Page 31 - Abyssinia Busniess Network November 2019

and private financial institutions. into long-term productive
investment, whether in the
Sign o’ the times At first glance the signs are public or private sectors, is not
encouraging. Global corporations a matter of appealing to the
Financial insecurity, economic are sitting on an estimated $2 trillion better nature of those managing
polarization and environmental cash pile, while high net worth such funds nor establishing a
degradation have become hallmarks of individuals have access to more than more welcoming environment
the hyperglobalization era. These are, $60 trillion in assets. The OECD in which they can do business.
moreover, closely interconnected and estimates that institutional investors
mutually reinforcing, in ways that can in member countries hold global In reality, too many
give rise to vicious cycles of economic, assets of US$92.6 trillion and while governments, at all levels,
social and environmental breakdown. figures for institutional investors in have for decades been
developing countries are harder to extending incentives and
This threat coincides with a worrying come by, estimates for the assets held protections to international
erosion of political trust, as income gaps by Brazilian pension funds exceed finance in the hope of boosting
have widened across all countries and $220 billion and some $350 billion capital formation. Instead,
the policy agenda perceived as catering for combined African pension funds. they have been sucked in to
to the interests of the winners from Redirecting a relatively small portion an unstable financial world
hyperglobalization, with scant attention of these resources to meet the SDGs geared to short-term trading in
paid to those who have seen limited should, the argument goes, be able to existing assets, prone to boom
gains or have fallen further behind. Even solve the financing challenge facing and bust cycles, with baleful
after the GFC, the rules of the game that the 2030 Agenda. distributional outcomes and
had generated high levels of inequality, large debt overhangs that act
insecurity and indebtedness prior to as a persistent drag on the
that crisis have remained largely intact, A string of measures, marshalled real economy. Re-engineering
adding further layers of resentment, often under the call to “blend” and financial stocks and flows to
aimed against outsiders, and widening “maximize” finance, have been support productive investments
political divisions. This breakdown in proposed that would channel (whether private or public) will
trust has occurred at the very moment the public money into “de-risking” big not happen without a
collective actions needed to build a better investment projects while employing fundamental change in the
future for all depend on a greater sense of securitization and hedging rules of the game.
shared responsibility and solidarity. techniques to bring in the private
investors. If only things were that
The SDGs, agreed at the United Nations simple; the evidence suggests that The current global economic
in 2015, were designed as a guide to that blended finance fails to mitigate risk environment where austerity
future. But with their delivery planned and instead boomerangs back to the is the macroeconomic default
for 2030 already behind schedule, public purse and the tax payer. option, liberalization the
frustration is growing across different favoured policy tool for
policy communities and at all levels of In fact, vast amounts of public affecting structural change and
development. The perceived problem resources have already been used debt the main engine of growth
is a shortage of finance to achieve the to save banks (and other financial is heading in the wrong
scaling-up of investments on which institutions) that proved too big direction when it comes to
the 2030 Agenda ultimately depends. to fail after employing these same delivering on the ambition of
With government finances burdened by techniques to indulge a frenzy of the 2030 Agenda. Accordingly,
increased debt levels and a fractured speculative activity in the run-up this year’s Report seeks to
politics impeding long-term planning, to the financial crisis. Moreover, make an alternative case for
pushing the financial envelope from underpinning the vast trove of delivering the 2030 Agenda
billions to trillions of dollars each year private assets is a tangled web of through a Global Green New
will, it is claimed, have to rely on tapping financial funds and debt instruments. Deal with a leading role for the
the resources of high-wealth individuals Channelling a portion of these assets public sector.

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