Financing for sustainable development: Why it’s not all about the money

While the 2030 Agenda and Sustainable Development Goals (SDGs) represent a high level of ambition from the international community, they also devote attention to ensuring the Agenda is grounded and realistic, through adequate “means of implementation”. The Agenda in para. 63 states that “cohesive nationally owned sustainable development strategies, supported by integrated national financing frameworks, will be at the heart of our efforts”.

In most countries, this “nationally owned sustainable development strategy” is called the national development plan. The 2030 Agenda encourages countries to consider the integrated nature of the 17 SDGs as well as interlinkages between goals—for instance how clean water and nutrition can support education. There is evidence that the 2030 Agenda has led to a greater number of countries preparing development plans that set out national priorities across different sectors.[1] These plans lay out what needs to be financed.[2]

While the number of development plans has increased, few contain a strategy detailing how they will be financed.[3] This is an important gap that reduces their effectiveness. There is a risk of national plans being overly aspirational and lacking a clear prioritization. This means that decisions about what is actually implemented are made when a country’s annual budget is developed,[4] or when programming decisions for other funding streams are made.

The UN, in the 2019 Financing for Sustainable Development Report, has encouraged countries to develop integrated national financing frameworks (INFFs) that include (1) assessment of existing and potential sources of financing; (2) a financing strategy; (3) arrangements for monitoring and review; and (4) governance and coordination. The reasons for an INFF are very similar to those for developing a national plan in the first place–to break past short-term concerns and silos and consider how different sources of finance can be managed in a coherent way that supports longer-term national priorities. Two examples from the work of the UN Department of Economic and Social (DESA) illustrate this.

Firstly, the UN Forum on Forest Secretariat (UNFFS) has been supporting countries for many years on forest finance. Investing in forests can support a range of objectives both at the local and global level. At the local level, they support improving livelihoods, reducing poverty, increasing employment, promoting economic development, reducing disaster risk, protecting biodiversity resources, preventing floods and soil erosion, addressing adverse impacts of climate change and extreme weather events, providing energy resources, and protecting water sources, among others. At the global level, forests help maintain weather patterns, regulate climate, protect biodiversity, provide services and materials for housing, medicine and medical supplies, and store carbon. Given the multiple benefits of forests, multilateral development and climate change funding institutions such as the Global Environment Facility (GEF) and the Green Climate Fund (GCF) include financing forests among their priorities. To maximize the efficient use of available funding resources for forests, it is important to ensure complementarity and coherence of different financing streams in support of national and globally agreed forest-related goals. This makes it necessary to involve a range of institutions and sectors: planning, finance, agriculture, tourism, and disaster risk reduction just to name a few. It is perhaps no surprise that some examples included in the 2019 Financing for Sustainable Development Report on the issue of “governance and coordination”, building block 4 of the INFF approach, focus on the area of environment and climate finance.

Forest finance also illustrates what assessment—building block 1 of the INFF framework—can involve. Forests are often undervalued as it is difficult to place a value on the many goods and services they provide. Markets often recognize timber and a few non-timber forest products, even though the value of forests to other areas of the national economy and society may be much larger.[5] Multi-disciplinary assessment of the value of forests to different sectors is not always available. One way to address this problem is to incorporate such assessments in the national planning frameworks. It is worthwhile for planning and finance ministries—especially in countries where forests are an important resource—to consider building or bringing in capacity for this kind of multi-disciplinary assessment.

A second area that can usefully be considered in an INFF is infrastructure asset management. Infrastructure assets ranging from schools, highways, electricity grids, water treatment facilities as well as natural resources are often on the front line of advancing the 2030 Agenda, and it is difficult to assess  financing needs of a country without factoring in the assets it already has. Frequently, public investment strategies focus on the acquisition or construction of new assets and do not budget for the financial, human and material resources to manage them over their lifespan. Contrary to common belief, the actual construction or acquisition cost of an infrastructure asset only contributes to 15-30 percent to overall expenditures. 70-85 per cent of costs are incurred over its lifecycle after it is built.

DESA consultant with Tanga’s asset management team at local landfill
DESA consultant with Tanga’s asset management team at local landfill

As a result of a strong focus on “new and shiny” infrastructure, priority is often given to building new assets while old ones are neglected. This oversight can be extremely costly. Underinvestment on maintenance of infrastructure has been estimated to cost some developing economies up to 2 per cent growth in GDP.[6] Underbudgeted and under-maintained infrastructure assets are more likely to fail, disrupting essential services like transport, water and sanitation or solid waste management. These vulnerabilities have been particularly evident during the COVID-19 pandemic. An asset management framework can support the provision of essential services that are reliable and inclusive and support the country’s overall efforts to “leave no one behind”.

Considering existing assets in the development plan and INFF in a systematic way can also significantly improve the effectiveness of government spending, as maintaining them may achieve the same thing at a fraction of the cost of building new infrastructure or replenishing natural resource stocks. As assets are often managed at the local level, this also requires a systematic approach and coordination between national and local governments. 

Over the past 4 years, DESA has supported a number of developing countries in improving infrastructure asset management practices at local and national levels. Consider the case of Tanzania: Here, DESA is working with a range of cities and districts in the development of Asset Management Action Plans (AMAPs) that support evidence-based, resilient, risk-informed and sustainable asset management. Cities like Tanga and Mwanza have since made significant strides in incorporating asset management activities into their local development plans and budgets. Their AMAPs focus on priority infrastructure assets like solid waste management facilities and central market spaces and spell out detailed construction, maintenance and upgrading activities that will improve the longevity, resilience, service and revenue potential of these assets.  

DESA’s field experience suggests that effective asset management practices are best introduced gradually and require an internal technical focal point in the local (or central) government that champions the cause.  A significant challenge that continues to impede country-wide asset management reform lies in the fact that there is still no coherent set of national policies and strategies for the management of public assets in most countries. Indeed, very few countries (South Africa is one) have established such a policy. DESA’s future capacity development activities in the asset management space will try to address this gap and promote peer exchange among countries to support an enabling national policy, legislative and regulatory environment for asset management that is firmly embedded in national development plans and INFFs. Such activities will also draw on the wide range of guidance material and toolkits included in the upcoming publication by DESA and the UN Capital Development Fund (UNCDF): “Managing Infrastructure Assets for Sustainable Development: A Handbook for Local and National Governments”.

The broad coverage of both national development plans and the 2030 Agenda makes the role of national planning and financing frameworks much more important, and at the same time expands the range of issues and sectors they need to involve. Factoring existing assets into the national planning framework—including forests in countries where these are an important resource—can result in a national plan that is more effective in helping the country achieve its development goals. As in other areas of capacity development, there is a good argument for a step-by-step approach. Incorporating a few types of asset of particular importance to the country can help develop its ability to coordinate and manage different types of information in the planning framework.

DESA has been supporting work on forest finance in Ethiopia and Tanzania, and on asset management in Tanzania, through a project on “Evidence-based, coherent and well financed strategies to implement the 2030 Agenda”. The project is financed by the UN Peace and Development Fund, established with a contribution from the Government of China.


[1] Chimhowu, Hulme and Munro, “The ‘New’ national development planning and global development goals: Processes and partnerships”, World Development 120 (2019) 76-89

[2] UN Financing for Sustainable Development Report (2019), page 12.

[3] UN Financing for Sustainable Development Report (2019), page 12.

[4] See ESCAP and IMF (March 2018), Improving the Links between National (and Sector) Plans and Budgets for Sustainable Development in Pacific Island Countries

[5] FAO (2013) Guidelines for Formulating National Forest Finance Strategies.

[6] Foster, V. and C. Briceño-Garmendia, eds. Africa’s Infrastructure: A Time for Transformation. 2010, World Bank: Washington, DC. 273.