Create New Era of Public–Private Partnership, Deputy Secretary-General Stresses in Remarks to World Bank, International Monetary Fund Side Event

Following are UN Deputy Secretary-General Amina Mohammed’s remarks, as prepared for delivery, at the side event to the World Bank Group/International Monetary Fund (IMF) 2023 spring meetings by the Global Investors for Sustainable Development Alliance and the Swedish International Development Cooperation Agency, in Washington, D.C., today:

I am pleased to participate in this timely and important discussion.  I wish to thank the United Nations Foundation for hosting this event, as well as Sida for their support to the GISD Alliance and the organization of this panel.

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 United States 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 United Nations will release a report on the status of the Sustainable Development Goals (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.  Multilateral development banks 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 Group of 20 provides clear steps on how this can be achieved and could enhance multilateral development bank investment capacity by up to $1 trillion.

Second, the multilateral development banks have the unique ability to mobilize private capital at scale in emerging and frontier markets — well beyond the $34 billion that was mobilized between 2018 and 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.  Multilateral development banks 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, multilateral development banks can develop transactions that will attract the private sector while maximizing scale and impact.  Realizing the full potential of multilateral development banks as catalysts of private investment will require deeper collaboration between the multilateral development banks, 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.