Fund Specifically Intended to Support Finance of Local Projects to Accelerate SDG Agenda
A unique, bespoke fund that is designed to focus exclusively on supporting cities and local governments; notably municipalities in developing countries, including the least-developed countries—was presented at the Second Annual Conference of the Malaga Global Coalition for Municipal Finance. The initial decision to establish the fund emerged from the inaugural convening in April 2018 of the Malaga Global Coalition for Municipal Finance; a coalition consisting of the United Nations Capital Development Fund (UNCDF); United Cities and Local Governments (UCLG); and The Global Fund for Cities Development (FMDV), its technical partner.
The Coalition supported the creation of the third party managed International Municipal Investment Fund to channel private sector finance from pension funds and other investors towards impactful projects sponsored by cities and local governments. Each project will deliver a measurable impact towards Agenda 2030 (the Sustainable Development Goals) and the Paris Agreement. The fund will be accessible by cities and demonstrate practical examples of how expanded local fiscal space can drive development.
UNCDF, UCLG and its technical partner, FMDV, formed the Malaga Coalition last year with the goal of leading in the advocacy, creation and support of a global financial ecosystem that works for cities and local governments, which are crucial for sustainable development and our collective future. Cities and local governments are the key to accelerating implementation of Agenda 2030 and the Paris Agreement. Cities and local governments are the entities that have the mandate, convening power, connection with the citizenry and comparative advantage to solve many global problems, and to advance many national development agendas. From plastic waste to peaceful streets to economic and social empowerment, cities hold the key. The road to accelerating the SDGs is not an elevated highway on concrete pillars that passes over the congestion. On the contrary, it is a winding road through every town and city that touches each citizen.
Yet the global financial ecosystem is not structured to this purpose. Instead, it favors countries, which have access to capital markets with sovereign guarantees and a monopoly of taxation; and large businesses, which can move capital around the globe and limit their tax liabilities. The goal of the Malaga Coalition is to drive a global financial ecosystem that will enable municipalities to accelerate Agenda 2030. The IMIF will provide one such driver towards accelerating Agenda 2030 by increasing available investment for SDG-oriented projects at the local level.
Accelerating Agenda 2030 will also require action in all areas of local government finance. These include own source revenue and local taxation, intergovernmental fiscal transfers, asset management, municipal borrowing, local government bonds, sub national development funds and public private partnerships. The coalition will work with local governments to help create an effective ecosystem for finance to support the SDGs.
Accelerating Agenda 2030 will also require national and international financial institutions to take a fresh look at local government finance. For example, by understanding how municipal access to capital markets can accelerate the national development agenda. The coalition will work with multilateral institutions such as the International Monetary Fund, and with national governments on the policy and regulatory reform required to expand local government fiscal space and accelerate Agenda 2030.
The second meeting of the coalition brings together local governments, national governments and international financial institutions. In addition to presenting the IMIF, the meeting will result in a policy agenda that the Coalition will pursue for the upcoming year.