The SDG Investment Fair was organized by DESA, in collaboration with the UN Global Compact, the UN Principles for Responsible Investment, UNEP FI and the International Chamber of Commerce.
Anne Simpson, CalPERS, said the SDGs are great for the sustainable investments that funds must harness in order to pay pensions.
Cristina Duarte, Cabo Verde, said it takes time to build institutions and regulatory systems conducive to investment.
22 April 2018: Representatives of governments, the UN system, international financial institutions, and the private sector explored new opportunities for SDG investment, during an ‘SDG Investment Fair.’ Discussions focused also on successful public-private partnerships (PPPs) in Kenya, Nigeria and Brazil.
The event took place on 22 April 2018, at the Westin Hotel Grand Central in New York, US, in advance of the UN Economic and Social Council’s (ECOSOC) Forum on Financing for Development Follow-up (FfD Forum). The Fair was organized by the UN Department of Economic and Social Affairs (DESA), in collaboration with the UN Global Compact, the UN Principles for Responsible Investment, the UN Environment Programme Finance Initiative (UNEP FI) and the International Chamber of Commerce (ICC).
Addressing lessons learned about investment, Cristina Duarte, Cabo Verde’s Former Minister of Finances, Planning and Public Administration, noted that building institutions and regulatory systems conducive to investment can take 10-15 years, and it requires policy coherence and integration. Admasu Nebebe, Ethiopia’s State Minister of Finance and Economic Cooperation, spoke about the importance of investing in human development, noting that Ethiopia is currently investing 25% of its national budget in education. He observed that Ethiopia is the country with the third-largest public investment in infrastructure, which he said is also essential for attracting private investment.
The acting mayor of Cartagena, Colombia, said the local government has collaborated with the national bank of Colombia to develop a strategy to target extreme poverty eradication and contribute to the achievement of the SDGs. Sergio Londoño Zurek, who is also the Director General of the Presidential Cooperation Agency (APC-Colombia), also reported that 55,000 people live in extreme poverty in his city.
Anne Simpson, California Public Employees’ Retirement System (CalPERS), observed that the SDGs bring benefits for pension funds because they address risks. She said that after the 2008 financial crisis, CalPERS decided to rethink investment in terms of long-term value creation, and concluded that it needs to manage three types of capital: financial; human; and natural. As these three types of capital are also addressed by the SDGs, she said, the Goals are great for the sustainable investments that funds must harness in order to pay pensions.
Simpson moderated a series of presentations on successful PPPs in Kenya, Nigeria and Brazil. Ormat Olkaria III (Kenya) – the first privately funded and developed geothermal plant in Africa – reflects the importance of successful risk allocation between the private sector and public sector in achieving efficiency. The project was funded through two separate rounds of equity and debt financing, resulting in profits for the private investor and a decrease in energy costs for consumers.
Among the ingredients that led to the project’s success, Paul Mbuthi, Kenya’s Ministry of Energy, noted the government’s focus on removing barriers to investment such as tariffs, as well as shouldering the high costs of the first explorations. Nachman Isaac, Ormat, explained what makes projects bankable and thus prone to success: long-term power purchase agreements; strong sovereign support, including support letters from the government; strong existing provisions that guarantee the recovery of a sufficient part of the investment; international arbitration; stable and predictable regulatory frameworks; and risk sharing.
The International Fund for Agricultural Development (IFAD) – Value Chain Development Programme (VCDP) – OLAM Farmers Partnership (Nigeria) provides smallholder rice farmers with access to a profitable and reliable market, and OLAM with a consistent source of high quality produce. The project leverages multilateral financing from IFAD to attract funding from a large multinational firm (OLAM) to provide a consistent source of income to small-scale farmers, which, in turn, should lead to increased capital investment by the small-scale farmers. Odoemena Benjamin, IFAD, said multilateral agencies can help governments catalyze the necessary resources for projects aligned with national needs and priorities.
The Renewable Energy Market and Pacific Hydro Wind Farms (Brazil) was financed by a national development bank, and shows that private infrastructure investment can be successful even without financing and/or guarantees from international lenders. Based on the success of this project, Pacific Hydro is currently pursuing several much larger renewable energy projects in Brazil, illustrating how smaller investments can spur larger-scale, long-term investments.
The panel discussions were followed by thematic parallel working groups on ‘Large-scale, Capital- intensive Infrastructure,’ ‘New Investment Opportunities in Agriculture,’ and ‘Innovative Financial Instruments to support the SDGs.’