Transcript Supporting effective development policies post

International Parliamentary Conference on the Post-2015
Development Agenda
London, November 26, 2013
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The main focus of the Monterrey Consensus was a
development partnership that mobilizes financing and
emphasizes sound policies as means to achieve the MDGs.
A framework for financing post 2015 should draw on this
commitment.
It also needs to adapt to changes in the global economic and
financing landscape, such as the strong growth of some
emerging economies, the increasing role of the private sector,
the emergence of new types of financiers, and the need to
address climate change.
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A global development cooperation that emphasizes financing from
diverse sources:
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Domestic resource mobilization
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Better and smarter aid
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Private finance for development
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Innovative sources of finance, including for global public goods.
The relative significance of each source, and the associated
leveraging challenges, will differ between countries.
Source: Financing for Development Post-2015, The World Bank
Group, October 2013
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Good policies and credible institutions to:
Increase impact of available resources
Leverage additional resources
Good policies and credible institutions enhance the impact of
available resources and leverage additional resources from both
domestic and foreign sources.
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Leveraging private financing
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Private sector and aid
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Innovations in financing
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Developing financial institutions and markets will facilitate
economic growth by mobilizing savings and allocating
savings to the most productive uses.
A policy environment, which includes a good public
investment program, encourages private investment that is
crucial for growth and to create opportunities.
Developing countries’ financial markets will play an
increasing role in intermediating external capital flows than
they do today.
◦ Developing countries are projected to account for about half of global
capital inflows in 2030, up from about 23 percent in 2010 (Global
Development Horizons, 2013).
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Foreign direct investment (FDI) has been a dominant source
of external private financing.
Over the past decade, many countries have demonstrated an
increasing ability to access international capital markets,
despite some slowdown after the recent crisis.
◦ Between 2000 and 2012, international long term debt flows – bonds and
syndicated bank lending – increased four-fold.
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Low income countries have less market access, however.
Overall, there is great need to leverage diverse sources of
financing to meet investment needs for development, such as
for infrastructure.
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Short-term debt
flows
13%
Other private
1%
Official (WB,
IMF, other)
1%
Banks
7%
Bonds
14%
Portfolio
equity
inflows
4%
FDI inflows
60%
Remittances in 2012 were an
estimated US$ 399 bn. If
included above, remittances
would constitute 28% and net
FDI inflows would constitute
43% of the total.
Source: Long-term financing for growth and development. G20 Umbrella
Paper, Feb. 2013.
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$ billion
400
Bonds
Bank Lending
% GDP (right axis)
% of GDP
2.0
350
300
1.5
250
200
1.0
150
100
0.5
50
0
0.0
2000
2002
2004
2006
2008
2010
2012
Source: World Bank Development Prospects
Group (DECPG).
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• Official Development Assistance
(ODA) have been an important
source of financing for the poorest
countries, and is likely to remain
so in the future.
• ODA to low income countries
(LICs) has declined recently,
however.
• Ensuring well-targeted aid to
fragile states and LICs, and
exploring its catalytic role, is key
to any future aid architecture.
Source: Fragile States 2013, OECD
NB: Based on OECD definition of fragile states
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Meeting developing countries’ cumulative infrastructure
financing needs will require an enormous mobilization of
private financing.
Attracting private financing to infrastructure has been a
challenge. Key areas of work include:
◦ Put in place an adequate legal and regulatory framework
◦ Support project preparation for quality project
◦ Mainstream use of risk sharing mechanisms with support from
multilateral financial institutions
◦ Have appropriate financial regulation
◦ Develop domestic capital markets.
◦ Strengthen catalytic role of the public sector.
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Kenya
Maharashtra & Tamil Nadu, India
CLIFF COMMUNITY SANITATION PROJECT
PRIVATE SECTOR POWER GENERATION PROJECT
Total initial investment: $7.2 million
Total initial investment: $623 million
- Homeless International
- Kenya Power and Lighting Company
- IFC
- SPARC (NGO in India)
- MIGA
- Community-based Organizations
- Commercial Banks
Emerging Partnerships
Sao Paulo, Brazil
Lake Kivu, Rwanda
METRO LINE 4
KIVU WATT
Total initial investment: $450 million
Total initial investment: $142.25 million
- Companhia do Metropolitano de Sao Paolo
- ContourGlobal
- 5 Equity Sponsors
- Energy Authority of Rwanda
- MIGA
- IDB
- Commercial Banks
- Emerging Africa Infrastructure Fund, AfDB
- FMO, Belgian Development Bank
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Source: Emerging Partnerships, IFC, 2013 and World Bank, Africa Region
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Available estimates for private aid to developing
countries in 2009 range from about US$ 20 to
US$ 60 billion.
Low estimate is equivalent to about 16 percent of
ODA from all donors in the same year, and up
from 2005 (12 percent of ODA)
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Private philanthropy to fragile states increasing in
recent years
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South-South philanthropy also on the rise,
especially in the Arab world
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A g R e s u l t s I n i t i at i v e
Inputs
increasing
yields
Outputs
post harvest
management
Livestock
Nutrition
International Finance Facility
for Immunization ( IFFIm)
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Global Funds that pool resources for specific issues
of global importance, e.g.,
◦ GAVI Alliance (formerly the Global Alliance for Vaccine and
Immunization)
◦ Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM)
◦ Global Partnership for Education
◦ Global Environment Fund (GEF)
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Carbon markets
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Diaspora (remittance) bonds
◦ Remittances are expected to reach US$ 414 billion in 2013.
◦ There is scope to further reduce the costs of remittances.
◦ Diaspora bonds could be a means to leverage the flow of remittances
for investment needs.
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A post-2015 financing framework needs to emphasize domestic resource
mobilization, leveraging of new donors and the private sector, and
innovations on financing instruments.
The relative significance of each source of financing will differ among
countries, depending in part on market access.
Policies and the capacity to implement them will lead to more effective use of
existing resources and will build an enabling environment to leverage
additional resources.
Strengthening partnerships to support countries in these areas needs to be a
core part of the post 2015 development financing framework.
ODA, private aid, and multilateral financial institutions will need to explore
more and innovative ways to catalyze financing from the private sector for
financing country level investments and global public goods.
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Marilou Uy
Senior Adviser
The World Bank
[email protected]
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