Perspectives 2019 2020 Public Sector

28 Sustainable Sovereign Financing: Optimizing Resource and Risk Allocation same period last year 9 . Governments should leverage this trend and work with both public and private sector partners to create bankable blended finance structures that fit within the mandates, constraints and risk-adjusted return requirements of institutional investors. With the right structures and incentives in place, significant private capital flows can be deployed to meet the investment needs in Africa. Government Framework — SDG Financing In 2018, Citi Research published a Global Perspectives & Solutions Report titled “ UN Sustainable Development Goals: Pathways to success — a systematic framework for aligning investment ” that offered investors a structure on how to allocate capital across the SDGs. While the report was directed at private sector investors, it does provide some key insights to governments on how to best mobilize private sector capital and to allocate their own resources for accelerating progress against development goals. Policy Imperatives/Enabling Environments The assessment of investment opportunities takes into consideration a number of factors and variables that will influence the targeted outcomes of a project. One of the principle considerations is the operating environment where the asset is domiciled and how public policy shapes the expected behavior of the key stakeholders including users, owners, regulators, financiers and service providers. Clear and consistent policy setting and implementation by the host government enhances the “predictability” of outcomes and reduces the risks associated with an investment. Governments must have a clear understanding on how investors view the legal, regulatory, financial and environmental landscapes in the markets where they operate. There are a number of public benchmarks, such as the World Bank’s Ease of Doing Business rankings, the Worldwide Governance Indicators and the World Justice Project’s Rule of Law Index, that provide comparative insights to the attractiveness of particular markets for investment. Competition for private sector capital is intense and sovereigns must strive to create and maintain the proper enabling environments through accommodative policies that support the targeted outcomes of the SDGs. For instance, developing a robust and reliable regulatory regime for power and providing appropriate tax incentives for financing renewables sources of energy can greatly assist in mobilizing capital for SDG 7 — Affordable and Clean Energy. 9 Dealogic August 2019