How to use this platform
What does the platform offer?
The development finance landscape has changed dramatically in the last two decades. Both domestic and international flows have grown rapidly and the range of financing instruments, providers and delivery mechanisms now available to many developing countries is significantly wider than ever before. At the same time, development projects are increasingly funded with the private sector, which has led to the creation of new and unfamiliar asset classes and instruments, adapted for the development context, such as impact investing, green and blue bonds and debt-for-nature swaps. This is auspicious for mobilizing the vast sums of resources needed to achieve the Sustainable Development Goals (SDGs) – estimated to cost trillions of dollars a year – but navigating this new and evolving landscape can be daunting, even for experienced development practitioners.
One of the key challenges is selecting the most appropriate and effective solutions out of the growing list of consolidated, emerging and non-traditional mechanisms to fund sustainable development for each given context. This is made all the more difficult because what works in one context, may not succeed in an altogether different setting. This online platform is designed to provide practical guidance on how to weigh the attributes of the expanding array of financing instruments, and their applications in financing the SDGs. It profiles solutions across various instrument type including securities (debt and equity), grants and risk insurance, describing their characteristics, advantages, disadvantages, possible risks and potential for scaling development resources and results.
A precondition for deciding what financing solution is needed is understanding what resource flows are currently being mobilised for which purpose. The SDG descriptions section of the platform provides additional information on the predominant tools currently used for addressing each goal, their sources and how they can be made more effective. The aim is to stimulate ideas about opportunities for using the additional solutions profiled, where applicable, to complement those already being deployed for greater development impact.
What is a financing solution?
The financing needed to achieve the SDGs will greatly surpass all current development financial flows, but can be raised from the large amounts of (mostly private) investable resources available globally. In addition, domestic public resources, even in low income countries, can be increased or optimized. Financing solutions provide strategies and means to effectively unlock and direct these sources of finance toward realising the SDGs.
Financing solutions encompass a vast universe of financial mechanisms, instruments, tools, and strategies, which can be used alone or in combination to structure new products that can increase the impact of development interventions. Resource flows for solutions can be pooled from national and international public revenues (taxes, grants,), short- and long-term private capital (bank lending, bonds), or combinations of both (public guarantees, public, private partnerships), and delivered through various public, private and blended institutions.
Decisions regarding the most appropriate financing solutions for each development intervention are often made in the context of incomplete information on volume of public expenditures and private flows currently deployed in support of the SDGs. Similarly, the amount of resources required to achieve the goals is rarely available. Therefore, the emphasis for financing the 2030 agenda is not just on increasing the financial flows aligned to the SDGs, but also on better monitoring and evaluating existing expenditures, so that outstanding funding gaps can be more accurately estimated. Only by spending and investing better the resources available, and by incentivising changes in consumption, production and investment patterns to reduce the burden on sustainable development, will it be possible for countries to finance this ambitious agenda. In this landscape, financing solutions can be categorized and contribute to the SDGs according to the financial results they aim to achieve namely:
- Generate or leverage additional resources for the SDGs: Any existing or innovative mechanism (e.g. impact investment vehicles, environmental taxes, etc.) that can generate and/or leverage extra financial resources for sustainable development.
- Realign current expenditures towards the SDGs: Any measure that can re-orient existing financial flows towards the SDGs (e.g. by eliminating energy subsidies and using the proceeds to fund renewable energy infrastructures).
- Avoid the need for future expenditures towards the SDGs, thus freeing up resources for investment in other areas: Any measure that can prevent or reduce future investment needs by eliminating/amending existing counter-productive policies, expenditures and behaviours (e.g. taxes on sugar content or tobacco and social impact bonds).
- Deliver financial resources more effectively: Any measure or strategy that can enhance cost-effectiveness/efficiency, synergies and/or favour a more equitable distribution of resources (e.g. enterprise challenge funds, national climate funds, etc.).
How can I use this platform?
This platform has been designed with practitioners, including public officials, policy makers, in-country stakeholders, researchers and consultants, who want to diversify the mix of development finance tools at their disposal. It also provides the knowledge to foster participation in development finance activities, and to mobilize and make more effective use of public and private financial resources for sustainable development. The toolkit can be used to:
- Expand your knowledge over the breadth of financing solutions available to implement an integrated, sustainable development financing strategy.
- Examine the potential, advantages, disadvantages, risks, and characteristics of the financing solutions in the context of your own work or country setting.
- Inform brainstorming and writing workshops and sub-national design and planning processes for drafting national or sector-specific strategies.
- Identify additional sources including case studies, e-learning and advanced guidance materials to operationalize the financing solutions.
The Solutions menu provides an alphabetical listing of all financing instruments profiled, but they can also be searched by the financial result(s) they produce; the financial instrument(s) they rely upon; the economic sector(s) their use is most prevalent; or the Sustainable Development Goal(s) by following the links on the right-hand column of the platform. A Glossary of development terms used throughout the platform can be found in the menu bar for ease of reference.
The platform can also be used in conjunction with the following UNDP’s companion publications:
- The Financing The 2030 Agenda: Handbook for UNDP Country Offices– which supports to UNDP’s country offices and partners in exploring new financing opportunities;
- The Development Finance Assessment and Integrated Financing Solutions, which integrates the formulation and selections of finance solutions with the conduction of detailed assessments of a country's development finance flows;
- The Biodiversity Finance Initiative Workbook, which guides the identification, development and implementation of financing plans and solutions for nature. The BIOFIN programme is implemented in 31 countries worldwide.
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