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1. Can guarantees effectively leverage financing for SMEs in low- and middle-income countries?

Author:
Bao-We-Wal Bambe
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Achieving the Sustainable Development Goals (SDGs) will require significant financing and investment, particularly as growing challenges from climate events highlight the insufficiency of public funds to meet the 2030 Agenda (World Economic Forum 2024). Private capital for low- and middle-income countries (LMICs) surged in recent years, with significant commitments from multilateral development banks (MDBs). However, the financing gap to achieve the SDGs remains sizable, highlighting the need for greater effort to mobilise much larger private capital for sustainable development. In recent years, guarantees have emerged as a key leveraging mechanism. They are designed to mitigate high investment risks to support private capital mobilisation in LMICs. However, despite some progress, guarantees are used sparingly, suggesting considerable scope for increasing their scale, as highlighted by the G20 Independent Expert Group (IEG). This Policy Brief examines whether guarantees can serve as an effective leveraging mechanism for small and medium-sized enterprises (SMEs) in low- and middle-income countries (LMICs). This is especially so because SMEs remain largely hampered by poor access to finance, despite their key role in providing jobs for the local population and contributing to economic growth. Moreover, in the face of climate change, SME adaptation requires new investments in climate-resistant technologies and clean energies, highlighting the need for additional financing amid severe constraints on access to capital. Guarantees can complement other leveraging mechanisms, further easing financing constraints for SMEs in LMICs. Guarantees can absorb some of the risks associated with investment, offering financial institutions greater security. This added security can, in turn, help improve access to capital for SMEs. On the other hand, they can also help catalyse private sector investment in LMICs. Recognising both the potential benefits and short-comings of guarantees, this Policy Brief provides the following policy recommendations on how guarantees could be extended efficiently to the SME sector in LMICs. • Guarantees should be directed at financial institu-tions to mitigate portfolio risk and actively promote lending to small projects or SMEs in high-risk sectors, particularly those with the potential to generate substantial economic, environmental, or social benefits. • Complement guarantees with additional measures to improve SMEs’ financial management, enhance risk assessment, and strengthen technical capacity through professional training and advisory services. • Implement partial credit guarantees to require financial institutions to retain a share of the risk, thereby reducing moral hazard and promoting rigorous analyses of borrowers’ creditworthiness. Complement these guarantees with conditionalities and monitoring criteria, such as regular reporting, to ensure the incrementality and additionality of guaranteed financing. Enhance the harmonisation of guarantees with other leveraging mechanisms, improve coordination among MDBs and DFIs, and streamline guarantee frameworks to achieve greater efficiency. • Recognise that guarantees alone cannot address structural vulnerabilities and institutional weakness in LMICs; a long-term commitment from decision-makers is essential to improve institutional and economic performance.
Topic:
Development, Finance, Sustainable Development Goals, and Investment
Political Geography:
Global Focus

2. Financing for development: from Monterrey to Seville

Author:
Stephan Klingebiel, Jorge A. Pérez-Pineda, and Kathrin Berensmann
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The United Nations financing for development process, including the Fourth International Conference on Financing for Development (FfD4) in Seville in 2025, is an important building block to foster global cooperation amid the current geopolitical tensions and multiple crises that have led to increased development financing needs on the one hand, and increased spending on the other, with the OECD estimating that the financing gap in funding required for developing countries to achieve the Sustainable Development Goals is $3.9 trillion per year. Against this backdrop, a coordinated international effort is essential to increase the scale and effectiveness of development financing and promote sustainable development globally, particularly in line with the 2030 Agenda. The overarching goal of the FfD process, including FfD4, is to mobilise adequate financial resources for the sustainable development of countries in the Global South, and to design appropriate architectures for development and sustainable finance. The FfD process is unique in that it takes a holistic approach, involving all sources of development finance and all public and private stakeholders. In this respect, the FfD process has an extraordinary convening power. The purpose of this Discussion Paper is to provide meaningful input to the preparatory process of FfD4 by offering insights into key challenges, opportunities and innovative approaches. The paper aims to contribute to the broader dialogue on financing for sustainable development and support informed decision-making for a robust and inclusive development agenda beyond 2030. Topics range from reforms of official development assistance, innovative approaches to private-sector and sustainable finance, and innovative reforms of multilateral development banks.
Topic:
Development, United Nations, Finance, Sustainable Development Goals, and OECD
Political Geography:
Global Focus and Global South

3. Lowering the Cost of Capital for Climate and SDG Finance in Emerging Markets and Developing Economies (EMDEs)

Author:
Jeffrey Sachs, Lisa Sachs, Ana Maria Camelo Vega, and Bradford M. Willis
Publication Date:
04-2025
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Today, the world’s fastest-growing economies face the steepest borrowing costs — even for clean energy projects with solid fundamentals. This is not a function of global capital scarcity. Trillions are available. The problem lies in systemic barriers that prevent capital from flowing to where it’s most urgently needed. The high cost of capital in EMDEs not only undermines critical financing for the energy transition and sustainable development; it also limits the ability for US- and EU-based financial institutions to invest in and finance projects in EMDEs, despite institutional and stakeholder appetite and interest for transition finance. This paper provides a holistic diagnosis of the structural forces inflating the cost of capital in EMDEs – including sovereign credit ratings, investor risk perceptions, development finance mandates, and regulatory norms – and it outlines ten actionable solutions to unlock long-term, affordable finance for climate and sustainable development – at the speed and scale required by both global goals and national ambitions. Each of the proposed approaches deserves careful discussion, consideration, and exploration; they are presented in this paper as a roadmap for discussion, including in the context of relevant global discussions on financing climate action and sustainable development, including the UN Financing for Development Agenda, the UNFCCC COP process, and the G20 Sustainable Finance Working Group.
Topic:
Development, Emerging Markets, Climate Finance, Sustainable Development Goals, and Capital
Political Geography:
Global Focus

4. Harms from Concentrated Industries: A Primer

Author:
Denise Hearn
Publication Date:
02-2024
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
Clashes between dominant firms exercising private power across the economy, and regulatory agencies tasked with preserving democracy have oscillated in ferocity throughout history. Today there is widespread recognition that in many markets, concentrated private economic and political power has yielded a range of anti-democratic, anti-innovation, and inequitable outcomes for consumers, workers, and smaller businesses. A vast literature1 now documents the macroeconomic and social harms from concentrated markets. As a 2019 International Monetary Fund (IMF) report states, “further increases in the market power of already-powerful firms could weaken investment, deter innovation, reduce labor income shares, and make it more difficult for monetary policy to stabilize output.”2 Competition policy, or antitrust, is a subset of a broader anti-monopoly agenda, and an important foundation for the functioning of fair markets. How its laws are crafted, interpreted, and enforced has substantial economic and social effects at local and regional levels, as well as national and international levels. The way that competition policy is written, interpreted, and applied has wider societal impacts beyond competition, including effects on democracy, economic inequality, growth and innovation, racial and gender imbalances, privacy, geopolitical implications and more. Competition policy also has redistributive economic effects between stakeholders, often privileging the largest corporate actors and their shareholders at the expense of other stakeholders.3 As the largest global firms have grown in size and reach, many national jurisdictions have set up competition authorities. In the last four decades, more than 120 legal systems have created competition rules, establishing National Competition Authorities (NCA) across a significant portion of countries.4 However, competition policy includes, but is not limited to, antitrust enforcement. It can also include a broader set of legislative and regulatory reforms which provide market guardrails that protect consumers, workers, independent businesses, and fair market dealing.5 The recently introduced Digital Markets Act in the EU is an example of competition policy using additional regulatory layers to protect the rights of consumers, start ups, and to spur innovation and economic growth. Today, competition policy and antitrust law are experiencing new political potency as various global jurisdictions have strengthened and enhanced their enforcement regimes.6 New market realities like digital market platform gatekeepers, the financialization of firms, the rise of private equity, resurgent labor movements, trade wars and industrial policy, and sustainability challenges, among others, have forced reconsiderations of how to adapt competition policy to meet new 21st century market realities. Competition policy’s narrow focus on consumer welfare (typically defined as low prices)7 over the last 40-50 years saw technological giants ascend to new heights with little to no scrutiny or challenges to mergers. A focus on lowering prices for consumers meant that new assetization strategies – such as monetizing a user’s attention while offering “free” products – went ungoverned by competition regulators. Non-price effects from concentrated markets like: threats to democracy or privacy, and effects on worker’s rights or the environment were mostly ignored. Mergers largely went unchallenged, leading to concentration across many sectors of the economy which is well documented in the US,8 Canada,9 and Europe10 and increasingly so in other jurisdictions. As so-called “superstar firms” have come to dominate national and global economies – in part due to a lack of strong countervailing regulatory structures and antitrust enforcement, and in part due to new network effects or economies of scale and scope in financial, digital, and other markets – many large companies are now akin to para-state institutions, which set the terms and norms of markets, acting as de facto private regulators. Global collective action problems like inequality, climate change, and biodiversity loss, which threaten the ecological and social thresholds upon which open societies are built, have also challenged the status quo of competition policy interpretation and enforcement. This presents a moment of political opportunity for a new vision, which asserts a concerted challenge to the ways in which concentrated corporate power undermines healthy economic, political, and social functioning across a range of industries. An anti-monopoly policy agenda ensures that markets operate on fair and competitive terms, that they reward innovation, create widely shared ownership and prosperity, and allow the best ideas, products, and services to flourish. Markets are public creations, governed by democratically determined rules. Anyone can be an anti-monopolist and participate in the active governance and shaping of markets, and there is now a wide global community of people who identify as such. At the end of this document we list some civil society organizations that are working to foreground anti-monopoly policy approaches and to build communities of practice, for those interested in learning more. Below, some of the harms from market concentration are outlined, as well as industryspecific or thematic considerations in technology, agriculture, and trade.
Topic:
Finance, Sustainable Development Goals, Business, and Industry
Political Geography:
Global Focus

5. Mercosur and Environment: progress in promoting the Sustainable Development Goals and the 2030 Agenda

Author:
Regiane Nitsch Bressan and Tatiana de Souza Garcia
Publication Date:
12-2024
Content Type:
Journal Article
Journal:
Revista Brasileira de Política Internacional (RBPI)
Institution:
Instituto Brasileiro de Relações Internacionais (IBRI)
Abstract:
This article aims to reveal how the UN’s 2030 Agenda and the Sustainable Development Goals (SDGs), especially the environmental ones, are being incorporated into Mercosur. Firstly, the paper presents a brief evolution of the environmental agenda in the history of Mercosur. Then, to subsidise the analysis, using quantitative data, we discussed the gradual incorporation of the SDGs in the different Mercosur bodies. In order to understand the evolution of the environmental SDGs, the research required the collection and analysis of qualitative data within the framework of the Environment Working Subgroup (SGT-6), which revealed the main environmental issues and their interrelationship with the 2030 Agenda. Finally, Brazil’s role and the prospects for the environmental agenda in Mercosur are discussed.
Topic:
Environment, Sustainable Development Goals, Regional Integration, Mercosur, and Agenda 2030
Political Geography:
Global Focus

6. Beyond Crises: The future of Special Drawing Rights as a source of development and climate finance

Author:
Didier Jacobs
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
The allocation of Special Drawing Rights (SDRs) during the COVID-19 pandemic has generated considerable interest in using SDRs as a tool for development and climate finance. This policy brief argues that the monetary logic that underpins SDRs justifies regular allocations of at least $200 billion a year, and more than doubling the share of low-and middle-income countries. Once allocated, governments can use SDRs in multiple ways, including to fund some development or climate projects. The brief also discusses reforms to deepen the SDR system in the interest of all countries.
Topic:
Development, Climate Finance, Sustainable Development Goals, Economic Policy, and IMF
Political Geography:
Global Focus

7. The Pact of the Future—Financing Issues

Author:
Betty N. Wainaina and Sarah Cliffe
Publication Date:
01-2024
Content Type:
Commentary and Analysis
Institution:
Center on International Cooperation (CIC)
Abstract:
Submissions for the Summit of the Future were requested at the end of 2023. CIC developed and submitted a short input on financing and the Sustainable Development Goals (SDGs). This note lays out our rationale and narrative concerning financing for development. Why is financing such a contentious issue? In part, this is because the events of the last few years have increased global financing needs—for pandemic recovery and preparedness, for climate, for social protection and economic development to overcome price shocks and other international pressures. In addition, global financing plays a role in escalating grievances about double standards. Double standards are, of course, a broader argument, from failure to coordinate COVID-19 vaccines to questions over different applications of international humanitarian and human rights law in Ukraine versus Palestine. Financing plays a role here, however, because of obvious inequities following COVID-19. HICs spent 24 percent of their gross domestic product (GDP) on stimulus and social protection programs in the first year of COVID-19; MICS could spend only 6 percent and LICS only 2 percent. Debt distress has risen dramatically in the last four years; 25 percent of emerging market countries are at high risk of default, while among low-income countries 60 percent are either at high risk of default or already in default. Some of the reasons financing paragraphs became contentious in recent resolutions are more process-based. Using the SDG Summit Political Declaration as an example, the draft text was too detailed in some respects and laid open challenges as to what should be decided in different governance structures. Some areas were insufficiently tailored to the current state of debate at the IFIs, G20, and other international platforms, risking being out of date at the time of publication. In some aspects, they were not specific enough, missing an opportunity to bring new ideas to the table. Last, they did not focus sufficiently on the core comparative advantage of a UN platform for these discussions, which is to link the achievement of the SDGs, global political stability, and peaceful international relations with financing.
Topic:
Development, Finance, Sustainable Development Goals, and Multilateralism
Political Geography:
Global Focus

8. Meaningful Partners: Opportunities for Collaboration between Women, Peace and Security, and Small Arms Control at the National Level

Author:
Callum Watson
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Small Arms Survey
Abstract:
National actors working in small arms control and on women, peace, and security (WPS) share commitments to reduce suffering, maintain peace and security, and contribute to the realization of the Sustainable Development Goals (SDGs). Yet, while these cross references are increasingly commonplace in the international policy framework, this does not often translate into harmonized references in national action plans (NAPs) on WPS and small arms control. Meaningful Partners: Opportunities for Collaboration between Women, Peace and Security, and Small Arms Control at the National Level—a Briefing Paper from the Small Arms Survey’s Gender-Responsive Arms Control project—identifies potential avenues for future work to better harmonize efforts related to WPS and small arms control, and improve the effectiveness of both policy areas in achieving their objectives.
Topic:
Security, Arms Control and Proliferation, Women, Sustainable Development Goals, and Peace
Political Geography:
Global Focus

9. Getting global development back on track: Focus and start at home

Author:
Erwin van Veen
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
Since 2019, realisation of the Sustainable Development Goals (SDGs) has gone from patchy to off-track as a result of Covid-19, global price shocks caused by the war in Ukraine and accelerating climate change. About 100 million people were thrown back into extreme poverty and hundreds of millions more face reduced health, livelihood and income prospects for the rest of their lives. The climate change agenda also took a backseat. Long-term global effects will be profound in terms of growing migration flows, further climate degradation and, likely, more conflict, authoritarianism and populism. Putting global development back on track requires focusing on fewer priorities rather than the entire SDG agenda, namely those with the highest negative impact on developing countries: conflict, climate change and inequality. Addressing these problems primarily requires middle- and high-income countries to reduce their contribution to climate deterioration and inequality at home, and to increase their support for conflict resolution efforts elsewhere at a faster rate. While it may seem counterintuitive, the greatest development contributions that developed countries can make lie at home.
Topic:
Climate Change, Development, and Sustainable Development Goals
Political Geography:
Global Focus

10. Rising to the Challenge: Building Peaceful, Just, Equal and Inclusive Societies in a Divided World

Author:
David Andersson
Publication Date:
07-2023
Content Type:
Special Report
Institution:
Center on International Cooperation (CIC)
Abstract:
This report analyzes the global state of play of SDG16+ while identifying tangible, cross-cutting solutions to advance its targets of peace, justice, equality, and inclusion universally. With both an eye to the SDG Summit and set against a context of SDGs backsliding and a polycrisis, it lays out six strategic approaches by which SDG16+ can and has been advanced, drawing upon regional, national, and subnational examples. These approaches highlight efforts to rebuild trust and reduce polarization, with people-centered policies speaking lived daily realities; demonstrate the need to build evidence on SDG16+ interlinkages and their application in practice, with better data as a driver for innovative change; unpack participatory approaches, including the meaningful inclusion of civil society and subnational actors, and make clear the need for smarter SDG16+ financing. It concludes with opportunities for urgently needed advocacy, policy development, and collaboration on SDG16+ in the immediate and medium terms within UN and IFI contexts. This publication is designed to complement other recent SDG16+ community partner reports, with key messages reflecting both an HLPF Pathfinders Member States Statement (with Colombia and Switzerland), as well as the statement prepared by the Global SDG16+ Coalition, co-drafted by the Pathfinders Secretariat with other members of the Coalition.
Topic:
International Cooperation, Sustainable Development Goals, Equality, and Inclusion
Political Geography:
Global Focus