Financing for Development
Our common future depends on all money eventually aligning with sustainable development that benefits people and the planet. With trillions of dollars needed to make the promise of the Sustainable Development Goals (SDGs) a reality, countries adopted the Addis Ababa Action Agenda in 2015 as a blueprint for actions by governments, international organizations, businesses and civil society to increase the financial resources available to align financing flows and policies with economic, social, and environmental priorities.
In broad strokes, finance for sustainable development includes public and private resources, spent by governments, businesses, and households, among others. It involves funds generated within countries, such as through taxation, as well as finance provided by one country to support another in reaching its development goals, such as through grants and low-cost loans.
The specific action areas of the Addis Ababa Action Agenda are domestic public resources, domestic and international private business and finance, international development cooperation, international trade, debt and debt sustainability and addressing systemic issues. While progress has been made across all the action areas of Agenda, many of its commitments remain unmet. A weak global economy, rising geopolitical tensions and the climate crisis have made it more difficult to finance the SDGs. Currently, almost 40 per cent of all developing countries suffer from severe debt problems. These countries cannot fund progress on the SDGs if they continue to face exorbitant borrowing costs and pay more on debt servicing than on health or education.
Although scaling up financing for sustainable development has become more challenging, money is available. UN Secretary-General António Guterres has called for an SDG Stimulus of at least $500 billions US dollars to significantly increase affordable, long-term financing for development. He has also stressed the need for deeper and longer-term reforms to the international financial architecture, which currently fails to serve as a safety net for all countries.
Aggressively mobilizing SDG financing will certainly require creative approaches, bold policy decisions, and new sources of funding. The High-level Dialogue on Financing for Development on 20 September 2023 at the UN marked a critical moment to review the implementation of the Addis Agenda and showcased innovative and practical solutions to unlock better financing and tackle the great finance divide between developed and developing countries.
Other Areas on Financing for Development
The Forum on Financing for Development
The annual Financing for Development Forum, under the auspices of the UN Economic and Social Council, seeks to review the Addis Agenda and other Financing for Development outcomes to advance the SDGs.
The Financing for Sustainable Development Report
The Financing for Sustainable Development Report 2023, issued by the UN Secretary-General’s Inter-Agency Task Force on Financing for Development, looks at progress made in implementing the Addis Agenda, other Financing for Development outcomes as well as the means of implementation of the 2030 Agenda on Sustainable Development such as finance, capacity building and technology and innovation. This report is issued annually.
Global Investors for Sustainable Development Alliance
The UN Secretary-General convened the Global Investors for Sustainable Development Alliance in 2019 to deliver solutions to mobilize private finance and investment for the SDGs. The GISD Alliance members control assets worth up to US$16 trillion. The Alliance works with the UN and other partners to unlock finance at scale by developing solutions, tools, and products to accelerate investment in the SDGs.
Financing for sustainable development – Report
Sustainable development prospects continue to diverge between developed and developing countries. The 2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads finds that financing challenges are at the heart of the crisis and imperil the SDGs and climate action. The window to rescue the SDGs and prevent a climate catastrophe is still open but closing rapidly.
Financing gaps for sustainable development are large and growing – the estimates by international organizations and others are coalescing around $4 trillion additional investment needed annually for developing countries. This represents a more than 50% increase over the pre-pandemic estimates. Meanwhile, the finance divide has not been bridged, with developing countries paying around twice as much on average in interest on their total sovereign debt stock as developed countries. Many countries lack access to affordable finance or are in debt distress.
The world is at a crossroads. This is the last chance to correct course if we want to achieve the SDGs by the 2030 deadline. Only an urgent, large-scale and sustainable investment push can help us achieve our global goals. In 2025, the Fourth International Conference on Financing for Development will be a once in 80-year opportunity to support coherent transformation of financing.