I would like to highlight three areas where, in UNCDF’s experience, local and global partnership between public, private and not for profit actors, banks and investors can make a transformational difference in making SDG achievement inclusive and ensuring progress reaches the poor communities, particularly in LDCs.
First, by understanding that ODA and other strategically placed public resources play a critical role in “priming the pump” for private investment in the local economic space. Perceptions among investors of high risk, insufficient returns, and weak management and accountability at the local level – particularly in LDCs - translates to under-funded local development plans, under-developed and climate-vulnerable infrastructure endowments, and inaccessible financing for poor households, women and small enterprise.
So, public / private partnerships that are designed to de-risk the investment space can result in the creation of viable local investment pipelines, draw in domestic banks and dormant capital, reveal markets to a wider pool of investors, and demonstrate the returns potential of investing in local economies. This kind of investment brings growth closest to “where people live”, generating local capital formation, and ultimately improving overall fiscal flows at the local level. It requires a public / private tolerance of risk, it requires investment in innovative financing models, and it requires “patient capital” that will see returns sometimes over a longer period than typical impact or donor investing currently expects.
Second, by achieving transformation through localization, recognizing that bringing planning, implementation, and resource flows for infrastructure, food security, livelihoods, renewable energy, climate change, and women’s economic empowerment, to the local level has proven acceleration effects for poverty reduction and local economic development.
The SDG agenda recognizes the important role played by cities and localities, where people live and work. Global partnership is needed to recognize the importance of localization, that recommits to empowering the local level with innovative and predictable financial flows from national and international sources, and with innovative forms of finance to help direct resources outside capital cities, into secondary cities, peri-urban and rural communities where the real test of the achievement of the SDGs will be judged.
And Third, by investing in financial inclusion, facilitated by digital pathways. Financial inclusion is recognized in 7 of the 17 SDGs as a key enabler for poor households, women and small enterprise to actively engage in their local economies, and for activating excessive liquidity and dormant resource flows – notably savings - through the economy. Global partnerships around financial inclusion can help improve remittance flows and reduce transaction costs to poor families; can provide financial planning, services and safety nets for the unbanked poor, while also strengthening the reliability and stability of national financial systems.
Financial literacy helps poor people to engage more dynamically with their local economies, to improve their livelihoods prospects, and to send their children to school. Global Alliances are critical to sharing what works, like the Better Than Cash Alliance – with over 40 governments and public and private organizations committed to reaping the benefits of efficiency savings, transparency, and financial access from transitioning from a cash to a digital economy.
We know from experience that global, south-south, north south, and public private partnership in these three areas can be a significant driver of transformative change for local economies and poor households in the pursuit of the SDGs.