Dialogue 4: Financing localisation and localising finance

The financing of Sustainable Development Goal (SDGs) is at a crossroads. Amidst rapid urban expansion, climate crisis and conflict, there’s an urgency to mobilise financial resources and direct investment flows to cities. This session will explore the critical challenges and opportunities in this field and discuss strategies to leverage finance to accelerate SDG localization.

The session will bring together a dynamic group of government officials, private sector leaders and development finance experts, situating local financing within the national and international contexts. Through keynote addresses, a panel discussion and interaction with the audience, this session will unfold by addressing topics such as national governments’ efforts to foster local finance through predictable funding, de-risking urban investments and effective regulatory frameworks.

The dialogue will also touch on successful strategies to build local government capacity and fiscal accountability, explore how reforms of the international financial architecture can help narrow the city SDG finance gap and consider how development banks can create tailored business models that respond to cities’ needs.  

Attendees will engage in the exploration of the challenges, rewards and trade-offs of financing SDGs. Gaining access to private financing requires that cities have the capacity to adequality manage budgets, develop investment-ready projects and form effective partnerships. While external finance can serve as a catalyst for SDG progress, a narrow emphasis on financial gains may disregard climate and social impact and lead to unsustainable financial arrangements. Speakers of this dialogue will clarify strategies for local governments that can improve access to revenues and affordable loans to invest in coordinated urban development. 

This dialogue will explore new frameworks for financing sustainable development that are fit for cities. It will build our understanding of the structural, political and financial reforms that cities, national governments and the international financial system can advance to unlock sustainable finance for SDG localization.

Guiding questions

• What challenges do local governments face in accessing international concessional finance as well as private sector finance for local development? What strategies have proven effective in helping local governments overcome these challenges?
• What considerations drive IFI, MDB and private finance decisions to invest in local development? How can the business models of these institutions evolve to align better with local development contexts? 
• How can local fiscal management, accountability and transparency be improved in order to unlock access to localized finance for the SDGs? 
• How can integrated national financing frameworks (INFFs) better emphasise the critical role of local finance in aligning financial policies with the long-term development needs of cities to achieve SDG localization? 
• What innovative risk-mitigation approaches or financial instruments could help cities sustain SDG-aligned investment while navigating challenging global economic conditions? 
• How can data improve financial flows towards cities and SDG localization, and what frameworks are needed to ensure evidence-based financing solutions? 

Key objectives

The session will enhance our collective understanding of the multi-faceted challenges of financing urban investment, highlighting the importance of collaboration across local, national and international levels to forge new pathways for financing SDG localization. Participants will gain practical insights for attracting investment, fostering collaboration and advancing sustainable development in their communities.

Key messages

• Empowering cities with the right financing tools and frameworks is essential for delivering on global commitments to sustainable development and building a more resilient future. (#ItAllStartsLocally) 
• The widening financial investment gap in cities, exacerbated by global crises, is limiting the effectiveness, speed and scale of local actions to make progress on the SDGs. (#ItAllStartsNow)
• It is imperative that we build up our understanding of the diverse forms of finance to ensure sustainable and inclusive urban development. (#ItAllStartsNow)
• SDG localization requires more than increased resources; we urgently need to build local capacity and strengthen local financial systems. (#ItAllStartsLocally)
• Concerted action and innovative thinking among public and private actors at all levels is needed to forge new frameworks for financing sustainable development that are tailored to the needs of cities. (#ItAllStartsTogether)