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Interview with Ben Slay on Development Finance


Ben Slay moderating the panel at the "Partnership for Development Financing at the Heart of the Great Silk Road" international conference.

Ben Slay is a Senior Advisor UNDP Regional Bureau for Europe and the CIS (RBEC)

UNDP: Various sources indicate that implementation of Agenda 2030 requires additional 250 bln USD. In your opinion, what is the most effective way to mobilize those resources?

Ben Slay: Most estimates have the costs of financing SDG achievement in the trillions of dollars, not billions. Given the estimated cost of implementation of the Agenda 2030, it is vital to design and implement policies that encourage private sector/commercial investments in sustainable, inclusive, integrated investment projects and technologies.

UNDP: Please elaborate what are the incentives for the private sector and IFIs to support implementation of Agenda 2030.

Ben Slay: Sustainable, inclusive business models can be profitable, especially in the longer term.  But not all companies know how to take advantage of these opportunities, and not all sectors are equally disposed to look past quarterly profit statements and take a longer-term view.

Initiatives such as the Global Commission for Business and Sustainable Development that provide sound evidence, rigorous research and compelling real-world examples—to explain why business leaders should seize upon the commercial opportunities offered by sustainable development—should be expanded, for the successful implementation of Agenda 2030.

UNDP: What would be the basis for public-private cooperation in financing for SDGs in the heart of the Silk Road and development financing as a whole? Please elaborate on public-private cooperation inside the country, on the regional and international levels, including with IFIs.

Ben Slay: Investments in connectivity—particularly in transport and telecommunications infrastructure—are central to prospects for economic growth and diversification and sustainable development along the Silk Road.  There are many frameworks/bases for promoting such cooperation, involving public/private partnerships; the Belt and Road Initiative and the Central Asia Regional Economic Cooperation (CAREC) programme come to mind in particular.

In terms of Turkmenistan, three points stand out:

·         The issue is not so much about cooperation with the private sector, as the most important companies/commercial actors are owned by the state, such as Turkmengaz concern, industrial plants and factories working in agriculture, transportation and construction. Whereas the Union of Industrialists and Entrepreneurs unites individual entrepreneurs and private companies, its status is close to the national ministry which is good for partnership development with the government, but changes the nature of the public-private cooperation concept.  The same holds true (to a somewhat smaller extent) with partners (actual and perspective) from other countries such as China and Uzbekistan. The key question then becomes how to ensure that corporate governance and management systems within these companies are “fit for purpose” in responding to large commercial challenges.

·         The largest connectivity questions concern energy and transport corridors, examples include pipelines like TAPI, but also potentially LNG/CNG infrastructure.  This involves both huge sums of money and geopolitical questions that might be even larger.  Traditional PPP approaches may not be so helpful in helping to appropriately conceptualize these issues and the relevant policy challenges because the nature of decision making and investment if peculiar to the region. The traditional PPP are about commercial (not political) partnerships between genuinely private companies and state institutions. The state takes on the responsibility to construct the infrastructure or ensure that the service is delivered to the public, and then contracts with a privately-owned company, who becomes responsible for meeting the terms of the actual construction, or actually delivering the service. In the case of TAPI, Turkmenistan and other regional actors are engaged into the process on the level of the government with the exception of some foreign suppliers. Decisions are made at very high political levels, and are implemented (primarily) by state-owned companies.

·         A related issue concerns the presence (or absence) of people-centred approaches to these questions.  Major transport corridor investments can generate important opportunities (e.g., in tourism, small business development, etc.) and risks (e.g., unanticipated strains on water, land, biodiversity, unexpected internal and external migration, which may pose risks to health and social cohesion) for the communities located along these corridors.  Planning frameworks designed to meet the needs of the big government agencies and companies who drive these investments too often do not accommodate (or accommodate only with difficulties) local level concerns about/solutions to these issues, and important local development opportunities can be missed.  UNDP (and other UN agencies) can help central governments, businesses, and local communities to take advantage of these opportunities and manage these risks.

UNDP:  Middle income countries often experience economic boom before falling into “middle-income trap” phenomenon whereby after reaching a certain level of per capita income, the countries experience stagnation of economic growth and at times a decline in growth which hinders implementation of the Agenda 2030. How to minimize the risks of economic downfall and ensure sustainable growth?

Ben Slay: Avoiding the middle-income country trap is about replacing (or at least supplementing) development models based on the extraction and simple processing of natural resources with models that generate value added and create employment through use of knowledge, skills, technology, and other forms of human capital.  Avoiding this trap involves:

·         Prioritizing investments in education, training, and human capital;

·         Avoiding policies that encourage excessive depletion of non-renewable resources (such as fossil fuels subsidies—which international experience show to generally be non-transparent and mostly captured by relatively well off households) and slow diversification/the development of non-resource intensive sectors;

·         Designing and implementing market and governance reforms that:

o   Increase countries’ attractiveness as sites for foreign direct investment, in order to acquire/accelerate the diffusion of knowledge-intensive technologies; and

o   Make it easier for small businesses to emerge and prosper, thereby promoting grass-roots economic diversification;

·         Participating in global (e.g., WTO) and (where justified) regional economic integration platforms that can promote integration into trans-national value chains, thereby improving access to knowledge-intensive technologies and to export markets for manufactured products.

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