MDBs’ Approaches to Mobilizing Private Investment for SDGs: Opportunities and Risks

Abstract

he 2030 Sustainable Development Agenda, adopted by the UN in September 2015, drew attention of the international community to the problem of finding resources to finance various initiatives and programs necessary to achieve the Sustainable Development Goals (SDGs). The availability of the required long-term financing from state budgets and multilateral development banks (MDBs) remains limited, and its structure is not optimal due to unstable market conditions and cyclical fluctuations in the global economy, as well as a number of long-term economic trends. At the same time, private investment, primarily from the largest institutional investors, could become another important source of additional financing for development, which could partially compensate for the abovementioned deficit. \n \nGiven that, on the one hand, private investors have considerable funds, which they are not inclined to invest in infrastructure development for various reasons, and on the other hand, MDBs’ investment in this sector remain limited, despite their vast experience and unique institutional characteristics, demand has increased for multilateral banks to perform a more active role in developing and using new financial instruments, addressing information problems and providing their own financial resources, that is, co-financing projects with the private sector. \n \nThis article examines the main approaches used by the MDBs to mobilize private investment, assesses their “major catalytic role” of co-financing with the private sector, and gives some recommendations on strengthening their mobilization role. \n \nAccording to the author, the data on direct private investment mobilization provided by MDBs indicate the need to expand the use of mobilization tools. In this regard, measures aimed at solving the main problems in this area - the limited MDBs’ resources and their conservative credit policy – seem to be the most promising. Among these measures are easing capital requirements for banks, optimization of “concessional windows”, and partial transfer of MDBs’ obligations to private investors, including through creating investment platforms and special funds. Although these mechanisms in various forms have already been adopted by key MDBs, given insufficient levels of mobilization, it is necessary to remove obstacles to their more active use.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 6 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.