A brief discussion on the importance of engaging private sector assets to finance the sustainable development goals.

1. Engaging The Private Sector In
Development
Financing The Sustainable
Development Goals

2. Development Goals
• Many see this mainly as a problem to be solved by
multilateral development banks and by
governments of high-income nations through
Official Development Assistance (ODA).
• Reducing poverty and
sharing prosperity have
long been development
goals.

3. Position Statement
While ODA will continue to play an important role,
it must become a catalyst to draw private sector
resources in order to finance sustainable
development.

4. New Millennium - New Momentum
 The Millennium Development Goals (MDGs) were 8
development goals focused on poverty, education, gender
parity, health and other concerns in developing nations.
Agreed upon by governments in 2001, they’ve given much
traction to development, including reducing extreme
poverty.
• The number of people living on less
than $1.25 a day has been reduced
from 1.9 billion in 1990 to 836
million in 2015.1
• The MDGs expired in 2015, but
much development work remains.

5. Post – 2015 Development
Post – 2015 international development targets all nations and
centers around the Sustainable Development Goals (SDGs).

6. Financing the SDGs
• The SDGs are ambitious and global, thus
ambitious global financing will be needed to
pursue them.

7. Financing the SDGs
• The global community provides US$135 billion a year in ODA2 . It is
estimated that an additional US$1 trillion3 per year will be needed
to fund the SDGs4. Where will it come from?
• The public sector will need to develop new streams of funding
through more efficient spending, better tax administration, and
more domestic resource mobilization (DRM) as a whole. For
example, it is estimated that African countries will need to finance
between 50-80% of their infrastructure development through
DRM5.
• The private sector assets – ex. remittances, pension funds, foreign
direct investment, etc – are in the trillions. The private sector seeks
investments based on risk/return consideration along with a
business environment conducive to investment6.
• For the scope of this brief discussion, we will focus on engaging
more private sector assets.

8. A Country Application: Haiti
Haiti, the poorest country in the Americas, is a recipient of
International Development Association (IDA) aid and would
have access to its Private Sector Window (an area proposed
to mobilize private capital and scale up private sector
development in the poorest nations).

9. Haiti Overview
• Haiti’s economic performance over the past four decades
has been disappointing and poverty remains endemic. A
history of political instability, natural disasters, and other
systemic problems has kept the country at a low GDP per
capita. But Haiti has a dynamic diaspora and possible areas
of economic opportunity, including tourism.7
• It would take huge resources to move
Haiti significantly toward the SDGs, well
beyond the country’s resources and
current ODA commitments. Once the
appropriate projects are formulated,
where can additional funds be sought?
The private sector is a logical partner.

10. Two Potential Private Sector Sources of
Finance
• Remittances to developing countries are large
and more stable than other sources of external
financing. Remittances to Haiti were equivalent
to 22% of Haiti’s GDP or US$1.97 billion in 2014.8
Diaspora bonds could funnel finances to projects.
• Total US retirement assets were $25.3 trillion as
of Dec. 31, 2016.9 Pension funds need long-term
investments and might be drawn to well-
structured projects in Haiti with the right returns
and risk guarantees.

11. Motivation for Stakeholder
Participation
• The Haitian government is not on course to fulfill its desire
to become an emerging economy by 2030. Even if the right
mix of political, social, and economic reforms are identified,
Haiti is already ODA dependent. Haiti would need
additional funds to do the additional projects.
• Official aid providers want to leverage their impact and
seek to catalyze investments from the private sector.
• Private sector investors look for appealing risk/return
opportunities and increasingly look to emerging markets to
boost returns. If Haiti and development partners can
structure projects with the right risk/return balance,
investors might participate.

12. Conclusion
• The task of helping developing nations out of poverty and
toward sustainable development is huge, and will require
much greater resources than the $135 billion per year of
current ODA.
• Private sector resources are in the trillions. Solutions for
sustained development must include strategies to engage
these resources.
• The Haiti solution above is
simplified but illustrates the
principle of the position.

13. End Notes
1. What Have the Millennium Development Goals Achieved?, The Guardian, July 6,
2015
2. Financing the End of Poverty, World Bank, July 10, 2015.
3. Mobilizing Private Investment for Post-2015 Sustainable Development, Brookings
Report, Homi Kharas and John McArthur, July 16, 2014
4. From Billions To Trillions: Transforming Development Finance, The World Bank
and International Monetary Fund, April 2, 2015
5. Opportunities for Economic Transformation in Africa, by Dr. K.Y. Amoako (video)
6. From Billions to Trillions: Transforming Development Finance, World Bank Group
7. Haiti: Towards a New Narrative, Systematic Country Diagnostic, May 2015,
World Bank Group
8. Migration and Remittances Factbook 2016, 3rd Edition, World Bank Group
9. Retirement Assets Total $25.3 Trillion in Fourth Quarter, Investment Company
Institute, www.ici.org