Evolving Financial Systems to Reach the SDGs World Bank Group - PowerPoint PPT Presentation

Evolving Financial Systems to Reach the SDGs World Bank Group Senior Vice-President Dr. Mahmoud Mohieldin @wbg2030 April 1, 2017 worldbank.org/sdgs

Global Development Challenges FRAGILITY AND LAGGING HUMAN LACK OF TECHNOLOGICAL VIOLENCE DEVELOPMENT RESILIENCE DISRUPTION • 65 million people • 26 million people are • 121 million children are • Lightning-fast changes forcibly displaced pushed into poverty not in school in technology which will globally each year due to • 400 million people do not disrupt markets and extreme weather • 46% of the global have access to essential beyond poor will be in health services fragile & conflict situations by 2030

The Needs Exceed Existing Resources Between now and 2030 $780 developing countries need an BILLION annual investment of up to: $470 For Climate Change BILLION Mitigation & Adaptation $240 BILLION Transport $690 BILLION Telecom Power Source: IFC Presentation to Center for Global Development, February 2017

Looking Back: The MDGs Era MDG Progress, by number of countries MDG 1.1: Poverty 7 2 27 71 11 27 MDG 1.9: Malnourishment 4 13 52 35 8 33 MDG 2.2: Primary Completion 11 17 40 40 12 25 MDG 3.1: Gender Parity 28 67 7 11 22 10 MDG 4.1: Under-5 Mortality 16 37 34 38 18 2 MDG 4.2: Infant Mortality 18 33 54 34 4 2 MDG 5.1: Maternal Mortality 11 20 88 15 3 8 MDG 7.8: Water 40 2 12 67 5 19 MDG 7.9: Sanitation 7 14 58 36 7 23 Target Met Sufficient Progress (by 2015) Insufficient Progress (2015-2020) Moderately off target (2020-2030) Seriously Off Target (after 2030) Insufficient Data 4 Source: World Bank data, staff calculations

Global Frameworks for Development: From MDGs to SDGs MDGs (2000-2015) SDGs (2016-2030) Goals 8 17 Targets 21 169 Indicators 60 ~231 Holistic: Economic, Social, Priority Areas Human Development Environmental Scope Developing Countries Universal The global development agendas serve as a guide for countries to determine their national development path 5

Transitioning from the MDGs to the SDGs: Lessons Learned • Ensure the timeliness and effectiveness of policy instruments • Increase efficient allocation of resources • Recognize and identify interrelatedness of development goals at the onset • Ensure strong government involvement • Promote quality data • Increase cross-institutional collaboration • Prioritize engagement of communities and community mobilization • Bridge the humanitarian and development agendas 6 Based on report: “Transitioning from the MDGs to the SDGs” jointly written by the World Bank Group and the UN Development Programme

The Sustainable Development Goals The 2030 Agenda of Ending Poverty, Preserving the Planet, While Leaving No One Behind 7

The World Bank Group has a Key Role to Play The World Bank Group Twin Goals are to Eradicate Extreme Poverty and Boost Shared Prosperity in a sustainable manner T HRE E PRIORIT IE S: SUSTAINABLE AND HUMAN CAPITAL RESILIENCE INCLUSIVE GROWTH 8 Source: World Bank Group Strategy, 2013

WBG GOALS: Eradicating Extreme Poverty and Shared Prosperity in a sustainable manner F ORWARD L OOK: “Ho w sho uld the WBG do it” Serving All Clients Leading Global Agenda Mobilization For Development Improving Business Model • New sources of • Knowledge action • Creating markets Private Capital plan/ Agile pilots • Implementing (IFC/MIGA/ICSID climate action • Mainstreaming joint • Shared services plan • Implementing IDA18 WBG solutions • Simplification • Enhancing crisis • Aligning IBRD • Domestic resource response lending with • People strategy mobilization approach priorities • Incentives for • Existing and new collaboration partnerships T HRE E PRIORIT IE S: “Wha t the WBG sho uld do ” SUSTAINABLE AND INCLUSIVE HUMAN CAPITAL RESILIENCE GROWTH 9

Domestic Private Sector US$ 440 Billion Savings and Remittances 2015 Investment A LARGE POOL OF PRIVATE CAPITAL IS YET TO BE CATALIZED WITH JUDICIOUS USE OF SCARCE PUBLIC AND CONCESSIONAL RESOURCES + Alternative means of funding: cooperatives, green finance, ethical finance, social impact financing, Islamic finance Sources: World Bank Annual Report 2015; World Development Indicators; OECD DAC Statistics

Official Development Assistance As development challenges at the global and national levels increase, so too should the resource envelope available to meet these needs….ODA flows are simply not enough. Developing countries' total resource receipts (in millions of dollars) 1200000 1000000 800000 600000 400000 200000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ODA Non-ODA Personal remittances ODA: Official Development Assistance. ODA in the chart includes bilateral ODA and multilateral concessional flows. Non-ODA flows include: other official developmental flows, officially-supported export credits, FDI, other private flows at market terms and private grants. Adjusted gross disbursements, three-year moving average, USD million, 2012 constant prices. Sources. Remittances, World Bank. Other resource flows, DAC statistics. NB: Data on flows to MADCTs are only available up to 2010.

IDA: WBG Fund for the Poorest • IDA is one of the largest sources of assistance for 77 countries, 39 of which are in Africa. • IDA lends money on concessional terms. A leading Overseen by source of non- 173 • IDA credits have a zero or very low interest charge earmarked shareholder concessional countries finance and repayments are stretched over 25 to 40 years, including a 5- to 10-year grace period. Long-standing Holistic • IDA also provides grants to countries at risk of debt field presence approach, in the world’s working across distress. 77 poorest all sectors countries • The 18th replenishment, just concluded this 12 year, mobilized a record $ 75B Commitment .

Domestic Resource Mobilization Median tax revenue as a percent of GDP by Income grouping, 1990-2014 • A country’s ability to mobilize domestic 25% resources and spend them effectively – at the national, sub-national and municipal levels – 20% lies at the crux of financing for development. 15% • Strengthening the capacity of local governments, including to raise their own revenues, to manage expenditures and service 10% delivery, and to borrow and manage debt prudently is critical 5% • Developing inter-government fiscal transfer 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 arrangements that consider the needs of sub- national governments and equalize fiscal capacity and expenditure is also critical High income Upper middle income Lower middle income Low income Sources: IMF data; World Bank Financing for Development Post-2015

Many Provinces Outsize Entire Countries 78 countries Countries with Population Under 5 Million People out of 196 total Mexico 8 provinces Provinces with Population out of 27 total Over 5 Million People Egypt South Africa 7 provinces 5 provinces out of 31 total out of 9 total Source: Data calculations from local government statistics

Expenditures for Local Governments Sample Expenditure Plan Expenses on Delegated Functions Own Expenditures 1. Preschool Education 1. Infrastructure and Public Services 2. Primary and Secondary School 2. Environment Protection, including waste 3. Health Care 3. Social, Cultural, Recreational Expenditures 4. Social Assistance and Poverty Alleviation 4. Local Economic Development 5. Public Order and Civil Protection 5. Social Housing 6. Other 6. Urban Development 7. Civil Security 8. Transfers to Sub-local Government Entities 9. Subsidies, Grants, Equity, In-Kind 10. Loan Repayment 11. Interest Charges 12. Guarantees Called Source: Municipal Finances Handbook: Managing Local Expenditures, Morrell and Kopanyi

Revenue Sources for Local Governments TAX FEES TOLLS INTEREST Property, Licensing, Roads, on bank Motor, Facilities, Bridges, etc. deposits or Sales, etc . Fines, etc . other funds RENT CHARGES SURPLUSES Land, Bus Stations, from local Buildings, Taxi Parks, etc. commercial Vehicles, etc . enterprises Source: Municipal Finances Handbook: Managing Local Expenditures, Devas, Munawwar, and Simon

Private Sector & Sustainable Development MARKET FORCES STAKE - HOLDERS “BUSINESS WILL BE 2030 THE SINGLE MOST Purpose IMPORTANT ACTOR CUSTOMER at the HEART LOYALTY IN DELIVERING THE of BUSINESS SDGs” – 2016 Global TALENT CEO study Sources: Adapted from 2017 Deloitte study on “2030 Purpose” and the 2016 Accenture “Global CEO” study.

Leveraging Private Finance How Much is Out There? $4. $4.5 $5 $5 $100 $100 $2 $2 TRILLI LLION TRILLI LLION TRILLI LLION TRILLI LLION Assets held Assets held Assets held Global bond by the world’s largest by the world’s ten by the world’s market sovereign wealth largest pension largest insurance funds funds companies Source: IFC Presentation to Center for Global Development, February 2017

Private Sector & Sustainable Development Sustainable Development Goal • The private sector can play a transformative role in supporting the SDGs. These are some of the biggest • market opportunities related to delivering the SDGs Source: Better Business Better World Report, January 2017