Blended Finance Must Be Mobilized for ‘Energy Transition, Digital Transition, Food Systems Transition’, Deputy Secretary-General Tells Alliance
Following are UN Deputy Secretary-General Amina Mohammed’s remarks at the side event of the World Bank Group/International Monetary Fund 2024 spring meetings by the Global Investors for Sustainable Development Alliance, in Washington, D.C., today:
I am delighted to take part in this essential dialogue. I extend special thanks to the UN Foundation for generously hosting this event, as well as SIDA [Swedish International Development Authority] for their steadfast support towards the Global Investors for Sustainable Development Alliance.
Financing for development is at a crossroads. Nearly a decade ago, in Addis Ababa, the international community came together to establish an agenda aimed at mobilizing financial resources for the Sustainable Development Goals (SDGs) where we called for billions to trillions. Yet, halfway to 2030, the promises of the Addis Ababa Action Agenda remain largely unrealized.
The past few years of global turmoil have increased the financing needs of developing countries to near-crisis levels. And progress made in recent decades to address poverty and hunger has halted — and in some instances, regressed.
Ongoing conflicts have further inflicted immense human suffering and driven up energy and food costs. And the climate crisis is subjecting some of the world’s most vulnerable communities to natural disasters and famine.
In the face of these crises, developing countries are not accessing the financing they need at scale and in time. The gap is enormous.
As highlighted in the 2024 Financing for Sustainable Development Report, an additional $4 trillion must be invested every year to 2030 to have a chance of achieving the SDGs. This is a sharp increase from an investment gap of around $2.5 trillion a year before the COVID—19 pandemic.
But developing countries have limited fiscal space exacerbated by borrowing costs which are so high that 3.3 billion people — around 40 per cent of humanity — live in countries that spend more on interest payments than on health or education.
In 25 developing countries, more than a fifth of tax revenue goes to servicing external debt. This is not only unsustainable. This is immoral. This is wrong. We need to correct this injustice.
The Secretary-General’s call for an SDG stimulus was heard by world leaders. Last September, they endorsed a stimulus of at least $500 billion in financing for developing countries per year — primarily through the multilateral development banks — and the need to tackle the high cost of debt and address the risk of debt distress.
In addition to recapitalizing the multilateral development banks on an urgent basis, increasing the volume of affordable and long-term financing means developing innovative mechanisms that can bridge the financing gap.
We believe that the use of blended finance instruments as initially outlined in the Addis Agenda can be a powerful mechanism for mobilizing private finance in areas where the private sector would not have invested on its own. However, to date, blended finance has struggled to catalyse private investment at the scale required.
The roughly $213 billion mobilized over the past decade pales in comparison to the trillions needed. And only a small portion of funds has gone to the poorest countries, including least developed countries.
We must do better. In particular, we see three key transitions where we need to see blended finance deployed and scaled — the energy transition, the digital transition and the food systems transition.
We need public and private investment in a transition to a decarbonized economy which works for the planet and for all people. We need a digital transition which ensures that all have access to affordable digital services and infrastructure. And we need a food systems transition which ensures food security and adequate nutrition while limiting harmful effects on the environment and climate.
These transitions require supportive policy and regulatory frameworks, operationalized through strengthened public sector capacity. And they require robust public—private partnerships and adequate financing.
I commend the work started by a number of multilateral development banks, including the Inter-American Development Bank, to revisit their approach to blended finance, particularly through the expanded use of guarantees to mitigate risk and catalyse private finance. This work must continue with urgency.
Yet, this is not only a conversation around the operationalization of blended finance mechanisms. It must also be a conversation around prevailing narratives and risk perceptions which limit the willingness of private sector investors to invest in least developed and emerging markets.
As we take decisive steps to set ambitious benchmarks for realizing the full potential of blended finance as a catalyst to scale-up private investment for the SDGs, let us also pledge to tackle these prevailing narratives and risk perceptions. All of you are part of this important work, and the United Nations is grateful for your ideas and partnership.
The Global Investors for Sustainable Development Alliance remains an important platform for engagement between the private sector, multilateral development banks and Member States, and I would like to extend my sincere thanks, on behalf of the Secretary-General, for your work to convene a broad range of stakeholders at the highest levels and for the tools which you have developed to mobilize SDG-aligned private finance and investment.
Your voice will be essential in the lead up to the Summit of the Future and at the fourth international Conference on Financing for Development in 2025.
These will be critical moments in reforming the global financial architecture so it better supports developing countries in accessing the financing they need — including through blended finance.
Today’s meeting serves as an important opportunity for us to openly and constructively engage on the obstacles and opportunities to scale blended finance to ensure that both the public and private sectors share the risks and rewards fairly.
I look forward the discussion, and to the important work ahead.