News

Strengthening the Foundation for Post-2015 Development and Financing

This is a critical year for global development. As we look ahead to the Financing for Development (FfD) Conference, the approval of the Sustainable Development Agenda, and COP21, the international community will be focused on financing and implementing the right approaches needed to achieve our shared, ambitious global goals.

As we move forward, we must ensure that we are building upon the lessons learned from proven operating and financing models that work. Adequate funding in support of each of the SDGs is critical, but the nature of the operating and financing model is equally critical to ensuring strong, tangible outcomes that deliver sustainable impact. To achieve success, future development must:

1. Build upon and scale up prior successful  efforts;
2. Address areas that have been acknowledged as critical gaps in the MDGs;
3. Learn from and advocate for inclusive operating and financing models that can ensure effective implementation and achievement of tangible goals; and,
4. Prioritize those models that can simultaneously achieve development, health, women’s empowerment, and climate and environment goals. 

The market-based approach and intermediary model that the Global Alliance for Clean Cookstoves (Alliance) has employed to address energy access and household air pollution is one such strategy that can provide valuable lessons for the effective implementation of the SDGs. 

The Alliance is a public-private partnership launched in 2010 to save lives, improve livelihoods, empower women, and protect the environment by creating a thriving market for clean and efficient household cooking solutions. Exposure to smoke from the use of solid fuels in traditional cookstoves and open fires –  the primary means of cooking and heating for nearly three billion people in the developing world –  causes 4.3 million premature deaths every year. Inefficient cookstoves and open fires are also a major source of greenhouse gases and account for up to 25% of global black carbon emissions. Women and children spend many hours gathering fuel – up to 5 hours per day – or spend a significant portion of household income to purchase fuel. In many cases, displaced and refugee women walk for hours to find firewood, which increases their risk of gender-based violence, dehydration, and physical injuries. 

The Alliance has experienced quick, sustainable, and scalable results in the clean cooking sector. Our market-based efforts have shown significant impact over the last four years with more than 20 million additional households now using cleaner, safer, and more efficient cookstoves and fuels, saving tens of thousands of lives, protecting millions of trees in vulnerable ecosystems, and creating hundreds of thousands of jobs. Improved technologies have also provided myriad socio-economic opportunities.  We project that by scaling up of our efforts, we will be able to ensure that 100 million households adopt clean cooking solutions by 2020. 

Recommendations on Effective Operating and Financing Models

The Alliance has learned valuable lessons since its launch that can inform the FfD discussions and enable effective use of resources to bring about the greatest, most sustainable impacts. Based on our experience, we have seven recommendations for effective operating and financing models:

1. It is important to identify and scale models that can act as effective intermediaries and pooled financing mechanisms to:
   1. Develop a comprehensive systems approach to a problem, particularly as development challenges are understood to be more interconnected and complex than previously thought;
   2. Create cohesion within an ecosystem of varied and diverse actors that each bring unique assets to achieve each SDG; and,
   3. Choreograph the nature and timing of interventions to achieve maximum impact over the course of a multi-year strategic plan.
       
2. Successful intermediary models should have the following characteristics:
   1. Clear, high-impact priorities for accountability;
   2. A focus on and involvement of the end users/customers of development interventions early on, not just at the end stage of implementation as passive beneficiaries/recipients;
   3. A strong and comprehensive gender approach to ensure that both women and men fully participate in development approaches from their inception and that interventions bring about positive social impacts;
   4. The ability to blend public and private capital and create a multiplier effect that is sustainable in the long term;
   5. The ability to be inclusive and to engage a diverse suite of global players and local actors from different sectors for maximum effect;
   6. The ability to create an enabling environment that “crowds in” many diverse actors towards common end goals;
   7. The ability to raise awareness and support large scale behavior change among targeted audiences;
   8. The ability to inspire and support innovation and R&D along value chains and then rapidly translate this into market advances; and,
   9. The ability to convene and share lessons to minimize duplication and to create momentum that can scale effective approaches and impact.
       
3. In the spirit of sustainable development, these intermediaries should have a “light” global touch with clearly defined roles and stronger and longer lasting local footprints.  
    
4. Financing mechanisms need to be developed with a capital structure that will allow for the appropriate stacking of capital that is both relevant for each sector depending on its current stage of maturity and accessible by all relevant actors – large and small. In the past, financing for development has depended on traditional pots of official development assistance, not the wider range of resources that can and should be utilized. The principal of accessibility has often been forgotten as well, and as a result, billions of dollars go underutilized and create consternation among enterprises, governments, and NGOs that are shut out or inhibited by the structure of financing. Here are some critical guidelines to utilize when structuring financing mechanisms:
    
   1. Early and effective public capital can set the right foundation for greater, more transformative private sector involvement is sustainable development.
   2. It is imperative that financing is accessible. Smaller partners are absolutely necessary to successful development, especially in hard-to-reach communities, but they are often excluded from the design process (of both development approaches and financing mechanisms) and are unable to access the resources necessary to carry out their important work. 
   3. Financing mechanisms must have an effective rollout plan to ensure that communities and markets can absorb financing and utilize the resources, particularly when resources come in different forms. The implementation plan may require a focus on building capacity so that smaller actors can manage an infusion of financing.
       
5. Intermediary models can only be effective if they have multi-year, flexible financing initially, followed by longer term results based financing. We have seen the importance of this flexibility with GAVI, the Vaccine Alliance, and the Global Fund to Fight AIDS, Tuberculosis and Malaria. Sustainable impact requires financing approaches that allow for foundation-setting and adaptability, which is only possible when funding is enabling, not restrictive.
    
6. Some “light-touch” intermediaries will require strong “host” organizations. These organizations are vital for initial support, structure, and strong policies and procedures. The importance of incubator “hosts” has been seen across areas of development, including energy, family planning, and vaccines, among others. The “host” organizations can also provide necessary stability to attract financing and a broader range of partner engagement.
    
7. While targets and indicators are critical to measure progress against each SDG, we also need to use appropriate metrics to measure effectiveness and value-add of intermediaries, development models, and interventions. Measuring against these metrics should help decide whether or not to scale a particular approach or not.

Conclusion

Strong operating and financing models for development approaches are necessary for reaching our shared, ambitious global goals. We must implement learnings from proven approaches to maximize impact. 

The Alliance’s recommendations must be taken into consideration when structuring the financing and working models for energy access approaches, yet they are also relevant across all areas of the SDGs and must be utilized to achieve the global goals.

If the international community is looking for results, then an accountable intermediary institution is an important model to utilize.  It will be far too complicated to coordinate across hundreds of necessary actors in increasingly complex ecosystems without strong intermediaries.  Coordination is not an end goal, but it can be critical to ensure appropriately staged interventions for high quality outcomes. We urge the international community and the delegates to the Financing for Development Conference to learn from our lessons as a strong intermediary creating lasting impact.