Financing strategy

Many priorities expressed in national sustainable development strategies will require private action, including additional long-term private investments and greater alignment of private business practices with sustainable development. Countries have adopted a wide range of policies to channel private investments to priority areas – investment policies to incentivise and attract foreign investment, reforms to improve the overall enabling environment for business development, and many others. Alignment of these policies with the broader sustainable development strategy is a key success factor in implementation. INFFs offer an opportunity to assess – and, if necessary, increase – policy alignment and coherence. 

Many countries have adopted financial sector development strategies and financial inclusion strategies. These strategies are important in identifying and overcoming financing gaps and binding constraints, such as the lack of access to finance for small and medium-sized enterprises (SMEs). 

Many countries have adopted national development cooperation policies to increase the coherence and effectiveness of development cooperation. They are increasingly covering a broader scope of resources beyond official development assistance, underscoring the need for coordination with other areas of finance. By enhancing coordination between different ministries and different levels of government, INFFs could further facilitate the active engagement of all parts of government in the implementation of development cooperation policies.

The global enabling environment shapes financing options for national governments, and thus has a significant impact on INFFs. Addressing the challenges in the global enabling environment requires multilateral action. Nonetheless, there are a range of actions that governments themselves can take, within the framework of the financing strategy, to better manage external risks. This does not replace the need for global action, but it does allow governments to better plan within an increasingly challenging global environment. Policy actions include trade and technology policies; debt management strategies; science, technology and innovation roadmaps; capital account management techniques; regulatory frameworks for the financial sector; and commodity stabilisation funds.