Public Sector Financing: Domestic Resource Mobilisation

Domestic resources far outweigh the amount of ODA that can be provided from donor partners. 50-80% of resources needed to finance the SDGs will have to come from domestic resources. This can be achieved through improved tax administration, improved capacity for implementation and obtaining an effective and efficient tax policy.

Improving public expenditure efficiency is also very important. This can be achieved through: building capacity from technical assistance and provision of advice and knowledge to strengthen country systems; Involving broader segments of society in decision making; and strengthening anti-corruption authorities, preventive measures and strong leadership.

Reducing illicit financial flows is another very important way of improving domestic resources. Studies show that up to $50-60 billion in illicit financial flows leave Africa per year. The main source of this loss is mispricing of trade invoices (under invoicing), illegal activities and exploitation from multinationals of loopholes in the law on tax.


Sustainable Development Goals


Financing for Development

In the past 10-15 years, the economic map of the world has changed and many countries have grown fast (Brazil, Russia, India, China, South Africa). We have also gone through a massive global financial crisis which has changed the way finance operates. The World Bank Group estimates the need to create about 5 million jobs per month in the next 15 years, most of which will be private sector jobs.

How do we create the conditions for the private sector and the public sector to work together? To move Billions of Official Development Assistance ($135 Billion ODA, the flows of concessional finance from developed countries to developing countries as measured by OECD) to Trillions ($3 Trillion in estimated shortfall of funding the SDGs a year).

Innovation in mobilising private sector resources is very important now. This is because banks are less willing to lend long-term and are more risk-averse, due to regulatory constraints. Hence, the need for emerging investors, such as institutional investors, pension funds, asset managers and sovereign wealth funds that can provide large and growing pools of funds.

Click to access DC2015-0002(E)FinancingforDevelopment.pdf

Click to access dfi-idea-action-booklet.pdf


Sustainable Development Goals for Kids



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