UN conference debates private sector role in public services and infrastructure

Geneva, 15 October 2014 (UNCTAD press release) – World Leaders Investment Summit II

Governments in the world’s poorest countries face difficult choices: how to fund essential services and at the same time ensure quality, accessibility and affordability?

The World Investment Forum, organized by UNCTAD, brought government and business leaders together in Geneva this week to seek answers to that question at a high-level summit. The UN’s role in this process was highlighted by H.E. Mr. David Carter, Speaker of the House of Representatives, New Zealand: “The private sector has an important contribution to make as an enabler of sustainable development” One of about 50 events that comprise the Forum, speakers at the second session of the World Leaders Investment Forum debated how investment could be increased to critical areas, such as infrastructure, energy, health, and education. Demand is growing for such services, as are challenges linked to climate change adaptation and mitigation. While public authorities take the lead in assuring these services, budgetary constraints have led to calls for increased private funding.

Speakers agreed that it is not a question of a lack of finance. UNCTAD Secretary-General, Mr. Mukhisa Kituyi said “As strange as it may seem, there are investors who are sitting on cash that they cannot invest for lack of adequately packaged or large enough projects.” In its World Investment Report 2014, UNCTAD identified almost $200 trillion of assets in the global financial system, some of which could be reoriented to sustainable development outcomes.

The discussion focused on ways to mobilise finance and package investment, even at the smallest scale, in order to channel it to infrastructure and public services in developing markets. This point was emphasized by H.E. Ms. Bronwyn Bishop, Speaker of the House of Representatives, Australia: “Investment does not have to be large-scale. Small investments can have a huge impact on development and on people’s lives”.

Sir Ronald Cohen, chair of the G8 Task Force on Impact Investment, echoed this sentiment when speaking on the role of impact investment: “The issues we face won’t be solved by exhortations to do more. We need innovation in finance and investment approaches.” He went on to ask, Ivan Pictet, who,as well as his role as President of Fondation pour Geneve, is also Head of the UN pension fund, if he would be prepared to diversify the pension fund into new asset classes, such as impact investment.  It is a question that goes to the heart of the investment-for-development debate: how to change mindsets and mobilise finance into what are perceived to be high-risk sectors in often unfamiliar markets.

One solution, according to the CEO of Japan Exchange Group, Atsushi Saito, is to adopt regional approaches to infrastructure development which can help reduce risks for investors through diversification. From the perspective of countries seeking investment in crucial areas of need, it is important to ensure that investment contributes to sustainable development.

Mr. Zhou Zhongshou, President of China Minmetal, said: “TNCs must do their best to recruit local staff and preserve the local ecosystem. Working together with local communities is key for investment projects, so that 1+1 is more than 2.”
Broadening the discussion to the wider political context in which investors operate, Ahmed Alhendawi, UN Secretary-General’s Envoy on Youth, emphasized that investment must target the developing world’s burgeoning youth population: “Investment in youth is crucial for peace and stability, which are a pre-requisite for the [Sustainable Development Goals]”.
The Forum, which brings together more than 2,600 participants from across the global investment community, addresses the world’s development financing challenges, and puts sustainable development and responsible investment at the centre of policy discussions. The event is the largest international conference devoted to the issue of investment for sustainable development.