How Can Development Cooperation Mobilise Private Investment in Developing Countries to Achieve the Sustainable Development Goals?

The world is facing enormous challenges, and Norwegian development cooperation has an ambitious mandate. Our aim is to help ensure that the UN Sustainable Development Goals (SDGs) are reached by 2030, and we will do this as effectively as possible with the limited funds at our disposal. Norad's development cooperation has undergone several changes in recent years. We have adopted a new strategy and, in line with this, our organisation is now structured around the SDGs. We have also been given more responsibility, and now manage about half of the long-term development funding. Following the reform of Norwegian development cooperation, the Ministry of Foreign Affairs now plays a more overarching role than before, which means that the primary responsibility for finding effective solutions for the use of development funds rests with Norad. We therefore need to work actively and continuously to gather knowledge and discuss the important choices and dilemmas pertaining to development cooperation. This requires both a retrospective and forward-looking approach: we must examine and understand what works best so that we can replicate it in other contexts. However, we also need to ask more fundamental questions about the framework conditions for development cooperation and consider what trends will be important in the years ahead.

It is against this backdrop that I initiated the Rethinking Development project in the autumn of 2020. So far, we have taken an in-depth look at four thematic areas, the importance of which we believe will increase as we head towards 2030. The project has examined the fight to combat poverty while also providing global public goods, how development assistance can help reduce global warming, how we can mobilise investments from the private sector, and what is needed for successful institutional cooperation.

The four thematic areas are very different, but they are similar in the sense that they all look at development cooperation as part of a larger picture, and aim to address dilemmas that are creating increasingly precarious situations. This report looks at how development aid can best be used to achieve large-scale mobilisation of investments from the private sector for developing countries to achieve the SDGs through, for example, job creation, poverty reduction, climate change mitigation and adaptation, and food security.

This report proposes the use of blended finance in development cooperation. This means combining the use of government development funds and private commercial capital to enable such investment. Norway can play an important part in the mobilisation of investments from the private sector for developing countries to reduce their investment gap. To achieve this, it is essential to build a unified and coordinated partnership between Norwegian players, with a particular focus on a close and good relationship between Norad and Norfund.

In this series of four reports, we have received input from the private sector, civil society and experts in Norad, the Ministry of Foreign Affairs and other government ministries, as well as national and international specialist groups. We would now like to invite you to read the report and participate in the discussion. If we are to meet the daunting task of achieving the SDGs, we need to develop new ideas and solutions. These ideas could also stem from new sources that are not already familiar with the work of the development cooperation. Perhaps someone reading this report has a solution that has not been thought of. As we head towards 2030, it is essential that development cooperation efforts encompass other funding sources and actors as opposed to just those internally in Norad.