THIS newspaper’s initiative to help mainstream Sustainable Development Goals through a series of articles focusing on the SDGs has brought forth the complexity and policy choices that need to be made by the federal government and the provinces. One question, however, still needs to be raised: how will the SDGs be financed?
No budgetary estimates are available on the finances needed to meet the cost of any of the 17 SGDs 169 targets. In fact, conversations on methodologies for calculating such costs are barely in the preliminary stages, as are the district-level target baselines to determine the scale and progressive pace of investments needed over the remaining 14 years to achieve the 2030 Agenda for Sustainable Development.
The SDGs won’t come cheap. We will need to mobilise tens of millions every year over the next decade and half in public- and private-sector capital. There is no doubt that we will need to significantly ramp up both public and private investments in two basic categories.
First, in social sectors such as education, health, drinking water and sanitation, where results can be measured with relative ease. The state cannot absolve itself of its fundamental responsibility of providing these services to its citizens. A long-term commitment for budgetary allocation, therefore, needs to come from annual development plans, irrespective of donor commitments. Domestic private sector investments are already heavy on health and education. Private health service providers serve almost 75pc of the population, and about 40pc of Pakistan’s schools result from private-sector investments.
Instead of simply being an ‘economic’ corridor, CPEC can become an environmental corridor.
With well-designed and coordinated policies, financing models and instruments, and incentive programmes, additional investments need to be unlocked. The government will need to create conditions that encourage private investments for quality delivery and to ensure equity and inclusiveness. A ‘leave no one behind’ principle needs to be followed by a ‘reaching the farthest first’ policy. We need to put our money where our mouth is and allocate additional resources to the districts with poorest poverty and HDI indicators in each province to lift them up to the national averages.
Second, for SDGs dealing with infrastructure, urban development, energy, transportation, mass transit systems, etc the country needs to strengthen its capacity to access international green finance. The cost of the capital for green growth has created a new global ecosystem of financial instruments and polices. In fact, this has become an essential first step to stimulate sustainable economic growth for green jobs.
The government needs to develop policy instruments and guidelines to encourage the banking system to make green investments. If the global green bond market has more than quadrupled since 2013, why can’t Pakistan avail itself of this rather than spending expensive cash on new motorways and colourful bus lines in the cities? If private firms can fund wind and solar parks in neighbouring countries in the region, the government can also attract them by developing guidelines to encourage banking institutions to make green investments.
The green financing mechanism can be widely adopted so that capital markets can allocate financing to low-carbon sectors of the economy. These measures include subsidies for clean energy, pricing of carbon emissions, emissions trading and taxes. Reducing the price of low carbon technologies to make them more attractive for private entrepreneurs and investors can help access international climate finance from the Green Climate Fund and other such options. Investments in low-carbon transportation, energy-efficient production and technologies, clean energy for the cities can — and should — come from the private sector so that the government is able to prioritise social-sector investments.
In other words, the argument is for us to correct the present imbalance: instead of spending the bulk of its financial resources on mega infrastructural projects such as motorways and bus lines, the government needs to prioritise specific social-sector SDG targets and create a policy environment to mobilise private-sector resources, particularly international green finance, for infrastructural needs. The China-Pakistan Economic Corridor offers Pakistan precisely this opportunity.
Instead of simply being an ‘economic’ corridor, CPEC can become an environmental corridor. CPEC can spearhead the development of regional renewable energy trade, expand to Pakistan China’s nationwide carbon market, which is already the world’s largest, to become a regional market. China’s share of global green bond market is over 40pc. Benefiting from the Chinese experience, Pakistan can launch green bonds under CPEC. This strategic move alone can help Pakistan address about 50 SDG indicators and, hopefully, attract direct foreign investment.
CPEC is part of a grand Chinese vision for enhanced trade with 60 or so countries, and 40 of them will be facilitated by CPEC alone. China considers it as a model and a pilot project that will give fruit to a ‘bumper crop’ in the future. In Pakistan, on the other hand, it is mostly (and erroneously) conceived as a transit trade facility. Opinion leaders in various provinces are bickering that the transit routes should pass through their favourite areas. Cargo trailers passing through our villages alone will not deliver prosperity. Of some $51 billion committed under CPEC, about $30bn will be spent on the power sector alone. Visiting Pakistani delegates are often reminded by their Chinese hosts to invest in education so as to harvest the ‘bumper crop’.
Pakistan and China share many SDG challenges, ranging from increasing inequality to making cities sustainable, from combating climate change to managing water or protecting oceans and forests. It’s a historic opportunity for Pakistan to weave its SDG targets in the accelerated pace of CPEC. Equally important, CPEC can serve as a model in acceleration for some SDG indicators.
Meeting the SDG challenge will be costly, but we cannot afford to do without it. Luckily, the country is rich in ideas, models, and the intellectual capital necessary to fulfil this agenda. What is needed now is leadership from the policy community to prioritise the development of a system that is designed to succeed.
The writer is CEO, LEAD Pakistan, a think tank focusing on climate and water issues.
Published in Dawn October 22nd, 2016