Boosting Local Economic Development through Innovative Financing

Developing countries face an annual investment gap of USD 4-4.3 trillion, fueled by multiple global challenges, along with COVID-19 recovery, economic uncertainties, and food and energy crises. In response, the SDG Stimulus, which was launched in 2023 by the UN Secretary-General, calls for a significant increase in financing for sustainable development, to the tune of at least USD 500 billion per year.

Cities are home to more than half of the world’s population, and account for 80% of global GDP and more than 70% of greenhouse gas emissions, while being at the forefront of the climate crisis. Yet, local governments are still recovering from the large losses in fiscal revenues and increased expenditures from the COVID-19 pandemic to address these multifaceted challenges. Cities are often precluded from access to forms of private investment. Among 500 large cities in developing countries, only 5% have credit ratings recognized on international capital markets. Investment needs for urban infrastructure globally are estimated at USD 4.5-5.4 trillion per year, translating into an estimated funding gap of approximately USD 350 billion per year compared to current levels of infrastructure investment.

More so, two-thirds of the 169 SDG targets in the 2030 Agenda for Sustainable Development require implementation at the sub-national level, primarily in cities. However, many national governments still need to create an enabling environment to deliver funds and programmes to urban areas, with effective fiscal, legal and regulatory frameworks for cities to access affordable and sustainable finance, greater access to sufficient and predictable sources of funding to meet capital, operational and maintenance costs for infrastructure and to repay financing, as well as increased use of innovative and sustainable financing instruments, such as green bonds, for infrastructure investment.

In addition to financial transfers from national governments, own-source revenue, and concessional finance, local governments will need to devise strategies to foster public-private partnerships and access private sector investments.

The event will explore innovative financing mechanisms from national and local governments, UN agencies, international financial institutions (IFIs), the private sector, and civil society to leverage catalytic funding to localize integrated solutions, across SDG targets, for SDG localization and achievement.

In addition, this event will draw on the experience of the Beni Suef Governorate, showcasing its strategy for innovative financing and local economic development measures, overcome myriad challenges to achieve sustainable, inclusive, and resilient livelihoods for local communities and a model for urban development in Egypt and beyond.