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ESCAP and the Republic of Korea urge governments to adopt innovative financing measures to advance 2030 Agenda in Asia and the Pacific

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A new report released today by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in partnership with the Science and Technology Policy Institute (STEPI) of the Republic of Korea, is calling for governments to adopt innovative financing models to advance the Sustainable Development Goals (SDGs) in the region.

While donor and philanthropic funds add up to billions of dollars, the cost of solving the world’s most critical development challenges runs into the trillions, with an estimated annual funding gap of $2.5 trillion to achieve the SDGs by 2030.

“It is imperative to implement innovations that can divert private capital towards development objectives to help bridge the SDG financing gap,” explains United Nations Under-Secretary-General and Executive Secretary of ESCAP Dr. Shamshad Akhtar. “The Innovative Financing for Development in Asia and the Pacific report aims to spark ideas and knowledge sharing to help stimulate further action to develop the innovative financing solutions urgently required for the advancement of the 2030 Agenda,” she added.

“Public policy plays a key role in enabling innovative financing for development by creating a favourable ecosystem where private capital pays more attention on SDGs,” pointed out Dr. Song, Jong Guk, President of STEPI, a leading Korean policy think-tank in the field of science, technology and innovation. “STEPI is very pleased to contribute to this flagship report to highlight the importance of innovative financing for the SDGs,” he added.

Since 2009, the Seoul metropolitan government has been implementing social economy policies to address growing inequalities, high youth unemployment rates and an aging society. These comprehensive policies have been highly successful and there are now 3500 social enterprises operating in the city, with sales volumes reaching 1.29 billion USD.

The success of the programme is based on four pillars: a cooperative governance model that encourages private and public stakeholder participation throughout the whole policy cycle, the localization of the social economy through the creation of social economy zones, fostering an ecosystem for the social economy, and expanding the public procurement of services and products offered by social enterprises to provide them with business opportunities.

The report analyses this and other innovative financing mechanisms in five core areas, namely: strategic leadership models that promote impact investing; policies that unlock corporate investment for development; private sector financing products for development; innovative public financing models for science, technology and innovation; and systemic approaches to finance and innovation as means for development.

It also features a range of other case studies from around the region and offers valuable guidelines for policymakers looking to introduce similar mechanisms. Examples include the India Impact Investment Council, the Thai Social Investment Taskforce, India’s Corporate Social Responsibility Law and Singapore’s Women’s Livelihood Bond, the problem-solving R and D programme of the Republic of Korea and the Social Outcomes Fund in Malaysia.

Key recommendations for governments include developing an impact investing strategic road map to guide the development of an innovative financing movement. The report also underlines the need for governments to provide incentives for the private sector (for example through public procurement or tax incentives) to move from economic-driven investments to impact investments that generate social, environmental and financial returns.

The report is part of ESCAP’s efforts to support its Member States in promoting social enterprises and impact investment.

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Turkey-Africa Partnership: Trade and stimulus to cushion the economic fallout of COVID-19

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African Development Bank Vice President for Regional Development, Integration and Business Delivery Khaled Sherif said trade and stimulus were needed to cushion the economic impacts of the COVID-19 pandemic and build resilience among African economies to future shocks.

Sherif participated in a 12 May virtual panel sponsored by the Foreign Economic Relations Board of Turkey (DEIK) titled Multilateral Response to Covid-19 Crisis: Turkey-Africa Partnership that also included Secretary General of the African Continental Free Trade Area (AfCFTA) Wamkele Mene; President and Chief Executive of Trade and Development Bank Admassu Tadesse; Nail Olpak, President of the Foreign Economic Relations Board of Turkey; and Husnu Dilemre, Director General for International Agreements and EU Affairs, Turkish Ministry of Trade. Nicholas Norbrook, Managing Editor of The Africa Report served as moderator.   

Discussions centered on the impacts of the pandemic on Africa, and how its partnership and trade with Turkey as well as regional institutions could help the continent bounce back. Dilemre pointed to Turkey’s strong diplomatic links to countries across Africa, noting that the country has embassies in 42 African countries, before going on to emphasize the importance of maintaining trade. “We are making sure that even in the present, under the severe measures that are used to control the spread of the pandemic, trade continues without restriction. We believe COVID-19 should not be an excuse to restrict trade,” he said.  

In response to a question from the moderator about the scheduled commencement of trade under AfCFTA on July 1,  Mene said there would be a delay given the current circumstances: “The conditions on the ground are not permissive for a credible trading to begin on the ground as we had been directed by the heads of state.” 

However, he argued that the Free Trade Area, once up and running, would act as a stimulus for the continent. “The stimulus package for us has got to be to implement this agreement. To boost inter-African trade and to position ourselves for year-on-year growth on the back of this trade agreement,” Mene said. 

Sherif described a number of obstacles to building stronger economic resilience in Africa,  including the continent’s heavy reliance on commodities for exports, lack of social safety nets, the need to import food staples and a low tax base on which governments can draw on for revenue. These have sharpened the economic impact of the pandemic, running down of foreign exchange reserves and leading to the downgrade of sovereign credit ratings for Nigeria, Angola and a few other countries.

“We are dealing with a set of exogenous shocks that Africa has never seen,” Sherif said.  He emphasized that the shocks were a result of global measures taken to contain the virus, not the disease itself. “This is not a crisis caused by the coronavirus, because the coronavirus has not spread substantially across the continent, except in five countries.”

The Bank is working with partners to cushion the  impact of the economic crisis, he said. “Between the International Monetary Fund, the World Bank, the African Development Bank, everyone is teaming up to see what kind of stimulus we can provide to the countries that are most in fiscal distress.”

Tadesse pointed to sectors that had been relatively less affected. “The agriculture sector is still going well. We’ve financed quite a bit of fertilizer as an example. Just between January and now we’ve done over half a billion dollars of fertilizer as imports,” he said.

He agreed with other panelists that free trade was key to accelerating growth in Africa. “As we go forward, I think we’ll see aggregate demand across borders picking up momentum, and I think that will act as a stimulus,” he said. “Of course, it will take some time to actually get there but complementary measures to support industrialization and value addition in various sectors, will actually give that momentum the pace that it needs.”

According to Turkey’s trade minister, the country’s bilateral trade with Africa stood at $23.8 billion in 2018, with Turkey’s exports at $14.4 billion in the same period. Turkish panelists expressed confidence that a Turkey-Africa conference scheduled for later this year would go ahead.  

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Energy News

World Bank: META 2 to Modernize the Energy and Mining Sectors in Brazil

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The World Bank Board of Directors approved today a US$38 million loan for the Energy and Mineral Sectors Strengthening Project II (META 2). Under the program, various Brazilian public institutions and sectoral agencies will be offered technical assistance activities varying from studies, training, methodologies, databases and IT equipment.

Brazil’s energy and mining sectors are among the largest in the developing world and are key to the country’s growth. However, both still face challenges to realize their full development potential and promote environmental sustainability and social inclusion. The project will allow the production of more reliable power, at lower prices, and the economic benefits of growing more efficient, resilient and competitive energy and mining sectors.

“The energy and mining sectors are among the main drivers of the Brazilian economy as they form the basis for the sustainability of the industrial and commercial sectors, in addition to leading to the provision of services that are essential for the quality of life of citizens. This project is a continuation of long-term collaboration with the World Bank. This new phase will promote changes to support the sustainable extraction and processing of minerals and metals to meet the needs of the global supply chain for inputs and new technologies. In energy, working together will make it possible to increase the efficiency and resilience of markets in Brazil,” said Bento Costa Lima Leite, Brazil Minister of Mining and Energy.

In Brazil, the electricity, oil and gas and mining and mineral processing sectors represent approximately 3, 13 and 4 percent, respectively, of the country’s Gross Domestic Product (GDP). These sectors, though, stand at different stages of development. The power sector is one of the most sophisticated in Latin America, but it is facing a number of challenges with respect to supply security, affordability and increasing its resilience to climate change. In the natural gas sector, Brazil has started adopting various measures under a new program aimed at establishing an open, dynamic and competitive natural gas market.This has significant potential to enhance energy security and to reduce industrial energy costs, but still needs to solve regulatory and governance issues. The mining sector requires modernization to achieve sustainable practices and a new strategy underpinned by sustainability.

“META’s first phase provided technical assistance to strengthen the capacity of key public institutions to increase the sector’s contributions towards a lower carbon growth path that is environmentally and socially sustainable,” says Paloma Anós Casero, World Bank Director for Brazil. “This second stage aims at increasing efficiency, long term infrastructure adequacy and climate resilience in both sectors, allowing them to grow in a more efficient and competitive way.”

Among the outcomes supported by the Project are:

  • Increase efficiency, long term infrastructure adequacy and climate resilience in the energy and mining sectors;
  • Institutional strengthening of energy and mining institutions to establish and implement strategies, policies and regulation; and
  • Implementation support, monitoring and evaluation, knowledge sharing and dissemination.

This fixed spread loan from the International Bank for Reconstruction and Development (IBRD) to the Ministry of Energy is guaranteed by the Federative Republic of Brazil and has a final maturity of 20 years, with a 19.5 year grace period.

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Environment

As the world’s forests continue to shrink, urgent action is needed to safeguard their biodiversity

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Urgent action is needed to safeguard the biodiversity of the world’s forests amid alarming rates of deforestation and degradation, according to the latest edition of The State of the World’s Forests released today.

Published on the International Day for Biological Diversity (22 May), the report shows that the conservation of the world’s biodiversity is utterly dependent on the way in which we interact with and use the world’s forests.

The report was produced by the Food and Agriculture Organization of the United Nations (FAO) in partnership, for the first time, with the United Nations Environment Programme (UNEP), and technical input from the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC).

It highlights that some 420 million hectares of forest have been lost through conversion to other land uses since 1990, although the rate of deforestation has decreased over the past three decades.

The COVID-19 crisis has thrown into sharp focus the importance of conserving and sustainably using nature, recognizing that people’s health is linked to ecosystem health.

Protecting forests is key to this, as they harbour most of the Earth’s terrestrial biodiversity. This report shows that forests contain 60,000 different tree species, 80 percent of amphibian species, 75 percent of bird species, and 68 percent of the Earth’s mammal species.

FAO’s Global Forest Resources Assessment 2020, noted in the report, found that despite a slowing of the rate of deforestation in the last decade, some 10 million hectares are still being lost each year through conversion to agriculture and other land uses.

“Deforestation and forest degradation continue to take place at alarming rates, which contributes significantly to the ongoing loss of biodiversity,” FAO Director-General, QU Dongyu, and the Executive Director of UNEP, Inger Andersen, said in the foreword.

The report presents a comprehensive overview of forest biodiversity, including world maps revealing where forests still hold rich communities of fauna and flora, such as the northern Andes and parts of the Congo Basin, and where they have been lost.

Conservation and sustainable use:

In this report, a special study from the Joint Research Centre of the European Commission and the US Forest Service found 34.8 million patches of forests in the world, ranging in size from 1 hectare to 680 million hectares. Greater restoration efforts to reconnect forest fragments are urgently needed.

As FAO and UNEP prepare to lead the United Nations Decade on Ecosystem Restoration from 2021 and as countries consider a Global Biodiversity Framework for the future, Qu and Andersen both expressed their commitment for increased global cooperation to restore degraded and damaged ecosystems, combat climate change and safeguard biodiversity.

“To turn the tide on deforestation and the loss of biodiversity, we need transformational change in the way in which we produce and consume food,” said QU and Andersen. “We also need to conserve and manage forests and trees within an integrated landscape approach and we need to repair the damage done through forest restoration efforts.”

The report notes that the Aichi Biodiversity Target to protect at least 17 percent of the Earth’s terrestrial areas by 2020 has been achieved for forests, although progress is still required to ensure the representativeness and effectiveness of such protection. 

A study conducted by UNEP-WCMC for this report shows that the largest increase in protected forest areas occurred in broadleaved evergreen forests – such as those typically found in the tropics. Furthermore, over 30 percent of all tropical rainforests, subtropical dry forests and temperate oceanic forests are now located within protected areas.

Jobs and livelihoods:

Millions of people around the world depend on forests for their food security and livelihoods.

Forests provide more than 86 million green jobs. Of those living in extreme poverty, over 90 percent are dependent on forests for wild food, firewood or part of their livelihoods. This number includes eight million extremely poor, forest-dependent people in Latin America alone.

UN Environment

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