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Financing the Sustainable Development Goals (SDGs) and Paris Agreement at the local level


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This is a presentation by Paul Steele, chief economist at the International Institute for Environment and Development (IIED) on financing the Sustainable Development Goals and Paris Agreement at the local level.

The presentation was made at the Money Where It Matters (MWIM) event, held in London from 7-8 December 2016, when the presentation framed the following discussions.

The purpose of the MWIM event was to reflect on our insights and explore further how financing mechanisms can more effectively channel resources to the local level, and identify opportunities to increase flows of finance to the local level in new contexts for development assistance and national investment.

Participants at the event also agreed on outstanding questions that require further research on finance for and with local actors to achieve the effective use and management of funds to deliver climate resilient sustainable development.

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Financing the Sustainable Development Goals (SDGs) and Paris Agreement at the local level

  1. 1. Getting money where it matters 1 Paul Steele December 2016Paul Steele December 2016 Financing the SDGs and Paris Agreement at the local level (Public and private finance, development and climate finance) Getting Money Where It Matters…
  2. 2. Getting money where it matters 2 Paul Steele December 2016 Objectives of Money Where it Matters: finance forum • WHY? To share insights from Africa, Asia and Latin America on the value of finance at the local level & how to tackle risks/challenges. • HOW? To identify the opportunities available for increasing the flow of finance to the local level in new geographies and contexts • WHAT NEXT? To agree outstanding questions on local level finance that will enable funds for climate resilient sustainable development to be managed efficiently
  3. 3. Getting money where it matters 3 Paul Steele December 2016 Overview of presentation • What is “local level” finance? • What are benefits of local level finance? • How to increase finance to local government? • How to increase finance to community groups? • How to increase finance to small and medium enterprises? • What reforms are needed in international finance? • What are perceived risks of local level finance and possible solutions? • Next frontiers: what are outstanding questions? • Meeting agenda
  4. 4. Getting money where it matters 4 Paul Steele December 2016 What is “local level” finance? Finance for: • Local government linked to communities • Community groups and collective action • Entrepreneurs, especially small and medium scale enterprises (SMEs) offering goods and services to the poor, or employing the poor May include role for national government: • Finance may flow through national government • enabling policy, incentives and regulations
  5. 5. Getting money where it matters 5 Paul Steele December 2016 Benefits of local level finance? • Relevant: poor know their priorities best so choose most useful public and private services • Longer lasting: local level finance builds on existing institutions and is owned by people • Value for money: better targeted investments lower costs and include local contributions • Accountable: enables more inclusive oversight by citizens, challenging power relations and changes incentives
  6. 6. Getting money where it matters 6 Paul Steele December 2016 How to increase finance to local government linked to communities? • Use decentralisation/ decentralisation channels • Build capabilities of local government to engage communities • Support and reinforce local governance and support bottom up demand from citizens • Blend climate (adaptation and mitigation) finance with development finance
  7. 7. Getting money where it matters 7 Paul Steele December 2016 How to increase finance for community groups? • Recognize contribution of finance to building social and political capital of disadvantaged groups • Recognise contribution of people’s own monies to neighbourhood improvement • Learn essential financial management skills, now able to hold aid agencies and government to account • Provide for better use of state (include local government) subsidy finance • Potential use of land as equity in public - private developments
  8. 8. Getting money where it matters 8 Paul Steele December 2016 How to increase finance for SMEs • Public finance to complement SMEs (eg early development costs by public finance) • Commercial financing modalities to support SMEs (eg simplified loan applications, more accessible lending conditions) • Enabling policy context: Getting policies and regulations right for SME finance • Building local demand for SME services
  9. 9. Getting money where it matters 9 Paul Steele December 2016 Reforms in international finance to reach the local level • Identify how much finance reaches local level and involves communities. Set a fund target. • Earmark flexible grant funding for local finance • Increase appetite of international funds to support innovative financial instruments for local priorities • Strengthen local capacity for climate finance • Build national platforms to channel climate finance flows to the local level.
  10. 10. Getting money where it matters 10 Paul Steele December 2016 Perceived risks of local finance and possible solutions • Transaction costs of many small projects – addressed by “aggregation” mechanisms e.g. federations of community groups, Ministries of Local Government, SME windows • Fiduciary risks of lower capacity groups – addressed by public financial management support etc • Impacts harder to track – addressed by community and participatory monitoring etc
  11. 11. Getting money where it matters 11 Paul Steele December 2016 Next frontiers? • Improve local govts ability to blend different sources of finance behind community priorities • Innovative finance mechanisms to mobilise private finance into pro-poor services • Explore role of community groups to de-risk private investment • Track finance to local level and improve national & global oversight of equity of flows • Design of international funds for public finance to reach local levels and mobilise private finance
  12. 12. Getting money where it matters 12 Paul Steele December 2016 Agenda 7th December: here: • Climate and Energy 8th December: London House • Forestry and Urban • Conclusions and next steps Local level finance: why, how and what next?