Financing sustainable development: insights from Ghana, Indonesia, Mexico, and Senegal

Delays in implementing the Paris Agreement on climate change and the 2030 Agenda and its Sustainable Development Goals (SDGs) increasingly appear to come partly from unmet financing needs and from the international financial architecture’s failure to channel resources to the world’s most vulnerable economies at the necessary scale and speed. As no country can finance the SDGs and other development agendas by freeing up more financial resources alone, systemic changes are needed in both public and private finance. The UN Secretary-General has therefore called for an ‘SDG Stimulus’, consisting for the international community and multilateral development banks (MDBs) in particular in significantly scaling up funding for global public goods, and for countries in aligning all forms of finance with the SDGs

Alignment and effective SDG financing are possible when four main conditions are met.

• Avoiding SDG-incompatible finance. For many countries–notably OECD and BRICS countries– achieving the 2030 Agenda is just as much about financing more as it is about financing less and in a more sustainable way. Examples include less financing for approaches that compromise specific SDGs (e.g., fossil fuel subsidies) and making difficult policy decisions that require short-term costs to achieve long-term sustainability gains.
• Combining long-term financing with longterm planning. Development financing strategies provide public and private investors with clarity and predictability, and make it possible for those key actors to better grasp the sequence of investments across relief, recovery, and long-term structural transformation. Planning efforts should also seek to avoid lock-in situations and path dependencies where short-term recovery expenditure could hamper long-term goals of reducing inequalities or advancing environmental protection, and even increase vulnerabilities.
• Better understanding the cost and benefits of SDG financing at country level. A clear understanding of allocation and spending on public services and public investments that contribute to the SDGs can help identify funding shortfalls. Double-counting investment needs in particular should be avoided while synergies between different types of investment should be prioritized.
• Aligning SDG financing instruments with countries’ needs and priorities. SDG budgeting tools can be the cornerstone of strengthening financing for the SDGs in countries and establish more coherent links between the SDGs and development strategies, as well as their implementation. However, as case studies in Africa, Asia and Central America, these tools only prove relevant if they do not add complexity to the administration but are well integrated into and supportive of existing national or local processes and strategies. And international partners should fully align with such national strategies.