2- Innovative financing and human development

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Presentations given in the second workshop illustrated the essential role played by the various actors to benefit financing for human development – individuals (migrants), and foundations. Assisted by public actors (incentives for reducing costs for example) and in association with the private sector, these actors are developing innovative mechanisms which are likely to generate new stable, sustainable and predictable resources in addition to official development assistance.

Migrants’ remittances were studied thanks to the clear presentation given by Dilip Ratha, an economist at the World Bank and Spanish and Italian experiences. They are respectively based on the G8 commitments on the reduction of remittance costs and the Spanish proposals regarding this country’s experience in the area.

Mr Ratha pointed out that migrants’ remittances are a major issue when it comes to development financing. Financial resources for developing countries estimated at $305 billion in 2008, migrants’ remittances were less affected by the crisis than other private flows and continue to play a counter-cyclical role. According to Mr Ratha, since official development assistance alone cannot achieve the Millennium Development Goals, it is important to raise more private resources for development. To do so, we need to lower remittance costs, increase transparency and competition in the remittance market, promote mechanisms such as diaspora bonds (they raise huge amounts of resources, for Israel and India for example, and were adopted by Ethiopia and are being debated in 10 countries) and secure future remittances. Remittances are directly linked to migrants’ needs and those of their families.

The second speaker, Dr. Basilio Toth, head of the office in charge of debt, international financial institutions, and export credits at the Italian Ministry of Foreign Affairs, presented the G8 process and the ambition of the goal of reducing remittance costs for the G8 Summit in L’Aquila. He also stressed the role of the G8’s Global Remittance Working Group coordinated by the World Bank and talked about Italy’s experience in promoting price comparison sites.

Spain organized a seminar in 2007 which identified four major obstacles to taking full advantage of remittances for development (cost, operators’ geographic coverage, lack of banking culture for migrants, impact on productive development). Based on this information, 10 proposals were identified which could better raise funds for development. There was particular focus on governments’ role in encouraging private flows through incentive mechanisms, and the importance of central banks and international organizations (bonds, commitment mechanisms, development of access to financial services).

Jacques Diouf, FAO Director-General, presented hunger-related issues throughout the world. The global food situation is worrisome. In total, a billion people are hungry, or 15% of the world’s population, and the international economic crisis has compounded the urgent need for an ambitious international response. Mr. Diouf regretted the fact that there has not been enough official assistance to support agriculture over the past two decades. He made a robust call for a portion of innovative financing to be earmarked to food security.

The last speaker in this part of the workshop then took the floor. In her presentation on philanthropy and innovative financing for health and development, Gargee Ghosh, Senior Program Officer for Development Finance and Policy at the Bill and Melinda Gates Foundation, explained the important role philanthropy plays. She then presented the work of the Foundation when it comes to non-profit partnerships (medicines and vaccines) as well as a fund for health measures in Africa. She stressed the need to be convincing when dealing with investors.

22 June 2009

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