Making money move: New financing to achieve the SDGs
BY Richard Bailey | July 3, 2018
“Money doesn’t grow on trees.” Regardless of where you grew up, we all learn about the importance of securing every penny, rand, real, euro, yen, ruble, or rupee. And the saying is particularly relevant today since development organizations like the United Nations (UN) must mobilize more than US$3.0 trillion every year if we hope to achieve the ambitious goals laid out in the 2030 Agenda for Sustainable Development.
Official development assistance (ODA) is still an important finance mechanism but only $140 billion are secured each year. If we, the UN, intend to accelerate progress so no one is left behind, ODA needs to be used more strategically, and other sources of finance must be secured. There also needs to be an organizational shift from strictly funding programmes and initiatives to an approach that involves “funding and financing” to tap into international, national, private and public financial flows.
Perspective shift: from funding to financing
A growing number of blended finance sources have helped advance development aims in recent years. Private sector guarantees, syndicated loans, and shares in collective investment vehicles mobilized $36.4 billion, while socially responsible investing exceeded $6 trillion between 2012 and 2014. Impact investors and development finance institutions created a new investing asset class that is projected to grow to $400 billion by 2025.
When it comes to financing, the rules are changing, and the UN is looking at new ways of aligning financial flows and attracting new investors. UN Country Teams (UNCTs) in Kenya, Indonesia and Armenia explored ways of helping national governments and local partners secure broad, non-traditional funds for development purposes. They mapped out challenges, unlocked new types of financing and used resources in a timely and innovative manner. The three most successful tools adopted were impact investing, Islamic financing, and sector-specific fund modalities.
Impact investing in Armenia
In the last few years, Armenia has turned into a thriving tech start-up hub and financing initiatives have followed two major trends: venture philanthropy and impact investing. To capitalize on these new forms of funding, the UNCT set up a country platform for SDG implementation that is aligned with national reform and SDG efforts. The collaborative space allows the UN, development partners and civil society to strengthen relationships and develop new ones with international financial institutions, donors and philanthropists.
Other innovations: SDG Innovation Lab, the Kolba Social Innovation Lab, ImpactAim Venture Accelerator.
Islamic financing in Indonesia
Home to the world’s largest Muslim population and the tenth largest economy, the Government of Indonesia recently turned to inclusive and ‘green’ financing to accelerate the SDGs. The UNCT saw the potential and embraced new forms of finance to support sustainable development initiatives. Good practices include employing blended finance instruments and Islamic financing (Baznas). In 2017, UNDP channelled zakat (charitable funds) for a micro-hydro energy project to improve access to water, renewable energy and livelihoods in some of the most remote parts of Indonesia.
Other innovations: Financing Lab, “Bring Water for Life” and #TimeforTigers crowdfunding campaigns.
Primary health care financing in Kenya
One million people in Kenya fall into poverty every year because of a fractured health care system, which is why the national government prioritized rolling out Universal Health Care in the “Big 4 Action Plan.” The UNCT supports the government by working with private sector partners on the Private Sector Health Partnership Kenya initiative and SDG Philanthropy Platform. Bringing together the private and public sectors together has opened doors to new cross-sectoral opportunities in the health, tech, early childhood development, nutrition, and technical and vocational training sectors.
Make it rain: harnessing the potential of innovative financing
The cost of solving the world’s most critical problems currently runs into the trillions, forcing development financing into a new era. There are no other options if traditional development aid no longer makes the grade. The UN has to pivot and embrace the changes taking place or risk becoming redundant and irrelevant.
Luckily there are many opportunities to seize, and the UN has plenty of comparative advantages to bring to the table. The organization has a long, successful history of bringing together partners, training and recruiting experts, scaling up projects, and imparting technical knowledge. UN staff are skilled in advising, brokering knowledge, innovating, analysing data, and measuring impact.
As we have seen in Kenya, Armenia and Indonesia, capital can be mobilized through impact investing, attracting early investors, or securing funds for larger investments in sectors identified by the central government. Embracing the latest tech innovations (e.g. e-health or mobile diagnostics) can turn unattractive investment areas into “bankable propositions.”
Perhaps the most important takeaway is to not “let perfection be the enemy of the good.” Change may take time but UNCTs can’t wait for everything to be in place before embarking on new initiatives or adopting innovative types of financing. Steps to secure the right kind of capital have to be taken because time is running and “business as usual” no longer works—the numbers tell the whole story.
Societal progress involves taking calculated risks, and achieving the SDGs is no exception. Unlocking new sources of funding is one way the UN can make sustainable gains and help governments make returns on the 2030 Agenda.
 Discussed in detail in “Financing the UN Development System. Pathways to Reposition for Agenda 2030” (September 2017), Dag Hammarskjöld Foundation in collaboration with the MPTF Office, http://www.daghammarskjold.se/wp-content/uploads/2017/09/Financing-Report-2017_Interactive.pdf.
 Amounts Mobilised from the Private Sector by Official Development Finance Interventions: Guarantees, syndicated loans and shares in collective investment vehicles’, OECD working paper, 2016.
 Baznas was established by the government based on Presidential Decree 8/2011. The agency is responsible for collecting and distributing zakat at the national level.
 Thomson Reuters Foundation, February 2018, http://news.trust.org/item/20180209112650-s1njv/.
Five ways the UN is experimenting together in 2018
BY Maria Blanco Lora | May 3, 2018
Here at silo-fighting HQ, for a fourth year in a row, we are trying to incentivize the UN to innovate together. This is our annual moment to listen to how UN country teams plan to go beyond business as usual and model next generation practices to meet the demands of Agenda 2030. We love this time of year, as the proposals themselves are great intelligence on the front line, and we get to know the problems teams want to solve and what tools they have at their disposal to solve them.
We were looking for joint efforts across UN agencies to innovate in the areas of data, behavioural insights, finance, collective intelligence and foresight. With thanks to our donors, these are investments in innovations which can either be scaled from one agency to the rest of the system efforts, from one sector or field to another, from one country to another, or from one geographic area to country-wide applicability. We are also funding UN teams that want to break new ground and test hypotheses for more proof-of-concept type innovations. The competition among country teams for the funding was tough, but thanks to our review team, after 100 proposals, we finally decided on 34 experiments and scaling efforts that we are thrilled to present in this blog.
Data for preparedness, prevention and prediction
Innovations in data was the most popular area in the proposals this year. A good chunk of winning pitches focus on new ways of gathering and analysing data to allow countries better prepare and respond to natural disasters along with citizen-generated data for predictive analytics.
In the Pacific, the UN country team in Samoa, will use new technologies to analyse households preparedness to cyclones, while Fiji will be scaling VAMPIRE to measure the impact of cyclones through data mining and build predictive analytics. In Viet Nam, the UN team will develop digital tools to link baseline data on vulnerability and resilience to preparedness to long-term planning disaster recovery planning.
To prevent food insecurity, the UN in Malawi will be using geospatial information to assist farmers and, in Ghana, the team will use remote sensing and drones to provide the government with timely data to respond to food security threats. In Iraq, crop productivity mapping through the use of mobile data collection and satellite imagery will explore new ways of measuring poverty beyond traditional surveys.
Sudan, PNG and Jordan will use participatory methodologies, based on mobile phone data, to test water and sanitation projects in camps for internally displaced persons to predict development investments and to look for future development trends.
The UN team in Dominican Republic will build on their previous experience to develop a national SDG data lab to integrate sustainable development into the development planning in the country. Also, Serbia will be developing an algorithm to assess the alignment of the national development plan and sectoral strategies to the SDGs. Last but not least, Uzbekistan will be using blockchain to improve public services testing whether this will reduce transaction costs and increase transparency.
Ramping up participatory programming with collective Intelligence
Lots of UN teams are trying to tap into the best collective minds in the countries they serve, with an increase in the use of new methods and technologies to engage the general public in policy development, budget allocation and monitoring. Based on what we got for our call for proposals, UN country teams feel comfortable using mobile tech to tap into collective intelligence to triangulate data or test their hypothesis while undertaking planning processes.
Albania and Mexico are using mobile technologies and social media to gather perceptions on the progress towards the achievement of the Sustainable Development Goals.
Digital tools, such as Rapid Pro, will be used by Trinidad and Tobago, Suriname and Somalia to enhance the dialogue with local authorities and, in the case of T&T and Suriname, to engage young people in policy monitoring and development. Colombia, through automatic speech recognition, and Lesotho, through open challenges, will also use collective intelligence for participatory planning and accountable governance respectively.
In Senegal, the UN country team will be supporting community health workers with a real-time monitoring tool, SMS-based, to prevent health emergencies. Monitoring will be also the scope of the project in Honduras, where women will be able to share and identify safe zones in the city of Choloma through crowdsourced audits facilitated by a real-time data collection app.
The UN country team in Iraq will engage youth IT developers and activists to harness the power of new technologies to oversee public investments in the documentation, conservation, rehabilitation and reconstruction of the country's cultural heritage.
In China, the UN team will link up farmers with tech companies to find solutions to connectivity gaps among poor farmers and decision makers using mobile technologies, e-platforms and drones.
The Pulse Lab Kampala in Uganda will advance their machine learning driven radio tools to develop an open software platform for the UN country team to enable open access to existing software applications developed by the Lab that will allow programme colleagues harness collective intelligence for their work. The UN team in Moldova will be on a quest to experiment, test and fine-tune a platform-based organizational model to explore if this type of platform would be feasible in the case of the UN global mandate.
Behavioural insights to meet people where they are
2018 was the first year we opened up to proposals in the area of Behavioural Insights. We will be funding initiatives to prevent sexual exploitation and abuse (Nigeria), to learn from devients to halt male violent behaviour towards women (Palestine) and to eliminate female genital mutilation/cutting (Mauritania). In Costa Rica, the UN country team will use behavioural insights to understand and tackle structural development gaps among the most excluded communities. Popular technologies in these proposals are social media, SMS polling, big data and the use of radio.
Innovative finance to channel private funds to development
UN teams in three countries will be experimenting with new forms of financing in 2018: Colombia, Somalia, and Armenia. Team Colombia will develop innovative blending finance solutions to support enterprises with peacebuilding impact in remote locations in the country. The UN in Somalia will set up open innovation challenges and crowdfunding platforms and the UN and the government in Armenia will be leveraging private finance for SDG-related objectives through social impact bonds as part of their SDG innovation Lab.
Imagining possible futures and seeing the future that is already here
To begin to use the future as a tool for development work today. Two UN teams will be using foresight and alternative futures as part of their sustainable development work.
In Egypt, the idea is to build scenarios to encourage foresight dialogues as a tool to increase civic engagement to define Egypt's future. The team will make use of forecasting tools such as Three Horizon Framework and Verge Foresight Framework. In the same region, Lebanon will apply a participatory approach to foresight, asking citizens to contribute to a foresight exercise using a mapping tool.
Pinky swear: we promise to work out loud….
This work will be led by a growing community of innovators within the UN. We are proud to have colleagues from almost every agency working in the field leading these innovations and we are aware that there are many more out there. The idea is to connect and learn from each other, so we are looking for mentors to help us (data scientists, human-centered design, machine-learning among others. Webinars and our One UN Knowledge Exchange group will be our main channels to support our innovators. We will also tap into the UN Innovation Network.
This was just a taste of the innovations that are coming up this year, for more, keep showing up to our Silo Fighters Blog. The UN innovators will be sharing their own stories in this space. And while you are at it, follow us on Twitter.
Photo: Trevor Samson / World Bank