A steady flow of catalytic capital can spur rapid social development and build economic resilience
The Covid-19 pandemic has set us back decades in progress towards the global development agenda. The crisis, felt by all nations, has reiterated the need for transformative action if we have any hope of meeting the 2030 target for the United Nations Sustainable Development Goals (UN SDGs). In view of the United Nations General Assembly, the G20 in Indonesia and the COP27 in Egypt, there is an urgent need to make the voice of the countries of the South, the region most affected by the pandemic, heard in these leadership meetings. global. Earlier this summer, a group of impact leaders, primarily from the Global South and representing the public, private and philanthropic sectors, met at the Rockefeller Foundation’s Bellagio Center, to organize new ways of thinking about development in the Global South in a post-pandemic period. world. The group, now called the Global South Impact Community, appealed to G20 leaders to enable catalytic funding and global collaboration towards a green, just and resilient recovery. Brought together by the Rockefeller Foundation and the International Venture Philanthropy Center (IVPC), which represents a family of global social investment networks in Asia, Africa, Latin America and Europe. AVPN is the largest of these networks and has helped advance the GSIC recommendations through our partnership with the Indonesian G20 Presidency.
The Indonesian government has led the world in its efforts to position the voices of often overlooked communities at the forefront of its G20 leadership. He emphasized ensuring that the most vulnerable communities suffering the worst effects of the climate crisis and the covid-19 pandemic are at the forefront of the deliberations and ultimately the commitments that are made at the meeting. G20 leaders in November. Of course, investing in climate-adaptive innovation and building resilient healthcare systems involves a lot of risk and a lot of time. When governments are faced with crisis after crisis, it is no surprise that the necessary investments in longer-term systemic changes are difficult. Tools such as blended finance and catalytic capital emerge as the most promising opportunities to achieve short-term development goals while maintaining the trajectory towards the long-term vision of the UN SDGs.
The OECD has estimated an annual financing gap of $2.5 billion to achieve the UN SDGs, a figure that has increased by $1 billion since the pandemic. Countries of the South have disproportionately faced the wrath of this global socio-economic crisis, manifested in vastly inadequate health infrastructure, lack of clean water and sanitation, increasing economic inequality and poverty in the region. Emerging economies remain on the periphery of multilateral institutions, financial flows and global trade relations, further exacerbated by the pandemic. The countries of the South need an urgent injection of catalytic capital into a multitude of development projects, both from national and international sources. To reach the trillions needed, all forms of capital are needed – public, private and philanthropic. Philanthropic capital can be particularly powerful because it is more intentional about impact and can help fund innovation, de-risk early-stage investments, and unlock traditional capital flows at later stages.
Emerging collaborative platforms within the Global South have never been more important, as they provide an opportunity for knowledge sharing and confidence building across these different sectors and along emerging market corridors that can accelerate critical reforms of global development institutions. The IVPC community, for example, is made up of philanthropists, impact investors and a range of organizations that are experimenting with a host of new and innovative approaches to how they use capital to invest in these climate solutions. at high risk or how they can invest for the long term in strengthening local health systems.
It is essential now, more than ever, to put the countries of the South at the center of a green, just and resilient recovery and to allow these emerging economies to lead the solutions in their own backyard. This will require knowledge sharing and trust building between the public, private and philanthropic sectors in the North and the South. We need immediate opportunities to unlock catalytic capital and spur global collaboration capable of addressing the existential challenges we face around a range of themes such as climate change, energy transition and health security. Catalytic capital has a great virtue in that it is investment capital where investors accept lower financial expectations to achieve greater social or environmental impact. The sustained generation and deployment of catalytic capital will transform the Global South and build resilience into economic recovery, against future shocks.
The GSIC has defined four areas of action: mobilizing catalytic finance to countries in the South, supporting capacity development to enable the absorption of catalytic capital, mainstreaming decarbonization and an enhanced response to global health crises. . AVPN has been a pioneer in this area, already with the launch of several pooled funds that focus on deploying financing to help organizations build their core capacities. So far, we’ve launched funds that focus on strengthening local healthcare systems and using technology to support climate adaptation, to name just two. Providing oxygen to organizations operating on the frontlines and addressing some of these critical issues will be a crucial part of the journey to net zero and the broader SDG goals by 2030.
With the Global South accounting for over 80% of the world’s population and the region with the highest population growth expected over the next decade, it is imperative not only to protect our immediate interests, but also to protect our sustainability needs. long-term. Achieving these goals requires an equal voice and champions in the key institutions and platforms that tend to guide global policies. There is a need for policies that will not only support countries in the South, but also enable the region to lead the global recovery in the post-covid era. Currently, there is a global imbalance that could prove detrimental for territories that will inevitably be more affected by issues related to climate change. It is estimated that globally, climate change could push more than 350 million people into extreme poverty by 2030.
The G20 summit in Indonesia comes at a critical time and could prove to be a watershed moment for the countries of the South. Followed by G20 presidencies in India, Brazil and then South Africa, this could be the turning point needed to prioritize the needs of countries in the South and champion the systemic change needed to make global financial institutions fairer and more innovative to meet the challenges to be met. As we emerge from the pandemic, world leaders, financial institutions and the private sector must come together to build this new inclusive future that positions emerging economies of the South as the standard bearers of this new era of sustainable development.
By Naina Subberwal Batra, CEO, Asian Venture Philanthropy Network (AVPN)