Content     ▶     Blog

Leaving No-One Behind: MDBs Working Together to Engage the Private Sector to Achieve Sustainable Development Goals

GPEDC Multilateral Development Banks Working Group • 5 July 2019 EN
Uploaded by GPEDC • 23 June 2020

A change in pace for the development landscape

The set of international agreements reached in 2015 marked a new era in financing for development. As a new global framework for financing the Sustainable Development Goals (SDGs), the Addis Ababa Action Agenda (AAAA) underscored that achieving these ambitious goals requires financing at an unprecedented scale, far beyond what government budgets, tax revenues and Official Development Assistance (ODA) can provide.

The 2030 Agenda calls all development actors, including the Multilateral Development Banks (MDBs), to step up and increase their efforts to promote inclusive economic growth while protecting the environment, and safeguarding a healthier planet for future generations. In particular, MDBs are called on to deliver concrete actions to scale up funding and enhance their collective efforts to go from “billions to trillions” to make the SDGs a reality.

In this endeavor, private sector participation is fundamental. Globally, an estimated US $5-7 trillion is needed annually until 2030 to meet the SDGs. At today’s level of funding, this leaves an estimated annual funding gap of US$2.5 trillion that needs to be covered in order to meet the SDGs in developing countries. MDBs have a long history of working with the private sector. They are key to promote meaningful and beneficial engagement from private stakeholders and to crowding-in private sources of funding that yield results for businesses and communities alike.

Market failures, political risk and credit shortage are big deterrents for private investment, but by finding synergies, leveraging their own resources and mitigating risks, MDBs are doing their part to help unlock and catalyze additional public and private resources, but also engage in policy dialogue to improve business environments, promote consultations with local communities and ensure that countries stay in the driver’s seat of their development priorities.

MDBs contributing to ensuring no-one is left behind

In aiming for sustainable development, ensuring that all populations benefit from private finance flows is critical. Vulnerable populations often lack access to the most basic services, experience shortages in quality employment opportunities, and fall outside the scope of competitive capital markets. Moreover, climate change, rising inequality, demographic change, new technologies and illicit financial flows may also increase the risks for already vulnerable populations. The number of people living in extreme poverty and living in conflict-affected situations in the world is expected to rise above 50 percent by 2030. Ensuring that no-one is left behind under the 2030 Agenda will not be possible unless the drivers of fragility, conflict and violence are addressed.

MDBs are working to mobilise private finance and play an important role in channeling financing to reach those who need it most. From providing lines of credit to those who would be otherwise unable to receive financial assistance, to facilitating women’s ownership of businesses, to engaging with government partners on infrastructure needs, MDBs continue to push for social and economic inclusion. By capitalizing on their convening power and as trusted intermediaries, MDBs strive to help member countries translate the SDGs into meaningful country-level targets, policies, programs and projects and help create equality of opportunities so that all people can have access to – and benefit from – sustainable development activities.

The Kampala Principles on Effective Private Sector Engagement in Development Co-operation, which will be launched in the upcoming 2019 Senior-Level Meeting of the Global Partnership for Effective Development Co-operation, a global platform to promote the effectiveness of all types of development co-operation, will help to shape the way development partners in general, and MDBs specifically, engage with the private sector – while providing a comprehensive vision where all stakeholders keep in mind vulnerable citizens and communities that are most in need to ensure that no one is left behind.

To learn about the initiatives that evidence how MDBs are working in line with these Kampala Principles while leveraging their resources to attract participation from private sector stakeholders in different projects and sectors, download the new 2019 Private Sector Engagement (PSE) for Sustainable Development brochure by GPEDC’s MDB Working Group.