Washington D.C.
United States of America
Deputy Secretary-General's remarks at Side Event, "Enhancing the Role of Multilateral Development Banks in Catalyzing Private Finance and Investment" at World Bank Group - IMF Spring Meetings [as prepared for delivery]
Statements | Amina J. Mohammed, Deputy Secretary-General
Statements | Amina J. Mohammed, Deputy Secretary-General
Excellencies, Distinguished guests,
I am pleased to participate in this timely and important discussion.
I wish to thank the UN Foundation for hosting this event, as well as Sida for their support to the GISD Alliance and the organization of this panel.
Dear friends,
The world is facing a series of cascading crises.
The economic and public health shocks caused by COVID-19 are continuing to affect people around the world.
The war in Ukraine has resulted in immense human suffering, as well as rising energy and food prices.
Inflation has been soaring, putting pressure on central banks to react.
Rising interest rates have exacerbated the debt burden in developing countries.
Most recently, financial markets in the US and Europe have been under pressure.
And there is barely a week without a new environmental disaster – showcasing the devastating impact of the climate emergency on people and planet.
These challenges have led to greater uncertainty and risks.
The UN will release a Report on the status of the SDGs later in April.
I am not spoiling the key findings when I say:
The SDGs need an urgent lifeline.
With an annual funding gap of $4 trillion for the SDGs, we know that public funds alone will not be sufficient.
We need to provide a massive boost from private investment in developing countries.
Multilateral development banks and development finance institutions are at the core of this agenda.
In the SDG Stimulus, the Secretary-General put forward three concrete actions to accelerate progress towards the SDGs:
To tackle the high cost of debt and rising risks of debt distress;
Massively scale up affordable long-term financing for development; and
Expand contingency financing to countries in need.
By doing so, multilateral development banks can increase the amount of private sector financing mobilized.
First, in leveraging their capital bases and balance sheets more efficiently.
MDBs can make a massive contribution to expanding concessional lending to developing countries.
They could also crowd-in the private sector by shifting to a model where loans are sold to investors.
The Capital Adequacy Framework Review by the G20 provides clear steps on how this can be achieved and could enhance MDB investment capacity by up to $1 trillion.
Second, the MDBs have the unique ability to mobilize private capital at scale in emerging and frontier markets – well beyond the $34billion that was mobilized between
2018 to 2020.
Establishing clear targets for private capital mobilization should be encouraged.
Another key area relates to the use of blended finance.
Blended finance mobilized only $10.7 billion per year on average – far below the contribution needed towards closing the investment gap for the SDGs.
MDBs and the private sector must work together to develop more effective instruments that can realize the full potential of blended finance.
Third, Multilateral Development Banks possess a wealth of in-country knowledge and expertise that can be leveraged to develop strong project pipelines.
The current cost of developing projects is prohibitive for many developing countries, which also lack technical capacities.
By increasing resource allocations to project pipeline development, MDBs can develop transactions that will attract the private sector while maximizing scale and impact.
Ladies and gentlemen,
Realizing the full potential of MDBs as catalysts of private investment will require deeper collaboration between the MDBs, their shareholders and the private sector.
I wish to thank the Global Investors for Sustainable Development Alliance for their work in providing a private sector perspective on how to scale up investment for sustainable development.
As the World Bank will soon enter a critical stage under a new President, I encourage you to build on today’s discussion to create a new era of public–private partnership.
We have no time to waste.
I thank you and look forward to a fruitful discussion.
I am pleased to participate in this timely and important discussion.
I wish to thank the UN Foundation for hosting this event, as well as Sida for their support to the GISD Alliance and the organization of this panel.
Dear friends,
The world is facing a series of cascading crises.
The economic and public health shocks caused by COVID-19 are continuing to affect people around the world.
The war in Ukraine has resulted in immense human suffering, as well as rising energy and food prices.
Inflation has been soaring, putting pressure on central banks to react.
Rising interest rates have exacerbated the debt burden in developing countries.
Most recently, financial markets in the US and Europe have been under pressure.
And there is barely a week without a new environmental disaster – showcasing the devastating impact of the climate emergency on people and planet.
These challenges have led to greater uncertainty and risks.
The UN will release a Report on the status of the SDGs later in April.
I am not spoiling the key findings when I say:
The SDGs need an urgent lifeline.
With an annual funding gap of $4 trillion for the SDGs, we know that public funds alone will not be sufficient.
We need to provide a massive boost from private investment in developing countries.
Multilateral development banks and development finance institutions are at the core of this agenda.
In the SDG Stimulus, the Secretary-General put forward three concrete actions to accelerate progress towards the SDGs:
To tackle the high cost of debt and rising risks of debt distress;
Massively scale up affordable long-term financing for development; and
Expand contingency financing to countries in need.
By doing so, multilateral development banks can increase the amount of private sector financing mobilized.
First, in leveraging their capital bases and balance sheets more efficiently.
MDBs can make a massive contribution to expanding concessional lending to developing countries.
They could also crowd-in the private sector by shifting to a model where loans are sold to investors.
The Capital Adequacy Framework Review by the G20 provides clear steps on how this can be achieved and could enhance MDB investment capacity by up to $1 trillion.
Second, the MDBs have the unique ability to mobilize private capital at scale in emerging and frontier markets – well beyond the $34billion that was mobilized between
2018 to 2020.
Establishing clear targets for private capital mobilization should be encouraged.
Another key area relates to the use of blended finance.
Blended finance mobilized only $10.7 billion per year on average – far below the contribution needed towards closing the investment gap for the SDGs.
MDBs and the private sector must work together to develop more effective instruments that can realize the full potential of blended finance.
Third, Multilateral Development Banks possess a wealth of in-country knowledge and expertise that can be leveraged to develop strong project pipelines.
The current cost of developing projects is prohibitive for many developing countries, which also lack technical capacities.
By increasing resource allocations to project pipeline development, MDBs can develop transactions that will attract the private sector while maximizing scale and impact.
Ladies and gentlemen,
Realizing the full potential of MDBs as catalysts of private investment will require deeper collaboration between the MDBs, their shareholders and the private sector.
I wish to thank the Global Investors for Sustainable Development Alliance for their work in providing a private sector perspective on how to scale up investment for sustainable development.
As the World Bank will soon enter a critical stage under a new President, I encourage you to build on today’s discussion to create a new era of public–private partnership.
We have no time to waste.
I thank you and look forward to a fruitful discussion.