Page 34 - Echoes of the Global South V2

Financing SDGs in the Global South: New
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Partnerships and Their Potential Impact

The Sustainable Development Goals (SDGs), established by the United Nations in 2015, represent a transformative
agenda to end poverty, sustain human well-being, protect the planet, and ensure prosperity for all by 2030. For
the Global South, achieving these goals is essential not only for improving social and economic welfare but also for
enhancing resilience against economic shocks and fostering long-term stability. However, the financing needs of
developing countries to meet these SDGs have soared from USD 2.5 trillion in 2015 to a staggering USD 4-4.3 trillion
by 2023, a sharp increase driven by the compounded effects of the global financial crisis, the COVID-19 pandemic,
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and ongoing geopolitical disruptions. This gap is further exacerbated by the diminishing commitment of traditional
donors like the OECD countries. To compensate for this, while private sector interest exists, it remains selectively
focused on a limited number of SDGs. While developed countries historically provided substantial support, recent
years have seen a noticeable shift. OECD countries have scaled back development aid due to domestic pressures
and competing priorities, reducing the availability of concessional financing. Additionally, private sector interest is
concentrated mainly on SDGs where immediate returns on investment are more visible, such as clean energy (SDG
7) and infrastructure (SDG 9). Other equally critical goals—such as those related to poverty reduction (SDG 1),
healthcare (SDG 3), and education (SDG 4)—struggle to attract private capital due to perceived lower financial returns
and longer payback periods.

Figure 5: Net ODA Flows from DAC Countries by Source (% of Total Net Flows)

Source: ODA trends and statistics, OECD

In response, developing countries are exploring new and innovative financing mechanisms, particularly by strengthening
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partnerships among themselves through South-South and triangular cooperation. These partnerships represent a
strategic shift toward mutual development and provide a sustainable, resilient financing framework through local

81. James X. Zhan, Bruno Casella, Reuben Wambui and Remi Vine, “Why trillions more are needed to bridge the SDG financing gap”, World Economic Forum,
September 18, 2023, https://www.weforum.org/stories/2023/09/why-trillions-more-are-needed-to-bridge-the-sdg-financing-gap/#:~:text=A%20new%20
midpoint%20review%20by%20UNCTAD%20sets%20the,and%20the%20triple%20food%2C%20fuel%20and%20finance%20crises.
82. Stuart Davies and Jose Palacin, “Innovative Financing Mechanisms and Solutions”, Policy Brief, United Nations Economist Network, United Nations, March
2023, https://www.un.org/sites/un2.un.org/files/innovative_fincancing_14_march.pdf

34 ECHOES OF THE GLOBAL SOUTH