Funding sustainability: The role of financing in global development initiative

THE Global Development Initiative (GDI) was established to support the timely achievement of the 17 Sustainable Development Goals (SDGs), as well as to revitalise global development partnership and promote stronger, greener and healthier progress on a global scale.

First introduced by Chinese President Xi Jinping on Sept 21, 2021, the GDI has garnered support from over 100 countries and international organisations.

Serving as a clarion call for shared development, the GDI seeks to strengthen international cooperation, foster a global consensus on promoting development and reinstate development at the forefront of the international agenda. Therefore, the role of financing in achieving the GDI is crucial and multi-faceted.

Financing serves as the backbone that enables the GDI to fulfil its mission of accelerating sustainable development in an inclusive manner. It lends strong impetus for pooling resources, overcoming developmental obstacles and fostering enhanced collaboration for higher efficiency.

The GDI leverages diverse financing mechanisms, including public and private investments, grants, loans and innovative financial tools, to mobilise the financial resources essential for implementing sustainable development initiatives. This allows for the expansion of projects, encourages innovative approaches, attracts diverse stakeholders and enables transparent monitoring, thus contributing to tangible and lasting impacts in sustainable development.

In recognition of finance's pivotal role, President Xi has announced key steps to implement the GDI, such as establishing the Global Development and South-South Cooperation Fund and increasing input in the China-United Nations (UN) Peace and Development Fund.

The Global Development and South-South Cooperation Fund as well as the UN Peace and Development Trust Fund are the two main platforms funding GDI cooperation projects.

The Global Development and South-South Cooperation Fund is an initiative launched by China to support development projects in developing countries. The fund aims to address development challenges and support sustainable development initiatives in partner countries.

The Global Development and South-South Cooperation Fund provides financial assistance, including grants and concessional loans, to support infrastructure projects, capacity building and technical cooperation. The fund also facilitates collaboration between China and other developing countries, enabling them to work together on shared development goals.

The China-UN Peace and Development Fund is an initiative established by China in partnership with the UN. It aims to support peacebuilding, conflict prevention and sustainable development efforts globally.

Since its establishment in 2015, China has been increasing its input in the China-UN Peace and Development Fund, enabling the fund to expand its reach and support a broader range of projects and initiatives aligned with the SDGs.

To show that China is committed to the GDI’s results-oriented actions, President Xi has committed US$3bil of international assistance for developing countries.

In 2022, he announced an upgrade of US$1bil into the Global Development and South-South Cooperation Fund and increased the support for the China-UN Peace and Development Fund. Thus far, the GDI has helped increase funding for global development and assisted developing countries in enhancing domestic resource mobilisation.

Malaysia's perspective on GDI

Recognising that the progress of the 2030 Agenda is in dire state and continues to be exacerbated by multi-dimensional crises, all ten Asean countries, including Malaysia, have expressed their support for the GDI by joining the Group of Friends.

Malaysia acknowledges the significance of the GDI's 32 practical cooperation measures, which aim to support and complement the efforts of Member States, particularly those of developing countries.

While the full impact of the GDI is yet to be realised, Malaysia reaffirms its commitment to strengthening multilateral cooperation.

Ambassador Ahmad Faisal Muhamad, Malaysia's Permanent Representative to the UN, emphasises that the GDI holds the potential to enhance South-South Cooperation, enabling developing countries to foster collaboration through government-led development programmes.

Malaysia remains committed to advancing the path of Global Development and South-South Cooperation. Former Prime Minister Datuk Seri Ismail Sabri Yaakob stated that Malaysia intends to promote sustainable development through increased access to green financing and the creation of new markets, emphasising the need for investments aligned with sustainability.

Recognising that sustainable financing is crucial for the overall recovery of developing countries, addressing funding gaps by incorporating innovative sources into the funding mix becomes imperative.

In this regard, the UN Sustainable Development Group, international financial institutions, regional organisations and other stakeholders, including the GDI, can play a pivotal role in providing better support for these efforts.

The way forward

Achieving the objectives of the GDI requires collective efforts and international synergy. To this end, maximising the utilisation of the Global Development and South-South Cooperation Fund and the China-UN Peace and Development Fund becomes imperative in mobilising and pooling additional resources. Indeed, upholding inclusiveness and shared progress is crucial to renew global development partnerships. Recognising the current shortfall in global development resources, it is crucial for developed countries to fulfil their Official Development Assistance commitments and increase investments in developing countries.

Additionally, stronger engagement of financial institutions like the World Bank, the Asian Development Bank and other international and regional development organisations in GDI cooperation is essential to provide enhanced funding support for developing countries and amplify the impact of the initiative.

Dr Sonia Kumari Selvarajan is Senior Lecturer at the Department of Political Science, Public Administration and Development Studies, Faculty of Business and Economics, Universiti Malaya. The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH), Tunku Abdul Rahman University of Management and Technology (TAR UMT), in conjunction with the 10-year anniversary of the Belt and Road Initiative.