Gearing up for the Global Goals

August 28, 2019

The Sustainable Development Goals (SDGs) are globally agreed upon common development goals for the planet, people and their prosperity. Nepal, along with the rest of the countries of the world, adopted the SDGs in 2015 and has started executing them by aligning its policies and programmes under the broad framework of Agenda 2030.

The ambitious targets of the SDGs and their overarching goal of “Leaving no one behind” call for a well-designed implementation strategy that identifies the right kind of interventions that maximize synergies and reduce trade-offs, as well as investment requirements, sources of financing, and partnership mechanisms.

As SDGs encompass a diverse set of outputs and activities, they have to be implemented and financed by multiple actors. These include the government, the private sector, external development partners, cooperatives, NGOs, and households that can afford and finance them in the form of out-of-pocket expenses.

Without understanding the needs, it is impossible to mobilize potential resources and stakeholders. This gap has been now been addressed by a new report that spells out our needs and a strategy to mobilize the finances. The Government of Nepal National Planning Commission, with the support of UNDP, prepared a report entitled “SDGs Needs Assessment, Costing and Financing Strategy”. The study mainly identified interventions necessary for the implementation of SDGs; estimated investment requirements in major SDG areas covering social, economic, infrastructure and environment sectors; allocated SDG investment requirements among government, private, and community sectors, including households, cooperatives and NGOs; drew up a partnership strategy to engage all stakeholders in the implementation and monitoring of SDGs; and suggested policies and institutions necessary for the implementation of SDGs at the national and subnational levels.

The fact that it estimates the approximate costs required to meet all the 17 Goals gives governments—federal, provincial and local—the liberty to make informed choices so that resources are optimally mobilized and utilized. For instance, in order to achieve Goal 1 (or the ‘No Poverty’ targets), Nepal will have to spend an average of Rs76.7 billion per year between 2016 and 2019, Rs134.6 billion per year between 2020 and 2022, Rs174 billion per year between 2023 and 2025, and Rs211.8 billion per year between 2026 and 2030.

Under Goal 1, Nepal aims to reduce the current poverty rate of 21 percent to 4.9 percent by the end of 2030. This means Nepal will have to maintain a robust and yet very stable economic growth, unclenched by any natural or anthropogenic shocks. This would require Nepal to make a huge investment, which is not sufficient even if we combine the all public finances, both domestic and international. This would only be possible if we create a business-friendly environment so that more international private finances can be drawn into the country.

Overall, an average SDG financing requirement for achieving the targets set for 2030 will be Rs1,055.8 billion per year during the entire period of 2016-19, Rs1,558.5 billion per year during 2020-22, Rs2,046.7 billion per year during 2023-25, and Rs3,069.3 billion per year during 2026-30. The average investment requirement for the entire SDG period is Rs2,024.8 billion per year. As a percentage of GDP, the annual average investment requirements for 2016-19 is 44 percent, which rises to almost 50 percent of GDP during 2026-30. The annual investment requirement for the entire period between 2016 and 2030 is about 48 percent of GDP on average.

Out of the total investment requirement, the share of the public sector is 55 percent and the remaining is expected to be covered by the private sector, including cooperatives and households.

What stands out here are a few key points. First, there is a huge financing gap, which stands at 28 percent. This points to the fact that this gap cannot be plugged without any special measures. The government will have to make an extra effort to bridge this financing gap.

Second, the private sector financing gap is as high as 40 percent. The report has it that around 36 percent (excluding the four percent contribution from cooperatives) of the total investment has to come from the private sector. It calls for more efforts to create an enabling environment to attract both domestic and international private investment. Studies show that the average FDI level (as a percentage of GDP over the period between 2005 and 2015) is 1.6 percent for South Asia and 2.77 percent for other LDCs. However, for Nepal the FDI level is 0.24 percent. Based on these statistics, there is clearly a scope for Nepal to attract more FDI if it clears familiar bottlenecks such as in the regulatory sphere.

Third, Nepal has an opportunity to mobilize more Official Development Assistance. Since the ODA it attracts is still 50 percent below the LDC average, Nepal can do better to bring it up to the LDC average, which will double the current ODA flow.

Finally, what is key is the opportunity staring at us if we can improve our delivery capacity. Nepal needs to both mobilize and deliver USD 20 billion annually. Records show that we have missed several opportunities due to weak delivery. Therefore, capital spending needs to improve. Improving delivery capacity is necessary not only to make sure we utilize available funds, but also to draw more FDI, ODA and other investments. Delivery issues have to be the usual criteria for FDI/ODA. In order to achieve the SDGs, Nepal needs to not just increase the amount of finance but also strengthen its capacity to utilize existing finances.

(Swarnakar, a Policy Advisor at UNDP Nepal, has been working in the areas of inclusive ecnomic growth and localization of the SDGs in Nepal.)