Session 1: 2017 Arab-DAC Dialogue on Development

27.03.2017 | Bern, Switzerland


Statement of OFID Director-General Suleiman J Al-Herbish at the 2017 Arab-DAC Dialogue on Development in session one: Adjusting development cooperation tools to ensure sustainable development, delivered on March 27, 2017 in Bern, Switzerland.

 

Ladies and gentlemen, It is a pleasure for us to resume our conversation with the DAC on the Sustainable Development Goals and the efforts to assist in their implementation.

As you know, in 2015, a new development paradigm that addresses people’s basic needs and plants the seeds of prosperity was agreed by the international community, all in the name of preserving our planet. The resulting Sustainable Development Goals are universal, inclusive and transformational.

Prior to this, we discussed the means and options of implementing the SDGs in Addis Ababa.

We recognised that implementation must be based on frameworks for international cooperation, economic and technical support for the poor countries and, importantly, solidarity.

Development is the responsibility of Partner Countries. They must set their own economic, social and environmental objectives and measure their own progress. By doing this, they can optimise their own domestic resources as well as the public and private resources of the international community.

However, the development needs are in trillions, rather than billions of dollars. This is why all available means and resources must be mobilized to meet the challenges of this ambitious agenda. “Business as usual’’ is no longer appropriate. There must be partnerships and policy cohesion among all stakeholders.

Today, we are here to discuss how we, as Development Partners, will make best use of the available resources, knowledge and our differing strengths. We need to further our thinking about the tools and mechanisms that we are already considering.

I would like to take this opportunity to address two issues relevant to how we can scale up our triangular cooperation to ensure sustainable development.

First, I want to talk about the need for financial inclusion. In short, this is about the need to boost access to finance for low-income individuals and small businesses in developing countries.

We have already recognised how crucial this is in delivering equitable opportunities for all, reducing poverty and driving sustainable growth. Today, however, two billion adults across the globe still don’t have access to formal financial services.

At OFID, we promote financial inclusion through our Public Sector, Private Sector and Trade Finance windows. We have helped the governments of partner countries to launch and sustain their own microfinance programs and support SMEs in both the formal and informal sector.

We have also worked with the UN (UNRWA) to extend micro- and SME-related financial services to poor Palestinians in the West Bank and Gaza.

And through private sector lending, we have channelled resources through commercial and microfinance banks around the world, strengthening local financial institutions and increasing their capacity to lend on and expand.

The Microfinance Enhancement Facility, for example, supported by OFID and other DFIs, is recognized as efficient and responsible, providing funding and stability to the microfinance market.

Now allow me to turn to my second point within our theme: One of the biggest hurdles preventing developing countries from achieving the SDGs is the lack of access to infrastructure. Without energy, roads, water and food, basic human needs cannot be met. At OFID, we focus on this most fundamental nexus and direct 70 percent of our financing towards related development. This amount is dictated by the demand of our partner countries.

OFID is an early pioneer and champion of energy poverty eradication in developing countries. This cause has been the central theme of our work since 2007, when OFID and its sister institutions of the ACG received a mandate from the Riyadh Declaration of the 3rd OPEC Summit.

Since then, we have intensified our programs and interventions. Our efforts and advocacy, together with other likeminded institutions and organizations, have been central in bringing the eradication of energy poverty to the fore of the sustainable development agenda as SDG7.

To achieve this goal by 2030—access to affordable, reliable, sustainable and modern energy for all—will require huge investment. Some estimates put the figure at US$1.26 trillion per year.

This means all available types and sources of funding will be needed: ODA, public-private partnerships, foreign private investment and local resources. But even then, there will be a need for more innovative financing vehicles, more cost-effective technology and more credible policy options.

For countries with an energy access deficit, there are several tried and tested options. One option is to develop dedicated facilities for identifying and converting concepts into bankable projects.

Another is the convertible grant scheme used to mitigate the high risks of small-scale energy access projects. The grant covers first losses; otherwise it is paid back to the contributor.

A successful example is the “OFID-REEEP Revolving Capital Pool”. This offers repayable grants at zero interest to start-up businesses to help them provide affordable modern energy services and unlock their expansion potential.

Ladies and gentlemen: In line with this last thought, small- and medium-sized enterprises are an important player when it comes to providing energy access. They are agile and innovative. Due to their size, however, they have little access to traditional finance. Here, multilateral and bilateral development partners must step in to provide sustainable support.

Real life examples show the power of our actions, so allow me to provide another. OFID’s US$10m private sector loan to Armenia’s Ardshinbank has enabled it to fund local SMEs involved in the construction and operation of small-scale hydropower plants.

Ladies and gentlemen: Since 2008, OFID has committed a total of US$3.4bn to energy projects, representing around 25 percent of the total value of all our commitments for the period.

But clearly, the scale of the task is much bigger than any of us can overcome individually. We all need to concentrate efforts to broaden and strengthen our partnerships.

Solid examples of these partnerships are the “ACG-World Bank Group (WBG) Deep Dive Process” and the “ACG-DAC Task Force on Energy” (the subject of session 5 today).

For OFID, partnership has been—and will continue to be—a key pillar in our strategy for alleviating energy poverty and achieving sustainable development in all sectors.

Ladies and gentlemen, please allow me to conclude by assuring you that: OFID and the Arab Coordination Group are committed to playing a fair role in support of the plans of its partner countries. The group has reviewed the tenets of Agenda 2030 and issued a declaration in its support. It stands ready, as always, to join all initiatives that promote the Sustainable Development Goals. Thank you for your kind attention.

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