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The $3 Trillion Annual Funding Gap: Financing the World’s New Sustainable Development Goals
Private Investment Corporation (OPIC)
through dozens of risk-sharing guarantee
arrangements around the world. Through these
programs, Citi has provided capital-to-scale
and accelerated micro-financing lending and
expanded access to financial services for micro
and small businesses across the globe. Citi and
other similar financial institutions would not
have been able to do this on their own. The
challenge and imperative going forward is for
blended finance to go beyond simple guarantee
structures and start incorporating official
development assistance that can provide a
layer of risk capital and consequently lead to
the layering of private sector capital. Global
ODA stands at roughly $135 billion per year
and is unlikely to grow meaningfully; if we can
better-leverage these funds, much more can
be mobilized.
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For example, a slug of ODA as
first loss equity in a high “additionality” social
infrastructure project could go a long way in
making an un-bankable deal bankable and result
in a very high mobilization ratio.
In order to promote these types of innovative
solutions and to put the theory into practice,
Citi is also participating in a number of public-
private partnerships that can be used to
develop and innovate new blended finance
solutions. One such example is the Sustainable
Development Investment Partnership (SDIP),
launched in Addis at FfD3; this partnership,
which includes USAID, the OECD, the World
Economic Forum and SIDA, among others,
is aiming to mobilize $100 billion in private
financing over five years.
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SDIP will focus on
infrastructure projects in developing countries
by using development assistance to mitigate
risk and attract private sector capital in support
of the SDGs.
Sustainability: The Co-Existence of Financial
and Social Return Targets
Through our core business, Citi has already
mobilized billions from the capital markets to
support environmental and social progress.
For example, in 2007, Citi set a ten-year, $50
billion Climate Change Finance goal. Proudly,
we achieved $50 billion by 2013, significantly
ahead of schedule. Subsequently, we launched
a follow-up ten-year (2014-2023), $100 billion
Environmental Finance goal, which will support
investments in renewable energy, energy
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World Economic Forum, “Blended Finance Vol. 1”
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World Economic Forum