial and economic policy sphere.

- The add value of the current Cuba social – economic reform, in which innovation perspective are one`s of the institutional call in order to improve public policies and enhance participation and efficiency.

Taking those aspects mentioned above, we are present three important results:

1-      Presented the country's financial panorama diagnosis, as a critical baseline and relevant information for financing decision-making process. The mapping of the national financial panorama was based on the methodological approach of the Development Finance Assessment Guidebook (UNDP, 2020)

The analysis showed that the Cuban financial panorama is marked by unstable, non-diversified and unsustainable access to sources to finance development marked by the predominance of family remittances and the fiscal deficit.

This first diagnosis the “Panorama Financiero” encourage the national authorities to identify experiences in the region that faced similar gaps and are looking how to designed - implemented mechanisms and promoting a new set of public policy’s that make possible to diversify and robust sources of financing.

2-      The Cuba SDG Lab is a dynamic platform adding institutional capacity to National Group for SDG Monitoring -the digital platform was supported by UNDP Innovation Fund 2019-. The ongoing Joint Program is fostering the SDG Lab as interactive mechanism for concertation and prioritising development programs and their initiatives. The SDG Lab platform are using for both, national entities and territorial government as instruments to achieved an effective SDG goals ensuring a proper follow-up and facilitate decision-making.

Likewise, the PC has been an opportunity to continue advancing in the digital transformation responding to national Informatization Programme. At the same time, SDG Lab are currently developing the Financial Module identify the way in which the public budget is awarded to initiatives whose incidence contributes to the goals of SDG Indicators. The piloting underway demonstrates that it is essential to modify the current way of allocating budget by sectors and expenditure elements, for a new vision: budget allocation base in destination or by programs.

3-      We also share with you another experience, in this case focusing in financing territorial development, through the Articulated Platform for Comprehensive Territorial Development (PADIT), a project that has the support of multiple donor sources. This Local Governance and Development Platform has been recently institutionalized by the Ministry of Economy, and it is part of the National Macro Development Program promoting territorial perspective, a theme that has come to occupy a key place in the national development agenda.

The PADIT was able to presented the procedure for financing territorial development. This procedure will allow the feasibility of social, economic and environmental actions in a suitable connection with municipal and provincial development strategies, and includes in its purposes public-private alliances to ensure financing and achieve impacts at the local level.

Vijayalakshmi Vadivelu Moderator

Hi colleagues can you share examples where vertical funds were used to leverage private sector investments. Our evaluations noted a good example from Sudan Jos De La Haye     

Qing Xu

Dear colleagues,

Thanks for the opportunity to join this e- discussion. I’d like to share some reflections from the China CO.

On Q2

Amidst these global trends, UNDP has engaged to bend the arc of digital finance in a positive and inclusive direction, working with our partners to ensure that no one is left behind. It is against this backdrop that a technical feasibility study was undertaken to explore possibly establishing a partnership with the Government of the People’s Republic of China and the Municipality of Shenzhen for a center focusing on advancing progress on digital technologies and sustainable finance for the SDGs.

Within China, the City of Shenzhen is becoming a global hub for digital technologies and sustainable finance, and offers a vibrant ecosystem of innovation across technology, policy, and regulation that could provide lessons and knowledge for countries keen to leverage such for achieving the SDGs.

On Q4

As a UMIC country and the largest GHG emitter, China has a decisive impact on global outcomes. In 2020, China announced to increase its NDCs by peaking CO2 emissions by 2030 and achieving carbon neutrality by 2060. Support for financing to enable emissions reductions and help achieve the net-zero goal will be critical. Steps have already been taken in the country. For instance, with roughly 800 billion yuan of green bonds outstanding, China is already the world's second-biggest green bond market after the US. China’s finance authorities updated the China Green Industry in 2021 increasingly reflecting international standards. In the COVID-19 crisis, however, China saw a mis-opportunity of its green recovery. In this regard, there is a need for greater alignment between Chinese and international standards and a shift from voluntary application to institutionalization.

A Platform Approach

UNDP China and Ministry of Commerce established an SDG financing platform in 2019, convening key stakeholders from the financing ecosystem to integrate the SDGs into financing and investment decisions to improve the effectiveness of capital flows to SDGs.

The stakeholders engaged include line ministries and financial authorities, national SDG innovation pilot zone Shenzhen; top tier think tanks; the most influential investors alliance in China and globally; verification agency; UN (UNICEF, and UNCDF); DFIs (New Development Bank, AIIB, CDB, ADBC, Exim Bank of China, CDB), etc.

Building on the foundation of the platform, UNDP launched The SDG Finance Taxonomy (China) [2020 Edition] which is a practical tool to operationalize the ‘management approach’ component of the SDG Impact Standards, by providing SDG indicators/metrics to verify and benchmark the investment's contribution to the SDGs. The taxonomy was co-generated with platform partners. This approach can ensure to achieve voluntary market adaptation and regulatory buy-in eventually.

Syntao Green developed an SDG Debenture Index launched in December 2020 using the Taxonomy and other national and international principles. Such SDG-related benchmarks have not yet appeared in China’s financial markets. The Index is an innovation in sustainable finance. The SDG Debenture Index covers 563 bonds with a market value of USD192.8 billion, a par value of USD 221.7 billion, and an average maturity yield of 4.22%. The number of SDG-linked bonds, as defined by the Index, represents about 20 percent of all debentures, the denomination approximately 30 percent (data as of December 1st, 2020). Creditability and the average yield to risk ratio of SDG bonds are higher than general-purpose bonds in China. Utilizing the Taxonomy, the Index provides references for the sustainable finance market and enhances market confidence, thereby supporting further development of SDG-enabling investment.

On Q5

SDG Impact (SDG Investors Map and SDG Impact Standards)

Within the scope of Taxonomy, the China SDG Investors Map identifies 14 sub-sectors from five “development priorities” aligned sectors, namely food and beverage, health care, infrastructure, renewables and alternative energy, and technology and communications. The Map compares 27 provinces and autonomous regions in China under each sub-sector to identify both a high development need or potential and strong political/financial commitment to spur the subsector growth. Data from approximately 40,000 policy documents were collected and mined. In light of COVID-19 and the efforts towards the recovery, the China SDG Investor Map selected five IOAs in “agriculture products” and six IOAs in the “healthcare delivery” subsector to focus on during this first stage of research in 2020.

New Development Bank’s RMB SDG-linked bond

On March 24, 2021, the New Development Bank (NDB) successfully priced a new 3-year fixed rate RMB 5 billion Bond (USD765 million) in the China Interbank Bond Market. The issuance will test UNDP’s SDG Finance Taxonomy and SDG Impact Standards for Bond Issuers. NDB will start to voluntary self-assessment of its SDG-linked bond after full disbursement of proceeds and provide recommendations to refine the SDG Impact Standards and the SDG Finance Taxonomy (China).

The SDG bond was issued as a part of the Bank’s RMB 20 billion Bond Programme. The bond was priced at the tighter end of price guidance at a yield of 3.22%. The final order book was more than 2 times oversubscribed. The geographic distribution of investors was as follows: China mainland-51%, APAC (excl. China mainland)-27.5%, EMEA-15%, Americas-6.5%. The proceeds of the bond will be fully utilized to finance Emergency Program Loan to the People’s Republic of China for Supporting China’s Economic Recovery from COVID-19.

  • The partnership is framed as a pilot/proof of concept. Furthermore, there is no monetary transaction between UNDP and NDB, making this a purely technical engagement, which minimizes risks.
  • The credible tools and technical backing provided by SDG Impact was instrumental for this partnership to move forward with confidence.
  • The prior relationship between the SDG Impact and China CO, established through engaging the SDG Impact Team as part of the China SDG financing platform and soliciting their inputs for the Taxonomy helped.  This resulted in the CO leading the process when the opportunity arose with SDG Impact playing a supporting and advisory role, which was a key to success.

Technical engagement:

NDB was consulted and provided technical input as one of the MDBs towards the development of the Taxonomy, which was the genesis of partnership.

UNDP China organized a public consultation on the SDG Impact Standards in 2020, for SDG Impact. The consultations attracted many intuitional investors as well as MDBs, which further enhanced UNDPs credibility in this area.

Supported by SDG Impact, the CO reviewed and provided technical inputs to the NDB bond prospectus, reviewed and aligned the NDB project document with the SDG Taxonomy. NDB was also invited to join the UNDP reference group on SDG Bond Standards. UNDP China joined NDB the pre-issuance global investor call with the underwriters & institutional investors totaling 50, to explain the Standards.

@Devanand Ramiah @ Marcos Neto @ Fabienne Michaux @ Thomas Beloe @ Sahba Sobhani @ Sebnem Sener @ Sara Lisa Orstavik

Piper Hart

Hi colleagues,

In response to question 1, yes, the lessons highlighted in the Reflections paper ring true. In particular, lesson 2 on strengthening national capacity reflects our experience in Nepal. It feels as though sometimes there is more appeal in supporting the exploration and mobilization of new sources of finance, without equal effort put on the national policy and institutional arrangements needed to ensure all sources of finance can be managed well (related to Orria Goni's point). UNDP has a longstanding comparative advantage in this area of work and therefore a key role to play in working with client governments to ensure they are able to maximize the reach and impact of all development finance sources.

Additionally, lesson 4 on political economy analysis is also key. It is well understood that that the mobilization of development finance depends on a variety of factors, including the social and political context in programme countries. It is vital to understand this and to incorporate these lessons into our development finance work. This is something that has come up in our work in Nepal to support increased use of blended finance (see more details under question 5) – the most significant barrier to private sector investment is high risk, both real and perceived. We are working to include political economy analysis in the implementation of our blended finance roadmap, ensuring that these issues are well understood and therefore can be properly addressed.

In response to question 2, UNDP is recognized as a partner of choice on development finance, which is a priority area of work in Nepal. Pre-pandemic, Nepal faced a significant SDG financing gap and, of course, this challenge is heightened in the COVID-19 context. Examples of our recent support include: 

  • Operationalizing an INFF. Building on the DFA, undertaken in 2017, UNDP Nepal is supporting Government efforts to operationalize an INFF. With many different initiatives ongoing to support the mobilization and management of development finance, supported by many different partners, the INFF will play an essential role in ensuring integrated and coherent financing solutions.
  • Embedding the SDGs in PFM systems. A key aspect of the INFF and a centrepiece of UNDP’s development finance work in Nepal is the localization of SDGs into the national budget. This includes the development of guidance and tools to ensure that officials have the capacity to meaningfully integrate the SDGs into the budget formulation process, using SDG analysis to inform allocation decisions. Work is also ongoing to incorporate SDGs into intragovernmental fiscal transfer processes – important in Nepal’s federalist context.
  • Generating development finance data. UNDP Nepal is supporting the strengthening of the Government’s Aid Management Information System, which provides data on development cooperation resources and is used to support enhanced development planning and resource allocation. This support included the launch of a COVID-19 portal, which facilitated tracking of donor contributions to pandemic response and recovery, ensuring a more coordinated and effective response. Looking forward, further system updates will explore how to incorporate new sources of development finance and how to link to other country financial tracking systems.

In response to question 5, specifically on how UNDP can assist governments in attracting investment/private investors, I’d like to highlight the work UNDP Nepal is supporting on blended finance. The Government of Nepal has made clear its commitment to scale up the use of blended finance. While there many resources that explain the what and why of blended finance, there is little information on how to make use of blended finance from the government perspective.

In Nepal, the Government’s role in blended finance transactions will be to identify and design bankable projects, to bring partners together and to act as a facilitator, rather than playing an active investment role (in most cases). This is likely the case in other LIC and LDC contexts. There is a need for more guidance on what actions governments can take to make blended finance a reality.

This goes beyond guidance on creating a conducive investment environment and might include guidance on the government role in blended finance and what capacities are needed to fulfil this role, or how to identify potential donor and private sector partners and how to organize consultations with these stakeholders to ensure their engagement. In Nepal, UNDP has supported the development of a blended finance roadmap that explores these issues and sets out a number of concrete recommendations for the Government.

Vijayalakshmi Vadivelu Moderator

Hello everyone! We are keeping the discussion space open until Friday (2nd July) night to accommodate those of you who are still working on their contributions. We look forward to hearing from you!

Linda Germanis

INFF in BANGLADESH with a zoom in on a private sector inclusive governance mechanism, private sector impact management, investor mapping, building a pipeline of bankable projects through a digital trade platform, and client oriented innovations such as linking citizens savings to SDG-aligned investments

 

Overall Lessons Learned, Question 1

In Bangladesh, the government is implementing Integrated National Financing Framework (INFF) to mobilize resources to address SDGs financing gap by 2030 and strengthening the financing for its 8th Five Year Plan (FYP) aligning with the country’s strategies towards COVID-19 recovery and the graduation from LDC status. INFF is serving as consolidated tool to consolidate United Nations (UN) Support for SDG Financing in Bangladesh and it has been officially being included as a governance instrument for SDG Financing in the 8th FYP.

 

The financing required for the 8th FYP implementation amounts to a total of $750 billion, and 75% of these resources are targeted to come from the private sector. Meeting these financing needs, the plan calls for the operationalisation of an INFF, centered on the update of the Development Finance Assessment (DFA) highlighting financing needs and resources and the update of the national Financing Strategy (FS). UN Agencies - namely UNDP, UNWOMEN, UNCDF, and RCO - are already working together on a  joint project INFFF4SDG to support the Government setting up an INFF.

UNDP and UNCDF Development Finance Support, Question 3

The INFF process is alredy ongoing and started with the revision of the DFA and FS complemented by the set up of an INFF governance mechanism planned to be embedded within the national SDG Implementation and Review Committee of Prime Ministers Office and linking public and private stakeholders under the same umbrella. This will allow to include an SDG financing Sub-committee under he main body responsible for SDG achievements increasing outrecah and influence in other line ministries in charge of secrtor specific reforms through additional thematic sub-commitees to translate baseline assessments into actionable policies. To further strenghten policy advocacy to move from impact management to bankable projects, sector specific baselines are beeing conducted directly in partnership private sector and development partners. An example is the reneable energy baseline assessment conducted in partnership with PUMA and H&M as UNFCCC fashin charter members that will identify actions and advoccay points that through the SDG financing governance mechanism will have a clearer path for dissemination, advocacy and action.

 

UNDP and UNCDF Development Finance Support, Question 2

To cater to the financing needs set out in the 8th FYP of the Governemnt of Bangladesh, the initial stages of the INFF process have been designed to prioritise the mobilisation of private capital investment in three SDG priority areas: water and sanitation, renewable energy and climate finance (SDG 6, SDG7, and SDG 13). To move from high level targets of the previous DFA and FS, to a ‘how to reach the target’ approach, the revised versions of DFA and FS will include financing roadmaps for each of the three SDG priority areas, with a strong gender analysis applied throughout. The revised versions IS also incorporating strategies towards strengthening and accelerating inclusive digital economies and SDG anchored Digital Finance Ecosystems.

Unlike previous DFA and FS, the revised version will highly focus on private engagement, its challenges and opportunities.

INFF is rigorously working on private sector’s engagement in financing through investment mapping, private sector impact management and the development of an SDG impact taxonomy, supporting new financing instruments such as blue bonds, leveraging blended finance to graduate SDG aligned bankable projects from grant capital to debt ad equity through a digital trade platform, financing for decent work, identifying and designing bankable projects, investigating the needs of SMEs and MSMEs in terms of SDG focused businesses and productivity and digitizing SME financing and green recovery. Moreover, inclusive digital economy scorecard (IDES) assessment of Bangladesh, SDG aligned digital finance ecosystem assessment (SDFE) and promoting domestic savings for attaining SDGs are some major focus areas of INFF. All these working areas of INFF converge to evidence based strategic approach for financing SDGs in Bangladesh.

 

Private Sector SDG Finance and Involvement, Question 5

Here is a snapshot of how all these modular pieces of private sector engagement in INFF in Bangladesh fit together to  move from private sector impact managmenet to bankable projects supprted by concrete technical tools. A process of public-private engagement and dialogue is being undertaken to both inform and shape policy responses for these roadmaps and the larger financing strategy, and to promote alignment in existing private sector business models and exploring new business opportunities that will enhance contributions to these priorities. The process aims to close the loop from assessment and investment impact measurement to the development, marketing and ultimately investment into in bankable projects. To do so more than 60 companies and financing institutions from a wide range of industries have been engaged to assess the state of market analytics and financing instruments available for the SDG investment priority areas (SDG 6,7, and 13). In parallel, national priority SDGs have been mapped against mainstream business impact management standards and indexes leading to the release of the first industry-based consolidated impact management report targeting initial 47 factories in the leading export sector, Ready-Made-Garment (RMG). The scaling-up of the initiative will broaden factory participation and will provide a platform for ongoing work to institutionalise an SDG investment taxonomy. This process is complemented by a baseline assessment of actionable initiatives and reformes conducted in partnership with H&M and PUMA under the Fashion Charter of UNFCCC and it will further reinforce market analytics and the development of a pipeline of SDG aligned investments through high level investment mapping, while a project specific digital trade platform will promote blended finance based on data transparency and project phasing linked to the best form of capital for each phase.

Christel Alvergne

Happy to contribute to this very interesting discussion. With regard to question 2 on innovative example on financing for development. This is a great question since we need more than theory and concrete solutions and experimentation are important to show case what innovative finance really means. At UNCDF, this question is adressed keeping in mind two important  elements of UNCDF footprint. One is our capacity to work in LDCs countries, in those countries, innovative finance requires to find ways to finance economic and social transformation. Second is our financial mandate and associated financial instruments (reimbursable grant, performance based grants and their potential contribution to influence domestic financial institutions and of course the loans an guarantees UNCDF can deploy). One example : In Senegal we have created a new fund with the FONSIS to finance women economic empowerment. The impact is assesed by UNCDF; UN Women an UNDP and the fund finance SMEs and PPPs that are reaching a certain level of impact (WE! Fund). In Senegal we have also create a financial institution for the diaspora saving to invest into local economies and smal PPPs. In Guinea, we are working with mining companies to boost the local economies and create backward and forward linkages to the growth of population. We also created a guarantee fund in which mining companies are investing to derisk SMEs and PPPs. 

 

Diego Pereira

Greetings from Uruguay. Here are some contributions on behalf of Uruguay CO.

Dear colleagues, here we share some ideas related to our work in Uruguay.

As many Latin-American countries, Uruguay shows inequalities in many dimensions.

Those inequalities are lost in average income metrics and undermine the impact of public policies.

Uruguay is one of the 62 Joint Programs of the SDG Fund in the Component 1. Through this valuable platform we have the goal of developing a Sustainable Financial Market in Uruguay.

The initiative started some months ago, from a detailed diagnosis recap in a document of discussion form UNDP about Impact Investment conditions. The same document was delivered the same time in the Sothern Cone counties (Argentina, Chile, Paraguay and Uruguay). The four countries share many features, and we are certain that some coordinated agendas for sustainable finance will be conducted in the near economic reconstruction stage.

Uruguay is the case of an open small economy between two big ones. The country used to play the role of financial investment hub for the wealthiest neighbors, a development strategy relying on a solid financial system and strong macroeconomics variables. Paradoxically, Uruguay also has a recently emerging sustainable financial market.

UNDP brings to the conversation a new dimension to the financial market in a moment where financial institutions request for an increasing sustainable share of their portfolio´s allocations.

Gradually, more financial agents from the “supply side” of the financial market, show an increasing interest to joint the future Sustainable Finance Roundtable.

Also the government and the Central Bank agree in take part of the first steps in this financial shift.

Thus, a first evidence was the need to construct a mature “demand side” (pipeline) to invest on. The emerging sustainable finance market needs pipeline creation but also a guideline for a proper market “fit”.

The Investor Map tool is helping us in the identification of investable areas or sectors in the local economy, and at the same time detects some of the most significant bottlenecks and obstacles to be solved.

At the same time, trough the SDG Joint Fund, we are delivering a set of courses and workshops, in order to raise awareness into the most relevant economy agents and aligned in some basic knowledge.

 

Gradually, some economy sectors and government agencies and ministries are demanding for methodologies and impact metrics guidelines.

UNDP SDG Impact set of tools and BCtA (Business Call to Action) approaches are an excellent response to that demand. We identified those contributions as first step to a more increasing relationship with the financial teams of the government that can lead us to a INFF process.

In the Post COVID stage, sustainable development is called to play a significant role. Fiscal restriction finds in private investments the most suitable partnership. Impact Investment serves as a framework were public policy is conducted through innovative financial vehicles as blended finance, and at the same time added impact driven management supported in rigorous metrics.

There is clearly a “momentum” regarding sustainable finance in Uruguay,  but there still a long way to go towards a sustainable financial market and our office has a key role to play jointly with other public, private and multilateral agents.

Mauricio Ruiz - COL

Other inputs from the perspective of UNDP-Colombia and INFF-Colombia:

#4: The remaining challenges in development finance (and INFF), from the perspective of an MIC like Colombia, are 3: (i) government stakeholders are still not aware of the financing needs and the total cost for public budgets to finance the SDGs (thus effectively increasing convergence times); (ii) from the private sector perspective, SDGs are still being interpreted by private stakeholders as a language spoken by few that is less common within the business community (on top of multiple ESG/standards). Thus the need for UN-System to broaden the outreach and increase the amount of inputs for the private sector to make strategic use of their alignment with their own sectoral partners; and (iii) development cooperation provides significant financing support but political-diplomatic dynamics alligns it with government priorities, not necessarily to areas/SDGs in need of financial support. UNDP can address these challenges by emphazising SDG-costing of goals and making more emphasis of convergence time to SDGs. These are the kind of challenges that INFFs (as global efforts) and governments are addressing with support from UNDP.


#5 Private Sector and SDG Finance: UNDP has provided significant support and specific tools to align the private sector to SDGs, including the SDG Impact toolbox. Despite recent efforts to streamline tools (e.g. OECD-UNDP Impact Standards), there is confusion on which of the many tools to use and when. This would call for a global effort to merge some strategies and officially phase out others, in order to avoid the current overload of standards/guidelines for private sector involvement. On the other hand, UNDP-Colombia has received support from UNDP-HQ to take the Investors Map to its new steps, specifically by doing outreach events to echo the findings of the mapping and highlighting how the private sector can, and is currently using the Investors Map to finance and align with SDGs.

Yuko Suzuki

Building on the comments by Orria Goni and Piper Hart, I’d like to share some thoughts on the question 1 and 4, from the work we support on the Effective Development Cooperation and the Global Partnership for Effective Development Cooperation (GPEDC).

Question1: Lessons from the reflection paper on development finance resonate well with reflections from the work on the effective development cooperation. In particular, the lesson No.2 speaks to the ethos enshrined in the principles of effective development cooperation: country ownership, inclusive partnerships, a focus on results, and transparency and mutual accountability, which provide a shared basis for working better together to deliver long-lasting development impact.

In this vein, the concept of effective development cooperation recognises the centrality of:

  • countries’ own goals and plans and their own development planning and implementation systems;
  • enabling environment and effective public policies to foster engagement of diverse partners and effective utilization of all development resources; and
  • conditions for building trust and relationships, based on transparency and accountability.

Yet, as highlighted in findings from the Global Partnership monitoring of effective development cooperation principles, where 86 programme countries undertook the exercise in 2018, the progress for making development cooperation effective is uneven across government and partners, as below:

  • Notable progress has been made by partner country governments on strengthening the quality of national development planning, yet development partners’ alignment to country-owned results frameworks declined.
  • Steady progress made by partner country governments on strengthening public financial management (PFM) system has not been matched with increased use by development partners.
  • The enabling environment for civil society organisation is deteriorating, with CSOs reporting a decline in the legal and regulatory frameworks that provide protection for CSOs engagement.
  • While global aid transparency has been improved, decreasing medium-term predictability and aid on budget subject to parliamentary scrutiny put at risk the ability of partner countries to effectively plan and budget for their development efforts, and limits domestic accountability over national development efforts.

Question 4: In responding particularly to how UNDP can better use our efforts across various knowledge domains to support countries address challenges on mobilising and aligning various development resources and interventions of partners to meet the national sustainable development results, I wish to note that the effectiveness principles recognise that partnerships build around openness, trust, mutual respect are essential in country-level development efforts, and to this end, they highlight that accountability among development actors and to the intended beneficiaries of development actions is essential in delivering results. In this process, transparency and comprehensive visibility of development resources from public and private sector is crucial, which the Development Finance Assessment aims to provide a useful basis to foster dialogue and collaboration based on comprehensive picture of development resources and finance and explore an Integrated National Financing Framework. As noted by Orria, there is important complementarity of efforts made by the Global Partnership for Effective Development cooperation to encourage countries undertaking Action Dialogues for Effective Development Cooperation. About 18 countries are planning to undertake the Action Dialogues this year, in the lead up to the next High-Level Meeting of the Global Partnership (2022).

In addition, the Global Partnership under the current 2020-2022 work programme aims to build better partnerships across various partners to ‘operationalise’ the principles of effective development cooperation. Some of this work includes the implementation of the Kampala Principles on Effective Private Sector Engagement in Development Cooperation, with a great collaboration with the Business Call to Action. This collaboration has brought forward country examples of how cooperation between the private and public sectors and development partners creates tangible impact on development, including COVID-19 emergency response.

While this consultation ends today, the Effective Development Cooperation team will look forward to deepening our collaboration with the SDG Finance Team in coming months/year.

 

Rebekah Chew

In response to question one, and to echo Yuko’s point above, it is useful to recall the internationally-agreed principles on how to partner effectively (country ownership, results focus, inclusive partnership, transparency and accountability). This is particularly relevant to the second finding of the paper that International cooperation modalities should prioritize strengthening country-level capacities support to improve avenues of development financing. Strengthening country capacities and ensuring country ownership should be at the forefront of all international cooperation if the aim is to seek long-lasting, resilient development gains that will remain once the project, or development partner, is no longer engaged.

On question three, and building on Yuko and Orria’s mention of the Global Partnership for Effective Development Cooperation’s Action Dialogue initiative, close to 20 UNDP country offices are supporting partner country governments, typically the Ministry of Finance, to convene diverse stakeholders together at country level to address challenges and bottlenecks to building stronger partnerships. As Orria mentions, in DRC and Kenya, this Action Dialogue (to be held in 2021) will be embedded within ongoing INFF/DFA work. For other countries, it will be embedded in national coordination mechanisms and focused on addressing fragmentation, use of parallel systems, challenges with the country’s aid management system, transparency (or lack thereof) of international aid, alongside other effectiveness issues. There are also others that are focusing their dialogue on private sector engagement in development cooperation or South-South cooperation. And while many countries are still yet to hold their dialogue in the second half of 2021, even in the planning stage it has been a useful exercise for various partner countries to consider, often together with the UNDP country office and country stakeholders, where their greatest challenges lie with regard to development cooperation and how to improve this and development financing going forward.

Mariana Gonzalez

Dear colleagues,

Thank you for the opportunity to engage in this discussion. Several lessons cited in the report are aligned with experiences from UNDP working with IFI/MDBs, particularly over the course of 2020 working together on COVID response (see infographic for summary of UNDP-IFI Partnerships for COVID-19 Response and Recovery).

Reorientation of global finance towards climate, recovery and SDG results is at the heart of UNDP’s increased collaboration with MDBs. In every region, UNDP is working with Governments and IFIs to leverage development expertise and resources towards shared outcomes, to enhance support for national governments and local communities and improve the sustainability of development efforts.

UNDP’s financial collaboration with IFIs has increased by 76% from 2016-2020. Since the start of the pandemic in 2020, UNDP has helped to mobilize $155 million through both direct grants and through government financing contributions from some of the world’s largest IFIs such as the World Bank, the German national development bank KfW, IFAD, Development Bank of Latin America, African Development Bank, Islamic Development Bank, Asian Development Bank and Inter-American Development Bank. The majority of this financing has enabled UNDP to support government partners in procuring vital personal protection equipment, healthcare equipment and expertise in places like Armenia, Bolivia, Cambodia, Cameroon, The Gambia, Guinea Bissau, Madagascar, Mexico, Turkey, Ukraine, Uzbekistan, and Zimbabwe.

Adding a few points and examples in reference to specific lessons cited:

  • Lesson 1: Multi-donor interventions and pooled funding modalities in complex crises enhance compatibility in responses and contribute to coherence in reconstruction. They can be applied in COVID-19 response in non-crisis contexts as well.
  • In Yemen, the World Bank has been the top contributor to UNDP through the Yemen Emergency Crisis Response Project (YECRP). With World Bank IDA’s support and YECRP, UNDP convenes humanitarian and development efforts to strengthen public officials’ capacities and communities’ access to lifesaving public goods such as water, food, healthcare, education, and safe roads.

 

  • Lesson 6: Addressing policy bottlenecks and using new and alternative financial instruments to enhance private sector engagement will increase development financing.
  • UNDP recognizes that upstream/policy/non-financial collaboration  with IFIs is as important as downstream/programmatic/financial collaboration for strengthened impact and development effectiveness on the ground. 
  • Knowledge partnerships are supporting policy recommendations and dialogue at country level, through UNDP-published joint reports with IFIs including Responding to the COVID-19 Pandemic with ADB and UNESCAP; and Africa’s Digital Solutions to Tackle COVID-19 with the European Investment Bank-- which is now being used to help frame a new partnership with the Arab bank for Economic Development in Africa (BADEA) on digital.

 

  • Lesson 8: Joined-up COVID-19 responses strengthen efforts to address SDGs reversals.
  • UNDP has partnered with IFIs on joint analysis and assessments to understand what has been lost, where the need is greatest, and to coordinate action plans and initiatives for a better recovery. Out of the over 119 Socio-Economic Response Plans (SERPs) rolled out to date by UN Country Teams with the technical lead and support of UNDP, about half were developed in partnership and with insights from the World Bank, and a third from IMF.
  • In Uzbekistan, for example, UNDP, UN country teams, the World Bank, IFC, ADB, the European Bank for Reconstruction and Development, the IMF, and the Islamic Development Bank collaborated on a joint COVID-19 Socio-economic Response Plan and joint resource mobilization of over $3 billion in loans for the country’s recovery. In Mongolia, UNDP, the Asian Development Bank (ADB), and the National Committee on Gender Equality conducted a joint study to assess the pandemic’s impact on women and girls in in four interlinked areas: social service, employment and income, government response measures, and vulnerability. In Angola, UNDP, the European Investment Bank (EIB), and WHO are supporting the Government to roll-out its national COVID-19 response and recovery plan, and in Ecuador, as part of a World Bank loan to expand social protection programmes to 2.4 million families, UNDP is providing technical assistance to help broaden the number of recipients who qualify to receive money transfers from the Ministry of Economic and Social Inclusion. 
Emily Davis

Hi all - happy to contribute to this very interesting discussion. 

As many colleagues have alluded to, UNDP plays a crucial role as convener and SDG advocate across financing actors and flows at the country level, including IFIs and DFIs, in its support to governments on financing recovery plans and crowding investment.

Of course, it is crucial to continue to promote UNDP as a strategic partner to IFIs and Governments receiving IFIs funding, throughout the project cycle at the country level – from design to loan implementation support, means proactively proposing ideas for joint work and follow-up – Mariana has shared links to these more recent examples in 2020.

There are also opportunities for UNDP to continue to engage IFI/MDBs through other financing service offers for government and private sector, as mentioned by Orria, Sebnem and Tim and others here. Some crucial and timely entry points which many Country Offices are engaged in already include: 

  1. Designing national SDG policy and financing frameworks (linking to Lesson 2 and 6 from report): UNDP is leading technical support to 70+ developing countries in implementing Integrated National Financing Frameworks (INFFs), in collaboration with the EU, the IMF, and other parts of the UN system, to ensure that financing for COVID recovery is aligned with sustainable development. Tim has mentioned the Indonesia example where UNDP’s support to the INFF includes collaborating with ADB work on SDG costing, and work on medium-term revenue strategy and budgeting by the IMF and World Bank. Additionally, Orria has mentioned the unique offer UNDP brings through the INFF platforms in specific crisis settings to focus on simultaneously financing humanitarian as well as development efforts through an integrated framework (Lesson 1).
  2. Identifying SDG investment opportunities and facilitating related dialogue (Lesson 6): UNDP’s SDG Investor Maps identify concrete, investable solutions at country level for public development banks and other investors’ action. Sebnem has highlighted how country-level insights on investment opportunities can provide IFI/DFIs with market intelligence and recommendations most aligned to a country’s national development priorities.
  3. By proposing harmonized policies and standards (Lesson 6): the OECD-UNDP Framework for SDG Aligned Finance launched last November provide an ambitious yet feasible set of policies, standards and tools to deploy capital in ways that drive the greatest impact towards achieving SDGs. Additionally, we have the SDG Impact Standards with assurance framework and certification. Xu Qing from the China CO has shared above on New Development Bank’s RMB SDG-linked bond – the issuance will test UNDP’s SDG Finance Taxonomy (China) and SDG Impact Standards for Bond Issuers - demonstrating this entry point as a new opportunity area for standard-setting alongside IFIs.

Looking forward to the continued discussion.

Tiana Randriantsoa

Hello all and first and foremost, thanks for including me in that constructive and fruitful discussion of Development Financing.

In terms of good practice, I may recall

- the Solomon Islands Integrated Financing Framework which brought together public and private financing policies

https//inff.org/resource/solomon-islands-development-integrated-financing-framework-siiff

- the Caribbean Action Plan on Health and Climate Change, which integrated / joint design may smoothly address operability and systemic issues at SDG planning levels

https://iris.paho.org/bitstream/handle/10665.2/38566/PAHOCDE19007_eng.p…

 

 

Lina Fernandez Pizano

Luciana Trindade de Aguiar Sebnem Sener Jan Kellett Alejandro Pacheco 

Dear Colleagues,

Thank you for the opportunity to join this e-discussion. I would like to share some thoughts and initiatives from UNDP Colombia.

Question 2

UNDP Colombia has developed a finance strategy that aims at offering a set of financial tools tailor made according to the level of growth stage of every supported business. The objective of this strategy is to offer comprehensive support to the population at the base of the pyramid (their enterprises or businesses) and to facilitate access to financial instruments, contributing to their sustainability. As a result, the CO has developed innovative examples of UNDPs work in development finance, some that have already been mentioned by the colleagues.

The application of instruments for risk management is essential and, on this aspect, we are in line with all the work mentioned by Jan Kellet. Thus, from UNDP Colombia we recognize the need to work on risk mitigation, including a strong focus on inclusive insurance. To do this, alliances are managed with the insurance sector, which allow the implementation of hybrid insurance, which includes not only the coverage of personal risks, but also effects on the productive activity, facing the materialization of risk or threats for the segments of the population served, in this case the base of the pyramid. Likewise, the promotion of innovative instruments in Colombia such as confirming and factoring can provide capital to enterprises and, in this way, UNDP is working to promote their use through financial incentives to prevent the established discount from having a high impact on the income of those who access these mechanisms for the first time.

Furthermore, aiming at supporting MSMEs that have limited access to the financial and capitals market and that, during Covid 19 crisis faced enormous challenges, Colombia’s CO has slowly stepped in the crowdfunding world. During 2020, a small crowdfunding campaign was executed for 32 MSMEs across the country as a pilot. The campaign reached 55% of its donations goal. Currently a second donations campaign is being designed, this time is focused on supporting Providencia, a Colombian Island located in the Caribbean devastated on November 2020 by IOTA Hurricane. In this opportunity, along with the Communications Office and the Accelerator Lab, a crowdfunding platform connected to an international payment gateway is being built based upon the hypothesis that technology enables empathy. Therefore, for this campaign, 360° videos with the life stories of the MSMEs involved in the project are going to be uploaded, leading to an immersive experience for donors.

In addition, a crowdlending product is being developed aimed at supporting agricultural small business in Colombia and, therefore, continue to explore further crowdfunding mechanisms to finance development. We are currently managing alliances with financial entities, NGOs or foundations that serve these population groups, as well as insurance companies that are interested in working on this blended finance strategy. We hope that this entire process will allow us to have knowledge and lessons learned to replicate and share with other countries.

Also, we have implemented the SDG-Investor map in Colombia identifying 22 areas of investment opportunities in 7 sectors and subsectors: i) Food and Beverages; ii) Technology and Communications; iii) Renewable and Alternative Energies; iv) Health; v) Financial; vi) Infrastructure; and vii) Services and Education. As Sebnem Sebner mentioned before, we have been working with Bancolombia (a major national bank) to explore how we can support to de design of the investment strategy and how to canalize resources to make investments into the areas identified by SDG-Investor map. We are hoping to share some news soon.

Additionally, we plan to have our first facilitation event within the investors map on July 1st. We will convene different actors from the ecosystem, have panel discussion and separate thematic working groups with companies and investors.

Lastly, to take the SDG Investor Map one step further, we will have a specific call for nominations of the GISV for Colombia, which will identify specific companies operating in the prioritized investment sectors of the map and, therefore, generate a potential investment channel to advance on the path towards the 2030 Agenda in the country (with the support of Luisa Bernal). This pipeline of companies participating in the call will facilitate the closing of deals with potential investors and will become a useful tool for brokers or financial intermediaries. The call will be launched July 1st and will be open until July 19th.

 

Private Sector SDG Finance and Involvement

Question 5

Within the private sector strategy, UNDP Colombia is working in engaging the private sector and promoting its alignment to the SDGs.

With the support of BCTA Luciana Aguiar, we have expanded our network to 25 companies en Colombia, the sectors include food and beverages, services, retail, financial, energy and utilities, housing, and construction, among others.

With these companies, and with the support of the BCtA team, we have implemented different communities of practice. One of them focused on Impact Measurement and Management, where five companies participated, and 3 Colombian case studies were created and published and are available in https://www.businesscalltoaction.org/impact-case-studies. These companies reviewed and adjusted their theories of change, developed new indicators that demonstrated their impact and implemented new IT tools, including KoBoToolbox and Google Data Studio. This work with the companies aimed to enhance data collection and data visualization, raising knowledge and capacities regarding impact measurement and management. We have also promoted the visibility of these inclusive business models through different events, where they can share their achievements and expand their networks. Just to mention some: HLPF, UN Global Compact Leaders Summit, GSIV, among others.

Currently, we are working with BCtA in the implementation of the “Innovation Journey”, with the objective of creating connections between the challenges of the government and implementing solutions created by the private sector. In this regard, we have been working with some government entities such as Innpulsa (Entrepreneurship and innovation agency of the national government) to identify major challenges through an innovative methodology and connecting these with different solutions created by the private sector, we are still in the design phase but very optimistic of the work we will pursue.

Lastly, together with the National Planning Department (DNP), the Global Reporting Initiative (GRI) and BCtA we developed the "SDG-Corporate Tracker" (SDG-CT) initiative. This initiative with a multi-stakeholder approach seeks to collect data through a technological platform to identify the contribution Colombian companies to the 17 Sustainable Development Goals (SDGs), based on GRI Standards. To date, we have more than 400 registered companies and almost 380 reports during 2018 and 2019. The information contained in the SDG-CT will be presented within the Colombian Voluntary National Report in July 2021 in the HLPF.

 

Jan Kellett

Great note Lina!

Colombia another country selected by all the partners for insurance/risk finance rollout. 

One of the biggest challenges might be more on the product development side, rather than the enabling environment.

There's so many opportunities in the country for UNDP to develop with our partners, and selecting the best will be a key task.

Maria Eugenia Oviedo

Dear  colleagues at IEO, thank you for sharing the reflection paper and organizing this discussion to gather additional inputs from COs. In response to question 5, we would like to share some examples from our work supporting the government in Argentina to attract and scale up sustainable finance and impact investment for post-COVID recovery efforts:

UNDP contributed to generate evidence-based data on financing for the SDGs in the country and propose political and institutional recommendations to promote impact investment in the country through the Development Finance Assessment. The study, based on the methodology developed by UNDP at the global level and in articulation with BPPS, provides an overview of the evolution of finance for sustainable development in the country, its allocation and contribution to national priorities within the SDGs and identified key financing challenges and gaps where impact investment could be a suitable vehicle to mobilize additional financing. This study could be of particular relevance in the post-pandemic recovery strategies.

UNDP supported Banco de la Nación Argentina (larger public bank in the country) to integrate the best practices in managing impact in order to implement the SDG Impact Standards, focusing to advance the incorporation of sound impact measurement and management practices in the design and operation of financial instruments aligned with the SDGs and establishing Eligibility Criteria to select and carry out ex ante impact evaluations of the activities classified as potential for SDG financial instruments .

Additionally, as @Ana Rosa Monteiro Soares mentioned, UNDP COs in Paraguay, Chile, Uruguay and Argentina produced a series of studies to assess the impact investment ecosystem in the Southern Cone and propose recommendations on how sustainable finance and impact investment could contribute to mobilize additional funding for post COVID-19 recovery.

As @Sebnem Sener already mentioned, Argentina Financial Regulator (Comision Nacional de Valores) included as recommendation of good practice the UNDP SDG Impact Standards to align funds classified as ESG, Green, Sustainable or Social in the Argentina capital markets.

UNDP in Argentina supports the government team of the sustainable finance Roundtable, regarding the development of a roadmap for a taxonomy and a financial reporting framework aligned with SDGs on sustainable financing, considering two main sectors: banks and insurance companies.

UNDP is also articulating through the structure of the Insurance and Risk Finance Facility, a flagship initiative launched at the end of 2020,  the ways in which insurance and risk finance  can contribute to development and the SDGs, in particular by  a  diagnostic research framework

UNDP is also working together with Global Compact in Argentina, as a coordinator of the Care for Climate Working group promoting the engagement of private sector with the Science based target and 1.5 campaign.

In addition, UNDP in Argentina is working through the BIOFIN initiative with subnational y national governments and the private sector to demonstrate how tailored investments and incentives in biodiversity not only protect nature but also create jobs, reduce pandemics, and combat climate change.

UNDP in Argentina together with UNDP Financial Hub will publish in the second semester of 2021 the Document: Focus Note Series on Fintech for Sustainability. Current Landscape and Key Opportunities Country Report: Argentina Authors: Gabriel Bizama and Delfina López Freijido with the supervision of Marianne Haahr.

Furthernore,  UNDP in Argentina is currently working on a consultancy to strengthen the national political dialogue on sovereign debt and investment in nature and climate action in the framework of the global health crisis generated by the outbreak of COVID-19.  A position paper will be presented during the second semester of 2021

Finally UNDP in Argentina is part of PAGE coordinated by ILO, together with UNEP UNITAR and UNIDO,  with the counterparts of Production, Labor, and Environmental Federal ministries, on sustainable finance, circular economy, just transition and green jobs.  Last year a high level dialogue on just transition and sustainable development was coordinated by UNDP. A second high level dialogue will take place during the second semester of 2021.

Please do not hesitate to contact us for any further information needed regarding these actions. Thanks!

Ayse Nur Tepebasi

Adding on to Funda’s discussion on Islamic finance and as an answer to Question 5, the IICPSD provides technical assistance and advisory services on Islamic finance. Under the Global Islamic Finance and Impact Investing Platform (GIFIIP), the Green Sukuk Initiative has been launched in partnership with the ICD of Islamic Development Bank and Securities Commission Malaysia in 2018. The initiative aims to raise awareness on the potential of Green Sukuk as an innovative financial instrument for green projects.

Acting like a facilitator in countries where there is demand and supply for a potential green sukuk, a feasibility study is conducted, mapping the key actors, opportunities and challenges in the national market and build a framework around the Green Sukuk ecosystem. The first activity of this initiative was implemented in Turkey and a similar study was also conducted in Pakistan. In 2020, the green sukuk initiative was launched in Uzbekistan on behalf of the CO. Following an assessment study and virtual workshop, the pre-feasibility report that identifies the bottlenecks, opportunities and assessment of the market conditions in Uzbekistan for a potential green sukuk issuance has been published.

In addition, upon the request of the Djibouti CO, IICPSD is providing technical assistance on Islamic microfinance development, with the objective of addressing the problem of financial exclusion and poverty. The overall aim is to support the development of the Islamic finance and microfinance ecosystem in the country through a holistic approach including skills improvement and capacity building.

The scope of work consists of two phases; in the first phase, the IICPSD performs an assessment of the sector, analyzing the relevant stakeholders and strategies from the public and private sector and identifying the opportunities and challenges for the development of the Islamic microfinance ecosystem in the country. This is followed by developing the strategy and designing an output for an Islamic microfinance program in the country. The second phase includes capacity development activities, including both virtual and on the-job trainings for the national stakeholders in the country to scale up the model and improve the efficiency of the system.

Muhammad Didi Hardiana

Dear Colleagues, thank you for the opportunity to join this virtual discussion.

Allow me to share some reflections from UNDP Indonesia. Under the leadership of Norimasa Shimomura and Sophie Kemkhadze, the CO pioneered the work on innovative finance, seeking to take advantage of new and innovative sources of finance to make a contribution to the discourse on development finance and financing SDGs more broadly.  

I will start with Q2.

UNDP Indonesia established the Innovative Financing Lab (IFLab) in 2018 in partnership with the Ministry of National Development Planning. The Lab was launched as a dynamic platform for different stakeholders to engage on the 2030 Agenda from a financing perspective – with the DNA of experimentation, innovation and impact. The Lab aims to innovate on means to unlock and leverage new finance to help close the SDGs financing gap through designing and testing new innovative financing instruments, helping to enhance investments for higher SDGs-returns, and contributing to a stronger enabling environment for SDG-friendly finance. The Lab focuses on three interrelated work streams, namely Islamic Finance, Green Finance, and Impact Investments.

Through the IFLab, we have been working closely with partners to leverage Islamic Finance at scale, from working with BAZNAS (National Alms Agency) to apply Zakat (obligatory alms giving), for the first time ever in the world, towards achieving local SDGs to supporting the Ministry of Finance in the issuance of the world’s first international sovereign Green Sukuk (Islamic bond), both in 2018. We also partner with MDBs (World Bank, ADB, IsDB), the private sector, academics, NGOs, and many more in different initiatives.

The first pilot project funded by Zakat provides renewable energy to more than 4,000 people in five villages in Jambi province that previously did not have access to electricity through the development and revitalization of five micro-hydro powerplants. In this project, BAZNAS channeling Zakat funds of USD 350.000 (approx. IDR 4.8 billion), also combined with other funds, including GEF funds and CSR funds of USD 281.357 (IDR 3.76 billion) from Bank Jambi (regional-state owned bank). Subsequent projects included disaster relief after earthquakes, capacity-building support, support for micro-enterprises, developing a safer school environment, biodiversity, and more. These best practices form the basis for enabling the global partnership between UNDP and World Zakat Forum in 2019. @Greget Kalla Buana 

Complementing @Tim Strawson, Indonesia is one of the pioneer countries to implement INFF and is currently designing the SDG Financing Hub as a platform that acts as a collaborative and coordination space across public and private financing as well as a key entry point of operationalizing the INFF concept in Indonesia. The Hub is expected to take on three critical roles: to coordinate nationally the financing of the SDGs, manage an SDG fund, and support project preparation and matchmaking.  

Q4 (and Q1)

Indonesia obtained the status of UMIC in mid-2020, where the GNI per capita in 2019 has risen to US$4,050, although the impact of the pandemic is likely to change this status. The Government has a strong commitment to achieving the SDGs while making a significant shift towards low-carbon economic transformation. Indonesia also aims to reduce GHG emissions up to 41% in 2030 through its NDC and achieving net-zero emissions by 2070. Sufficient financing is required to realize these commitments including through strengthening public finance reform and leveraging innovative finance.

With regard to Q1, I would particularly like to emphasize lesson 2: International cooperation modalities should prioritize strengthening country-level capacities support to improve avenues of development financing. We saw great success in one of our initiatives aimed at strengthening government capacity in public finance reform and fiscal policy for climate change enabling the development of innovative financing instruments. A key achievement was the development of Climate Budget Tagging, a tool that has been integrated in government planning and budgeting to track and identify climate change related program/activities and its budget allocation at the national level since 2016. Over the past 5 years, the average of climate change budget allocation was USD6.8 billion/year or 4.0% of the state budget per year. @Radhika Lal @Asad Maken 

In addition to enable the tracking and evaluation of public expenditure from climate mitigation and adaptation, the  Climate Budget Tagging enabled the Ministry of Finance (MOF) to develop innovative financing instruments in the form of Green Sukuk (Sharia-bond). In the process, UNDP has continuously provided support to MOF and relevant line ministries, particularly in providing a series of capacity buildings and technical support towards the pre- and post-issuance process, e.g. in the development of Republic of Indonesia Green Bond/ Sukuk Framework, preparation of Green Sukuk Annual Allocation and Impact Reports, as well as in several studies/ knowledge products development – one of which is the study on Indonesia’s Retail Green Sukuk.

Since leading as the world’s first sovereign green Sukuk issuer in 2018, with UNDP support, the government has raised and mobilized over USD 3.9 billion towards green investments through its six-time green Sukuk issuances (four times in the global market and two times in the retail market). To date, the proceeds from Green Sukuk have been allocated towards projects in renewable energy, energy efficiency, sustainable transport, waste management, and resilience to climate change sectors – contributing towards reducing up to 10.3 million tonnes of CO2 emissions, along with the strengthening of climate resilience. This also complements previous comment from Tiana Randriantsoa 

Q5

The Innovative Financing Lab is positioned as a convening space for all stakeholders and due to its dynamic structure, it is able to open doors for strategic partnerships and engagement with non-traditional stakeholders such as venture capitalists, institutional investors, commercial banks, and small to large scale. private sector partners who will not be formally involved with the UNDP CO.

The renewable energy project described earlier is one example of how UNDP Indonesia can attract the private sector and Islamic philanthropy to work together and contribute their funds to real projects that benefit the poor and vulnerable.

With funding from UN Joint SDG Fund Component 2, UNDP Indonesia will work with the APEC Advisory Business Council (ABAC) Indonesia and Bank Mandiri Capital, a subsidiary to one of the largest banks in the country, to develop the first Indonesian private impact investment fund which invests into early-stage start-ups that are supporting the implementation of SDGs in Indonesia. It plans to blend concessional and non-concessional finance from development finance institutions, charitable foundations, family offices, with aims to mobilize up to USD 30 million investments. @Artak Melkonyan @Sahba Sobhani 

SDG Investor Map: Indonesia is currently undertaking this exercise with support from ADB and UNDP BRH. It has identified 10 sub-sectors from five development priority sectors, i.e. food and beverage, health care, infrastructure, renewables and alternative energy, and education. The remaining steps are to identify potential subregions and derive specific IOAs. @Devahuti Choudhury

Patricia Purcell

Hi All, thanks for this engaging discussion! Regarding how UNDP is using Vertical Funds to leverage private finance:

UNDP’s VF portfolio covers 137 countries, across 802 projects, valued at $4.9 billion.  To date, the portfolio has leveraged $21 billion in co-financing from government, and private sector partners.

UNDP’s private sector engagement across our VF portfolio includes a combination of in-kind, technical assistance and direct investments in areas including, among others: investments and support for sustainable energy access and low carbon transition; sustainable agriculture and water resources; transformation of commodity supply chains to be greener, more sustainable and inclusive to benefit production communities; greening agriculture through restoration/agroforestry through special purpose vehicles/public private partnerships and/or other types of aggregate instruments to benefit farmers and their families; and investments in mangrove restoration and sustainable forestry focused on the transition to certified sustainable forest management. Several countries have also requested UNDP’s support to be the financial intermediary for engaging between tropical forest countries and the private sector to mobilize finance for emissions reductions in deforestation.

UNDP is also leveraging its VF portfolio to support to SMEs/MSMEs, including a focus on women-owned business (e.g. through small, off-grid clean energy and digital providers), as well as investments in job creation (e.g. through ecosystem restoration and wildlife conservation), and future skills development, with a focus on youth (e.g. in the renewable energy sector).

Some specific programmatic and private sector partnership examples, include:

 

  • Through our Climate Promise - which is assisting 118 countries to make their NDCs more ambitious, more inclusive, and ready for implementation, together with over 35 partners – has identified investment potential within the private sector for delivering NDC sectoral targets for the energy sector (Ghana, Kenya, Uganda, Cote d’Ivoire), agriculture sector (Paraguay and Philippines) and water sector (Tunisia). More information can be found here: Private Sector Investment in NDC Sectors (undp.org).
  • UNDP is supporting more than 70 countries to develop Integrated National Financing Frameworks (INFFs) to mobilise and align all sources of finance with their COVID-19 recovery plans and revise medium-term development plans, in support of delivering on their sustainable development and climate goals.
  • De-risking the policy landscape for private investment in sustainable development through the deployment of economic expertise; data and analytics for evidence-based public policy and budgetary decision-making; and diagnostics and tools. For example, UNDP is partnering with Microsoft on the identification and development of open-sources, high value data related to the productive use of energy that can contribute to energy planning and accelerate the closing of the energy access gap. We are also jointly engaging on a Distributed Renewable Energy Certificate - a new financial instrument to aggregate investments in distributed renewable energy projects and crowd-in climate finance and additional investments from the private sector to address the  energy access financing gap.
  • The Climate Investment Platform (CIP)  partnership between UNDP, IRENA and Sustainable Energy 4 All (SE4ALL) works to declutter the climate finance landscape, framed around four tracks: ambitious NDCs, policies and regulation, financial de-risking, and access to capital markets. is unlocking private finance to scale up the clean energy transition. Recent examples of the CIP’s work include Comoros, Sao Tome e Principe, Sudan.
  • In April, UNDP, in partnership with the UN Secretary-General’s Global Investors for Sustainable Development (GISD) Alliance launched the ‘SDG Investor Platform,’ an innovative tool to facilitate private sector investments in the SDGs. The Platform uses data and insights needed to increase financial flows to the SDGs and map specific investment opportunities across key sectors supported through UNDP’s VF portfolio. For example, so far, the Platform has captured 26 global Investment Opportunity Areas on SDG 7 (‘Ensure access to affordable, reliable, sustainable and modern energy for all’).
  • UNDP is partnering with IFIs in several countries in areas of de-risking, green economic growth, energy transformation and digital innovation  – for example: 
  • In Uzbekistan, UNDP is partnering with six IFIs and several UN partners to create jobs for and re-skill migrant workers.
  • EIB and UNDP partnered on a joint study Africa’s digital solutions to tackle COVID-19  to better understand the digital solutions and corresponding investment required to support the continent’s recovery, which identified more than 100 high-impact digital solutions that can curb the spread of COVID-19 in Africa, including a self-diagnostic app available in 15 African countries.
  • In Belize, Jamaica and St Lucia, UNDP is partnering with the Caribbean Development Bank in a GCF-supported project, aimed at unlocking private sector investment for productive sectors and energy systems. The programme will blend GCF and CDB resources to extend concessional lines of credit to DFIs, who in turn will on-lend to MSMEs and households for climate action investments. The programme will simultaneously deliver technical assistance to facilitate programme lending and support the transformation toward climate-informed lending.

 

  • Rwanda’s Green Recovery Transformation Plan focusses on energy access, support for youth and women-led SMEs/MSMEs, digital transformation, climate-smart agriculture and opportunities through the newly operational Africa Continental Free Trade Agreement, and re-imagining the tourism sector.
  • In Latin America and Caribbean, UNDP is supporting climate-resilient and ecosystem-based rural livelihoods in Costa Rica, Guatemala, El Salvador, Cuba, Honduras, and Colombia, and deforestation free commodity production and land restoration inpartnership with the private sector in Peru, Colombia, Ecuador and Paraguay.
  • In Saudi Arabia, UNDP established a national center of excellence on energy efficiency, now becoming the premier platform in the Kingdom for advancing next generation policies and technology solutions in key sectors like buildings and transport, and with private sector partners like the energy giant Saudi Aramco. In UAE, UNDP helped establish a carbon center of excellence generating new large-scale private investments into solar expansion.

Other relevant examples of UNDP’s work on Sustainable Finance that complements the VF portfolio, include:

  • In its capacity as Secretariat for the G20 Sustainable Finance Working Group (Co-Chaired by the US and China), as well as coordinator of the Financing for Development climate action and sustainability track (led by the Group of Friends -France, UK, EU, Fiji, Rwanda, Saudi Arabia and Italy), UNDP is supporting efforts across the UN and development system to both align and mobilize sustainable finance to support achievement of countries’ SDG and climate ambitions, including in partnership with the IMF.

 

  • UNDP’s support also includes innovations in finance in the face of the debt crisis that is challenging countries’ ability to invest in sustainable development and climate action. For example, UNDP is supporting governments in the development and brokering of debt relief through a new generation of debt4nature/climate instruments that include restoration and nature/conservation-focused performance bonds with clear restoration, biodiversity and climate dividends and significant job creation opportunities. UNDP will advance this work with the private sector, including in the design of such instruments, building a pipeline of investable/bankable projects, as well as helping to build the capacity of governments through the transfer of knowledge and expertise, among others.
  • UNDP, together with UNEP, led the recent launch of the Through the Taskforce for Nature Related Financial Disclosure, constituting representatives from over 30 financial institutions, corporations, and financial service providers. The TNFD will establish a framework to enable the private sector to factor nature-related risks into decision-making and reporting, with the aim of correctly pricing the value of natural of capital into all asset classes.
  • The newly established Global Fund for Coral Reefs, which seeks to raise and invest USD $500 million in coral reef conservation over the next 10 years, will serve as a finance instrument that blends private and public funding, and support businesses and finance mechanisms that improve the health and sustainability of coral reefs and associated ecosystems, while empowering local communities and enterprises.
  • UNDP’s Ocean Innovation Challenge, launched in January 2020, is a unique new mechanism that has been designed to accelerate progress on SDG14 Oceans by identifying, financing and mentoring innovative, scalable and potentially transformational approaches to ocean and coastal restoration and protection that sustain livelihoods and advance the 'blue economy'.  The first OIC call for proposals, focusing on SDG 14.1, marine pollution, received over 600 proposals of which a final cohort of nine projects were selected as Ocean Innovators.  These innovations represent a diverse range of approaches to reducing marine pollution such as using benign organic substitutes for plastics products, introduction of extended producer responsibility regulations to reduce plastics pollution, and sustainably harvested seaweed as a substitute for synthetic fertilizer.

 

Thanks again! Happy to provide more details!

 

 

 

 

Alicia Lopez

Hi colleagues,

I would like to share the recent work that the Bureau of Latin America and the Caribbean and the Mexico CO have done to accompany the Mexican Ministry of Finance in their very first Sovereign SDG Bond Issuance.

In September 2020, Mexico issued a Sovereign Sustainable Development Goals (SDGs) Bond, an important step forward in the country’s commitment to the SDGs' achievement and a major advance for development finance.

Mexico issued a groundbreaking seven-year SDG Bond for a total value of USD 890 million, resources that will be transferred from private funds to finance SDG-oriented programs. This innovative bond was issued under its new “SDG Sovereign Bond Framework” developed with investment bank Natixis and released in February 2020. The transaction reached a demand of USD 5,696 million, equivalen