Pipeline Builder Partnership: Charles Abani Interview

Over the next four weeks, and in the lead up to Building Bridges Week 2022, the SDG Lab is running a series of interviews looking at sustainable finance from the perspectives of four people involved in the Pipeline Builder pilot, a joint initiative of the SDG Lab and the Ground_Up Project. The Pipeline Builder seeks to streamline and boost financial flows to projects aligned with national sustainable development strategies, and it has been kickstarted in Ghana.
Pipeline Builder Partnership: Charles Abani Interview

The West African country of Ghana is the focus of a pilot of the Pipeline Builder, a partnership between SDG Lab at the United Nations in Geneva and Ground_Up Project, a Swiss-based impact finance advisor. It aims to connect investors with SDG-aligned opportunities in developing countries through a network of financial intermediaries. Since the project was launched in late 2019, the global environment has changed dramatically. Still reeling from the pandemic, developing countries are now having to cope with higher borrowing costs, rising prices, slower economic growth and fuel and food disruptions. Under growing pressure, Ghana has turned to the International Monetary Fund for assistance. Charles Abani, the UN Resident Coordinator in Ghana, says a balanced, equitable and forward-looking IMF programme, combined with sustained fiscal discipline, will help restore investors’ confidence.

To discover more avenues to help advance sustainable finance visit the website of the upcoming Building Bridges Week, as well as to see more of Charles Abani's interview.

Ghana’s fiscal and debt situation was precarious before the war in Ukraine dealt another severe blow to the economy. How has this affected the climate for investment in Ghana’s sustainable development goals (SDGs)?

"The dent to investor confidence has been significant. However, the overall sense is that the underlying fundamentals for a recovery will be in place. The IMF process will help introduce discipline within the system that would then enable some of these investments to become aligned. An IMF programme will help Ghana weed out inefficiencies and prioritize public expenditure to foster an environment for private investment. Hopefully, it will be significant enough to enable Ghana to continue its recovery and move forward with its sustainable development agenda."

"Ghana’s ambitions for achieving the SDGs seem outsized when you look at the resource requirements and budget demands – estimated at over USD 43 billion per annum between now and 2030. The government has some really tough choices to make about how to prioritize its expenditure on economic transformation alongside social spending and also security spending in the context of the conflict in the Sahel. There are worries that there will be significant slashes to social spending. The IMF programme will help Ghana address these and identify the priority areas to lead Ghana firmly back on the path to sustainable growth."

"Crucially, Ghana has a framework for investing in sustainable development and has integrated the SDGs into this framework. The government has created a number of flagship programmes, the most prominent of which is the integrated set of initiatives in the Ghana CARES programme. The essence of it is to provide 30 billion Ghana cedis (about USD 3.5 billion) of government money in order to leverage a further 70 billion from the private sector for key areas. Alongside that, there are a number of initiatives, including the work underway with the SDG Lab to leverage private sector finance through its Pipeline Builder pilot in support of CARES."

"The Ministry of Finance has set up a delivery unit to enable the CARES programme to gain ground in the different areas of investment required. The UN will support the unit with some technical assistance to prioritize investment opportunities and take concrete actions to realize them. The World Bank and particularly the African Development Bank are also providing key investments. And we're looking to see how the new Development Bank of Ghana might provide a base for assurances to foster investor confidence as well as to support deserving businesses, especially micro and small to midsized enterprises."

How can Ghana keep its SDG strategy on track? Even before the pandemic the government was facing a significant gap in financing for the 2030 Agenda.

"The government has been very keen from early on to have a development agenda with an SDG lens. It has continued to restate that, most recently when it presented its Voluntary National Review in New York at the high-level political forum in July 2022. The National Planning Development Commission last year produced a medium-term framework that sets out the priority areas for investment across social and economic sectors."

"Looking ahead, Ghana is also doing a lot of work in the digital space to create platforms such as the national identity card that will help generate revenue and build a stronger foundation for personal finance and social protection. Increasing domestic resource generation is a key dimension of Ghana’s ambition for self-reliance, and there is a raft of initiatives around government to strengthen that process."

Developing countries face significant barriers to securing finance for the SDGs. Higher inflation and slower growth are making it even tougher. What can be done to mobilize more investment for these countries?

"The UN Secretary-General's Common Agenda speaks to some important aspects around reforming finance for development – the need to look at increasing Special Drawing Rights allocations available to developing countries including Ghana, the need to look again at the risk premiums that are being placed particularly on developing countries and how those risk premiums can be reduced to increase the fiscal space for action towards building back better. In Ghana, it’s about fiscal governance and discipline as well. The coming-in of an IMF programme provides the basis upon which those priorities can be agreed. The investment areas that are prioritized need to be those that help Ghana achieve the SDGs. The largest area of need is in infrastructure and a number of those are huge investments. Until one sees clear adherence to programme imperatives, some of the bigger kinds of investment that need to come into Ghana in the billions are likely to sit at the borders for another year to see how the IMF programme is playing out."

"Despite the difficult circumstances, there are opportunities, there is a policy framework available, there are flagship programmes around which government is making investments that then create opportunity. We’ve agreed as the UN in Ghana to support the Northern Investment Summit and work with the Ghana Investment Promotion Centre to host the SDG Aims Forum next year, so potential investors can interact on the ground with opportunity here in Ghana, as well as beyond. The event was held this year in Kenya, and we’re looking at ways to develop some of the ideas there, for instance the idea of a social impact bond, as well as supporting Ghana’s SDG investment agenda through the Secretary-General’s SDG Financing Roadmap."

The private sector is an essential part of Ghana’s plan for sustainable growth. What is the case for investing in the SDGs in Ghana in the short term? Where are the opportunities at the moment?

"The Ghana CARES programme provides opportunities in light industry, food and beverages, entrepreneurship, pharmaceuticals, textiles and garments, and there are significant infrastructure investment opportunities, for example in road and rail, housing and health sectors. ICT is another opportunity as Ghana is seeking to grow a hub for digital-related businesses. The agriculture and food systems also offer opportunities, for example in fertilizer production and agro-processing."

"The MSME space offers a lot of opportunity. With Ground_Up, we’ve been working to create a fund of funds, particularly to help the small- or medium-scale sector to blossom and develop, which is really part of how Ghana needs to go if it is to recover. One challenge is supporting businesses to be investment-ready, because money must meet investable-opportunity. Early-stage investing is still emergent, but it's also an opportunity space for the riskier and more patient kinds of investors to find good ideas that need backing with smaller investments."

From your vantage point as the top UN representative in Ghana, what makes the Pipeline Builder a compelling proposition?

"As a UN-wide priority, financing for the SDGs cuts across the mandates of many different agencies, funds and programmes. UNDP’s work on investor maps has identified a number of key investment areas, particularly within agriculture and the agricultural value chain. UNCDF has also begun to make funds available through its Build and Bridge facilities. UNOPS have supported the government with technical skills to make opportunities in infrastructure investment-ready. And WHO and UNICEF are working on ways to leverage innovative blended finance to address needs in health, water and sanitation."

"One key advantage to engaging with the SDG Lab and the Pipeline Builder is the ability to bring the different dimensions and strands of investment opportunities to one space. We talk a lot about needing more investment. The Pipeline Builder from the supply side has the potential to be a huge aggregator of finance to meet the significant needs. The work we've been doing with Ground_Up and the skill set that sits in that partnership, which is thin at country level and probably shouldn't reside here all the time anyway, is key to a discussion that brings people together."

"This will all help to concentrate the leadership we need from governments, but also concentrate the ways in which investment comes into Ghana. I suspect there's still significant mapping to be done to see what broader opportunities can be there, but certainly this is the value addition for us. And because no one agency has all that competency in one place, having the Pipeline Builder as an external resource is of key significance if we are going to fill the gap in financing for Ghana’s sustainable development strategy."

Why is the Building Bridges sustainable finance conference an important initiative?

"The Building Bridges investment conference, attended last year by Ghana government officials, is an excellent opportunity to enable key government officials and investors to dialogue, identify low-hanging fruit and address the concerns and questions to catalyze this on the ground, strengthening the enabling environment, providing assurances to investors, removing hurdles and constraints, and helping to focus investments that leverage results for achieving the SDGs. In 2022, this will be even more important."

Decent Work and Economic Growth
Industry, Innovation and Infrastructure
Reduced Inequalities
Sustainable Cities and Communities
Partnerships For the Goals
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