Multilateral Financial Institutions May Catalyze Public Development Bank (PDB) to Supply SDGs – Global Problem

  • Feedback Raghav Gaiha, Shantanu Mathur (New Delhi, India)
  • Inter Press Service

Investment gap

The investment estimates required to achieve these goals show that the financing needs are significant although the assessment of the growing financing requirements is significantly different.

The Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Program (WFP) estimate that 20 265 billion a year will be needed to achieve “zero hunger” by 2030 (SAFIN, 2021).

In 2019, the United Nations Conference on Trade and Development (UNCTAD) estimated the total investment required to achieve actual SDGs in developing countries at 80 480 billion for food and agriculture, with actual investment of $ 220 billion to US $ 260 billion.

These estimates suggest that an additional US $ 300 – US $ 350 billion per year will be needed over the next decade to transform the food system for a healthy people, a healthy planet and a healthy economy.

The rapid and widespread impact of the coronavirus epidemic has plunged the world economy into a severe contraction. The prospect of economic recovery is highly uncertain and negative risks are major. The development finance gap is likely to get worse.

Towards filling the funding gap

To meet this demand, funding from all sources will be required to work in line with the 2030 Agenda and the Paris Agreement. The World Bank-led expansion of the Service Suspension Initiative (DSSI) by the end of 2021 will help most developing countries focus on domestic priorities, including the return of SDG delivery.

A general framework is being created for debt treatment outside the DSSI, while some international financial institutions (IFIs) are expecting historic heights in their replenishment (IFAD, IDA, AFDB). Also, a new general allocation of US ০ 50 billion (IMF Special Drawing Rights) has been called for to benefit the weaker countries.

Introduction of Jan Unnayan Bank

Public Development Banks (PDBs) have considerable potential here because financial institutions with state capital have mandates to pursue development goals (as opposed to commercial purposes only in their bank operations. PDBs differ from state-owned commercial banks; they also differ in their mandates and instruments Infrastructure, agricultural processing, or other).

Yet other PDBs have primary focus on agriculture but their portfolio includes other sectors. It is based on the idea that supporting sustainable micro-agriculture through the development of an inclusive agro-food value chain is two to three times more effective as a means of poverty alleviation than other sectors.

Some PDBs target small-scale enterprises, including producers, while others focus their portfolios on larger agribusinesses or larger investments, for example, agricultural infrastructure and markets. This diversity is key to understanding the role of different types of PDBs in advancing the 2030 Agenda.

However, the ultimate goal is to address market failures, counter-cyclical roles, and greater risk tolerance than other financial institutions. By staying close to their public mandate and public policy and governance institutions, PDBs can play a catalytic role in providing socially, environmentally and economically sustainable outcomes across the food system to accessible, affordable and usable financial services for the rural poor.

PDBs (which are already responsible for more than two-thirds of formal financing for agriculture), can certainly bring about change across the financial ecosystem. These include sustainable and green financing, issuance of investment products, mixed solutions and public-private financing schemes.

At the same time, they are embracing digital solutions throughout their business activities and providing financial services and products to a wide variety of clients in the food system – including women, youth, SMEs and small holders. It is known that private investment in agriculture and / or other activities in the food system is often limited by the many risks associated with poor infrastructure and economic profits. PDBs are able to increase congestion, risk reduction, and commercial financing to increase their ability to set SDGs and climate-related goals such as the Paris Agreement.

Combining catalytic investments

Stimulating responsible private investment and financial innovation – such as through mixed financing – is needed to improve food security and nutrition and inclusive rural transformation, and to address post-epidemic gaps in the ODA. Uncatad estimates that about 75 percent of the gap could be financed economically by the basic sector – with the potential to raise 195 195 billion annually. PDB is actively engaged in the platform where private investors, businesses, social workers and other entities are investing to finance SDG connected projects.

In their statement (Matera, June 2021), the G20 development ministers welcomed the establishment of a “Finance in Commons” working group, led by IFAD, to finance sustainable food, acknowledging the critical role of the PDB. The private sector will be developed on the basis of public efforts in the development of agro-food system.

Coming out of the UN Food Systems Summit (UNFSS) as a concrete action is the emergence of a Coalition for Action to launch a PDB Global Platform to increase investment in the chain of inclusive and sustainable food systems, accelerated education, innovation, capitalization and services. Deployment.

Moving forwardStrengthening the financial space to ensure sustainable domestic financing to close the fiscal gap will require strong international cooperation and political goodwill. Multipurpose development banks can work with PDBs and test / verify sustainability-related financial instruments, including bonds, funds and other investment vehicles (sustainability / green) to move towards sustainable development. It will play a key role in raising the much-needed funds to reduce the SDG funding gap in developing countries and to become a long-term financing instrument for international and national public financial institutions.

Raghav Gaiha Research Affiliate, Population Aging Research Center, University of Pennsylvania, USA, and (Honorary) Professional Research Fellow, Global Development Institute, University of Manchester, UK; Shantanu Mathur Lead Advisor and Senior Partnership Officer, Global and Multilateral Employment International Fund for Agricultural Development (IFAD). (Feedback is private)

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© Inter Press Service (2021) – All rights reservedOriginal Source: Inter Press Service

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