development finance impact project
TRANSCRIPT
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DEVELOPMENT
Finance Impact
Unlock Financial Opportunities
PREPARED BY: MD. SHANIAT HOSSAIN
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What is
DEVELOPMENT
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The systematic use of scientific and technical knowledge to meet specific objectives or requirements
An extension of the theoretical or practical aspects of a concept, design, discovery, or invention.
The process of adding improvements to a parcel of land, such as grading, subdivisions, drainage, access, roads, utilities.
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FINANCING What is
Development
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It is the act of providing funds for development purposes and the whole range of management activities that guide the allocation and use of those funds.
Financing for development is focused on new stakeholders in the financing of development cooperation and to support poor countries' financing of development and poverty reduction a necessity when official development assistance is no longer sufficient.
It reduces capital flight and increase taxation of international companies in the countries where they operate.
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Financing For Development
APPROACHNeed to focus both on more financing and on effective financing. It's more money and smarter money to reach the SDGs. And that development needs to be economically, socially and environmentally sustainable.
The challenges of mobilizing the financing resources needed to help meet the SDGs.
Developing new approaches and intervene public- private solutions that mobilize al types of finance(public, private, domestic and international) all for development.
Calling for unprecedented levels of cooperation, partnership and coordination among the MDBs, UN, private sector, civil society academic organization and governments.
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FINANCING Source
of
Developmentfor
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Sources of Finance
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INTERNATIONAL INSTITUTIONS
Aims to stabilise the international monetary system and help when monetary flow from trade causes problems
Provides help and advice as well as funds to countries experiencing balance of payments problemsIMF gets its funds from its 184 member states
Focusing on providing funds for projects
Aimed at alleviating poverty, inequality and promoting development
Currently has 184 members
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Grants Concessional Loans
Loans
Equity Investments Guarantees
TYPES OF FINANCING FROM THE WORLD BANK
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Aiming to bridge the gap between the funds currently pledged and those needed to meet the Millennium Development Goals (MDGs)
Uses the long term commitments of donor countries as security for raising further funds on international capital markets
Aims to raise an extra $50 billion per year between now and 2015
INTERNATIONAL FINANCE FACILITY (IFF)
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Policies to attract investment
Has been criticised as being a means by which MNCs can exploit poorer countries
Policies need to focus on having the right conditions in place such as Infrastructure, Security, Peace, Local laws and regulation, Government corruption, Tax regime
FOREIGN DIRECT INVESTMENT (FDI)
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To help developing countries improve tax systems to generate tax revenue more efficiently
International taxes on pollution, air transport, arms, rent on deep sea mineral extraction – funds raised used to help fund development
Aims to reduce short term speculative trades and stabilise currency flows
Issues of how far such taxes could raise sufficient funds and whether they would distort markets too much
TAX MEASURES
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PUBLIC SECTORThe Role
of
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The process through which countries raise and spend their own funds to provide for their people is the long-term path to sustainable development finance.
It is not only provides governments with the funds needed to alleviate poverty and deliver public services, but is also a critical step on the path out of aid dependence.It does not necessarily mean new taxes or higher tax rates. Governments often see their revenues rise though improved audits or simplified filing processes.
Tax RevenueIncome Tax
VATImport DutyExcise Duty
Sources of Public Revenue
Non Tax Revenue
FeesCharges
FinesSocial Security
Repayments from Domestic
DOMESTIC RESOURCE MOBILIZATION
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Improving good governance and fighting corruption, better tax policies, administration and public expenditure efficiency
Change technology and practice to improve collaboration and cooperation
Conditions can be achieved by good governance and savers will feel confident to save, investors to invest, and both will be served by accountable governments providing public goods
Reduce red tape impediments to doing business and create a new era of public private can collaboration.
WAYS OF DOMESTIC PUBLIC RESOURCES
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Raising the revenue fairly and equitably Ensure that when revenue is spent it leads to improve service such as school, education, health etc.
Improving the investment climate and reduce red tape impediments to doing business.
Introduce new rules of law in place, take incentive for foreign investor and try to reduce illicit financial flow
CONTINUED….
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APPROACH
Domestic Resource MobilizationFor Country
By increasing the TAX- GDP ratio
Increasing Public expenditure efficiency
Decreasing energy subsidies
Improving the infrastructure with the existing resource for better efficiency
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OFFICIAL DEVELOPMENT ASSISANCE
THE ROLEOF
ODA is the key measure used in practically all aid targets and assessments of aid performance.
The DAC defines ODA as “those flows to countries and territories on the DAC List of ODA Recipients and to multilateral institutions which are provided by official agencies, including state and local governments, or by their executive agencies.
The each transaction of which is administered with the promotion of the economic development and welfare of developing countries as its main objective is concessional in character and conveys a grant element of at least 25 per cent.
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OFFICIAL DEVELOPMENT SSISANCE
COVERAGE
Military aid: No military equipment or services are reportable as ODA. Anti-terrorism activities are also excluded. However, the cost of using donors’ armed forces to deliver humanitarian aid is eligible.
Peacekeeping: Most peacekeeping expenditures are excluded in line with the exclusion of military costs. However, some closely-defined developmentally relevant activities within peacekeeping operations are included.
Nuclear energy: Reportable as ODA, provided it is for civilian purposes.Cultural programs: Eligible as ODA if they build the cultural capacities of recipient countries, but one-off tours by donor country artists or sportsmen, and activities to promote the donors’ image, are excluded.
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Graph
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INTERNATIONAL DEVELOPMENT ASSOCIATION
THE ROLEOF
The International Development Association (or "IDA") is the World Bank’s fund for the poorest countries. Since its inception in 1960, it has been a core part of global development finance, providing half a trillion dollars, in constant 2015 prices, for investments in 112 countries.
It provides long -term loans at zero interest to the poorest of the developing country.
IDA’s goal is to reduce the disparities across and within countries, to bring more people into the mainstream.
It helps build the human capital, policies, institutions and physical infrastructure needed to bring about equitable and sustainable growth.
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INTERNATIONAL DEVELOPMENT ASSOCIATION
FinancingFY16 Top 10 Borrowers
$ million
Ethiopia 1,862
Vietnam 1,670
Bangladesh 1,557
Pakistan 1,460
Nigeria 1,075
India 1,025
Tanzania 864
Kenya 646
Congo, Dem. Rep. 600
Ghana 500
Source: http://ida.worldbank.org
IDA Lending by Sector % of total
Infrastructure 36
Social Services 28
Public Admin. and Law 17
Agriculture 10
Industry and Trade 5
Finance 3
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INTERNATIONAL DEVELOPMENT ASSOCIATION
GRAPH
Source : World Bank
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PRIVATE SECTORThe Role
of
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BLENDED FINANCEBlended finance is defined as the complementary use of grants (or grant-equivalent instruments) and non-grant financing from private and/or public sources to provide financing on terms that would make projects financially viable and/or financially sustainable.
It has three key characteristics:Leverage: Use of development finance and philanthropic funds to attract private capital into deals. Impact: Investments that drive social, environmental and economic progress. Returns: Financial returns for private investors in line with market expectations, based on real and perceived risks.
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Instruments Blend Finance
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Example of
Blended Finance
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BLENDED FINANCETHE ROLE
OF
Returns are seen as too low for the level of real or perceived risks.
Markets do not function efficiently, with local financial markets in developing economies particularly weak.
Private investors have knowledge and capability gaps, which impede their understanding of the investment opportunities in often unfamiliar territories.
Investors have limited mandates and incentives to invest in sectors or markets with high development impact .
Local and global investment climates are challenging, including poor regulatory and legal frameworks.
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BLENDED FINANCEAPPROACHES
OF
Technical Assistance(Technical/OperationalExpertise)Technical Assistance addresses risks in new, uncertain and fragmented markets for investors. Costs and risks associated with exposure to new markets, technical uncertainty,and the inability to build a pipeline can be reduced through this mechanism.
Risk Underwriting(Capital Preservation)Risk Underwriting reduces specific risks associated with a transaction. This mechanism provides direct compensation or assumes losses for specific negative events.
Market Incentives(Results-basedFinancing/PriceGuarantees)Market Incentives address critical sectors that do not support market fundamentals. This helps new and distressed markets that require either scale to be commercially viable or reduced volatility, by providing fixed pricing for products.
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PRIVATE PHILANTHROPY
THE ROLEOF
Philanthropic foundations play an important role in sustainable development is not only in mobilizing financial resources, but also as development actors in their own right. Until recently, however, governments and foundations have often followed parallel paths without engaging in genuine complementary partnerships.
It will require a paradigm shift in how governments approach foundations, embracing them as catalytic partners rather than solely considering them as financiers.
The distinctive role of foundations in the development arena, and acknowledging the innovative practices emerging from the philanthropic sector, the OECD Development Centre launched the OECD Global Network of Foundations Working for Development (netFWD) to serve as a platform for co-operation and exchange, and as bridge between foundations and policy makers.
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PRIVATE PHILANTHROPY
THE ROLEOF
Philanthropy’s financial contribution to development has nearly multiplied by ten over a decade.
Philanthropy’s non-financial contribution to development includes testing innovative approaches and leveraging resources from others.
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INNOVATIVE FINANCING
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CONTINUED….
Multilateral Debt for climate swaps initiative
Unlock funds to finance climate change adaption and mitigate projects
Remittances represent a key external financial flow
Unlocking value from Diaspora flows
Encouraging private voluntary contributions through matching funds
WORLD BANK facilitate the insurance of the bond by providing technical advice
Generate additional development funds by tapping new funding sources (that is, by looking beyond conventional mechanisms such as budget outlays from established donors and bonds from traditional international financial institutions) or by engaging new partners such as emerging donors and actors in the private sector).
Enhance the efficiency of financial flows, by reducing delivery time and/or costs, especially for emergency needs and in crisis situations.
Make financial flows more results-oriented, by explicitly linking funding flows to measurable performance on the ground.
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CONTINUED….
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FRAGILE OR CONFLICT
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Conflict, natural disasters, fragility, and humanitarian emergencies deprive millions of children around the world of their right to education.
FRAGILE OR CONFLICT During conflict, schools are often destroyed or become unsafe. Students are forced out of school, making them more vulnerable and at risk of violence, forced labor, and permanent displacement, without a guarantee that they can go back to school when they arrive at a safer destination.
Ensuring that children have access to education during conflict and crises protects their rights, instills a sense of normalcy, and fosters resilience, inclusion and tolerance, supporting the long-term processes of rebuilding and peace-building.
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THE CHALLENGE
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THE CHALLENGE
Citizen security is a growing concern in middle-income countries, closely linked to rising inequality
Poverty will increasingly be concentrated in countries affected by fragility, with almost half the world’s poor expected to live in these situations by 2030.
By 2030, the share of global poor living in fragile and conflict-affected situations is projected to reach 46 percent.
Domestic expenditure on education as a share of total public expenditure increased globally in low- and middle-income countries, on average, by 0.42 percentage points (from 16.12% to 16.54%), while the average increase in GPE partner developing countries was 1.46 percentage points.
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SOLUTIONS
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SOLUTIONSRedefining fragility and monitoring the global, regional, and country fragility risks.
Developing an operational framework for effective support in countries affected by fragility and conflict
Invest in the enabling environment for technology adoption.
Developing innovative financing solutions, including with private sector involvement, for situations of fragility, conflict, and violence.
Establishing strong partnerships for sustainable peace and development with humanitarian, security, diplomatic, and development actors.
Developing innovative financing solutions, including with private sector involvement and promoting fragility risk reduction in Bank operations and ensuring operational and financial rapid response to protracted and recurring crises.
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RESOURCEShttps://www.slideshare.net/MarAye/development-finance-impact-project-mma-55693528
http://www.globalpartnership.org/multimedia/infographic/education-cannot-wait-conflict-and-crises-endhttps://www.youtube.com/watch?v=KFBGNiFl5p4
http://www.worldbank.org/en/results/2016/08/19/tackling-fragility-conflict-and-violence-with-development-solutions
http://www3.weforum.org/docs/WEF_Blended_Finance_A_Primer_Development_Finance_Philanthropic_Funders_report_2015.pdf
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THANK YOU