By Sidra Tariq
Difficulty in finding local partners is a challenge for investors when channelling funds into UN’s sustainable development goals-related (SDG) projects in developing countries, says a senior official.
The UN is currently working with stakeholders on defining the SDGs and the process is likely to conclude by the end of this year, according to Richard Bolwijn, economic affairs officer at the UN Conference on Trade and Development (UNCTAD). The project will set targets for the 2015 to 2030 period for poverty reduction, food security, human health and education, climate change mitigation and other objectives across economic, social and environmental pillars.
A June 2014 World Investment Report by UNCTAD, entitled: Investing in the SDGs: An Action Plan, identifies key SDG sectors that would require investment – such as infrastructure (50 per cent), climate change and environment (27 per cent), food security (12 per cent) and social (11 per cent) – and underlines the need to mobilise funds through various types of financial institutions and investors.
“At the 2013 World Investment Forum, which was held in Doha, we had sovereign wealth and pension funds and institutional investors around the table to discuss how to channel more funds into SDG-related infrastructure projects,” says Bolwijn, who is also one of the authors of the report. “They mentioned, almost unanimously, that [one of] the key problems they face is that many projects in developing countries are not what they call ‘pre-packaged’ – there are no clearly defined infrastructure projects of sufficient scale being offered to them with pre-approvals in place, feasibility studies carried out, environmental impact assessments carried out and so forth. The second biggest problem they mentioned is that, very often, they have a huge difficulty in finding local partners for implementation,” says Bolwijn.
The two problems are related, he adds. “If interested in working with large-scale investors in carrying out such projects, local partners could work with policymakers and the government – either at national or sub-national levels – to try and help them with the pre-packaging of such projects and make sure that they are already attached to such projects as potential partners. That solves two problems in one go: it urges governments…to create pipelines of bankable projects, to which these local companies are immediately associated, and it solves the international investors’ problem [of] finding local partners.”
Moreover, Bolwijn says that a significant increase in private sector investment is needed to reach the SDGs, as the public sector cannot cope on its own. Investment needs “in developing countries alone are up to $4.5 trillion per year,” he adds. “Private sector investments must increase to reach those goals and a prerequisite is that there is a conducive overall policy climate for investment.”
The report adds: “Policymakers need to find the right balance between creating a climate conducive to investment and removing barriers to investment, on the one hand, and protecting public interests through regulation, on the other. They need to find mechanisms to provide sufficiently attractive returns to private investors, while guaranteeing accessibility and affordability of services for all. And the push for more private investment must be complementary to the parallel push for more public investment.”
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