In today’s world, poverty and underdevelopment are not isolated phenomena. Among other things, the Millennium Development Goals (MDGs) are concerned with food and commodities, the financial and economic crisis, and the global climate question. With these challenges becoming ever more intertwined, the players involved are realising the value of joint action. Public and private actors seek each other out in order to create synergy. These kinds of relationships typically require some getting used to. Innovative financing has become an indispensable instrument for leveraging public and private resources.
That is why the Netherlands has decided to join the Leading Group on Innovative Financing for Development. Initially, my country will have observer status, but with a view to becoming an active player. Many successful initiatives to mobilise public and private funding for development spring from the work carried out by this forum.
The Netherlands’ affiliation with the Leading Group stems from our commitment to development partnerships. Sharing and mobilising our knowledge and experience involves sharing and mobilising financial resources. There is a real risk that innovative ideas are being conceived for development partners, rather than with them. Yet development partners are more than capable of adapting innovation to their needs. In light of this, partnerships need to transcend borders. The Leading Group has an undeniable advantage here, allowing developing countries, emerging economies and high-income countries to get together with UN agencies, international financial institutions and NGOs at an early stage to try out and promote initiatives. Thanks to the nature of the Leading Group, innovative financing is not politicised at an early stage. New initiatives need space to grow. This enables us to take a good look at the pros and cons of innovative ideas and their practical implications. Promising proposals can then receive wider international support and be put into practice.
The catalytic effect of innovative financing can substantially expand the reach of Official Development Assistance (ODA), which is greatly needed. According to the UN Secretary-General, the MDGs will not be achieved without an extra effort. The year 2015 is fast approaching, and if we are to meet the MDGs, we need to employ more knowledge, capacity, resources and innovation. The Netherlands, which has long earmarked 0.8% of its GNP for ODA, is especially interested in innovative financing as a means of increasing the effectiveness and reach of ODA. This can be done by working with new partners through new forms of cooperation, using new methods. The International Finance Facility for Immunisation (IFFIm) is an interesting example. The Netherlands is contributing EUR 80 million to this facility over an eight-year period. Long-term government pledges of this kind enable IFFIm to raise funds by issuing bonds in the capital markets, providing it with immediate cash resources for its immunisation programmes. As a result, by September 2009 – a mere three years after its launch – IFFIm was already able to disburse USD 1.2 billion. Investment in immunisation now will save many lives in the future.
To sum up, innovative financing helps us to turn development challenges into development opportunities. The Netherlands is delighted to be involved in the pioneering work carried out by the Leading Group.
Maxime Verhagen
Minister of Foreign Affairs of the Kingdom of the Netherlands