At a United Nations Summit in 2015, countries adopted the 2030 Agenda for Sustainable Development, including its 17 Sustainable Development Goals (SDGs) to end poverty and hunger, reduce inequality as well as tackle climate change. These SDGs, although not legally binding, are the responsibility of governments to implement and review. A key tenet of the initiative is to get local stakeholders involved. “We will not be satisfied unless we get the villages talking SDGs,” says Mahmoud Mohieldin, senior vice president for the 2030 Development Agenda, United Nations Relations, and Partnerships at the World Bank Group.
In an interview with Knowledge at Wharton, Mohieldin discusses the role of his institution, his key priorities and why localization is critical to the success of the SDGs. (Those interested in international development or social entrepreneurship may enter the 2018 Ideas for Action competition, a joint initiative by the World Bank Group and the Zicklin Center for Business Ethics Research at Wharton. The competition is looking for young leaders worldwide to share ideas for financing and implementing the U.N.’s SDGs).
An edited transcript of the conversation follows.
Knowledge at Wharton: What are your top priorities at present and going forward?
Mahmoud Mohieldin: My priorities are to get the SDGs’ agenda implemented and for it to be taken seriously, not just at the global level or at the big centers of activities in New York or Washington D.C. Our hope, and this has been reflected in our flagship activities this year during the annual meetings of the IMF [International Monetary Fund] and the World Bank, is to localize the SDGs. So, as I’ve been telling colleagues, including the deputy secretary general of the United Nations, my good friend Ms. Amina Mohammed [deputy secretary-general of the UN], who is leading the U.N. work in this area, that we will not be satisfied unless we get the villages talking SDGs.
And to “talk” is not just an expression of talk, but basically assessing what you are achieving with them. Are the numbers of the poor declining? Are the numbers of the employed getting bigger? Are the numbers of those with problems related to nutrition or health issues falling? Are we satisfied with the quality of health indicators, sustainability of networks, including transport? Are we factoring in matters related to the environment in our decisions when it comes to growth, infrastructure, energy, networks? This is basically what would be a good measure of success — not in Washington and New York but definitely in the villages and the cities and towns around the world.
“We will not be satisfied unless we get the villages talking SDGs.”
Knowledge at Wharton: Do you have examples of areas where this localization strategy for the SDGs is working well? What could other regions learn from them?
Mohieldin: We have a few good examples. One of them is from Colombia. This nation did well by embracing the SDGs even before they were announced as global goals. I think they embraced them as part of their public policy priorities in March 2015, while the SDGs were supported and endorsed by the state leaders in September 2015.
Localization is a very interesting concept. It gets us away from this whole debate about centralization versus decentralization. Localization tells you that while there are many things that are good to be handled at the center because of economies of scale, because there is a comparative advantage at the center, at the same time each community even within one city may have its own priorities.
We saw this in Medellin when I went there. One community has a priority to build a school. Another one, because it has the schools, wants to have libraries. The third, because it has the schools and the libraries, wants to have a recreational facility for senior citizens or for the young kids. So who will decide this? Even if you are a master of planning at the center — in Bogotá, in the case of Colombia — you will not really be aware of the priorities of these few hundreds of individuals. So you at the center need to understand the priorities for coordination and for resource allocation. You may give ideas about what could be the best prototype model for putting up a school or a health facility. But then, the [decisions] based on [local] priorities should really be taken [by the local stakeholders].
In Medellin, I saw something I didn’t see elsewhere — people are owning the project. They talk about it as you and I would talk about something that we’ve done in our homes — something that we’re proud of that we did ourselves, not just bought from the market. And as if I was a guest in their house, they took me on a tour, “Please see this. Please go and see that.” They explained to me how many weeks they debated about the priorities, about the locations, about the resources, about the management. This issue of ownership is about ownership of the country.
We have now opened up this black box. We now have more information and more data with more details. The granularity of details allows us to know more about the [local] priorities. The role of the World Bank here is not just to watch with a smile, which I did, but to provide financial support if it is needed and share best practices from other countries. I’m bringing from Colombia their ideas and knowledge and trying to share it with others.
Knowledge at Wharton: How has the localization process worked in Africa?
Mohieldin: I’m happy to see other models of localization from Rwanda and from Kenya. And many of them have to do with the use of information technology. While the center has provided huge investments in technology, back-up facilities, services to protect the data and all of that, there are many good solutions that have been happening in different villages with certain market dynamics that you and I cannot really imagine.
Here is a good example from Kenya that didn’t stop at Nairobi or the big cities, we saw it in villages: providing better pricing mechanisms for products with the use of technology. So while you and I could be texting about some particular issues here, those villagers and farmers would be texting about pricing issues, insurance for their crops, best wholesaler, etc.
Knowledge at Wharton: In Colombia, in Rwanda, in Kenya, clearly there is a strong drive towards localization and it’s working well. In other parts of the world, where localization is less successful, what have you seen to be the main obstacles and what can the World Bank Group do to help overcome those obstacles?
“The granularity of details allows us to know more about the [local] priorities.”
Mohieldin: The concept of localization based on the global goals, flexible financial mechanisms, using public-private partnership schemes, using a lot of relevant and adaptive technologies, including information technology, is a new model. What you are right about is basically the old models … some of them went right, some of them went wrong. But the approach of using this mix as a package — global goals which are only two years old, means of implementation using finance and technology, and information technology, and getting the local leaders involved, is a new thing. So I cannot really say that it has failed. I only see that it is experimenting with some success in some areas, and in other areas, they are just trying to gain knowledge about it.
The other good examples I can refer to are from China and Vietnam. These are countries that are very proud of their central mechanisms. They are master planners and they have achieved a lot. But when I see their presentations, in the 2030 Agenda in the case of China and the 2035 Agenda in the case of Vietnam, the solutions are based on their relative development. Over the years, there has been great success in China in certain areas, but we still have a lot of poor people in a number of areas. The programs for these people are very much localized. Vietnam is basically about inclusive growth.
Knowledge at Wharton: Speaking about the new strategy that combines finance, technology, innovation, etc., can you tell me about the new models of development that are coming into existence because of this new strategy? How do you see that evolving?
Mohieldin: So, if I look at the paper titled, “From Billions to Trillions: Transforming Development Finance [2015 U.N. conference in Addis Ababa, Ethiopia], which is basically about finance for development, I see good progress since the time of Monterrey. [The Monterrey Consensus emerged out of a meeting of the international conference on financing for development in Monterrey, Mexico in March 2002].
Let me give an outline. You have domestic sources, through domestically sourced mobilization, through financial inclusion. You have external sources, through the private sector, FDI [foreign direct investment], portfolio investment, and from the countries that are still in need of official development assistance.
Then there are other areas of focus like trade, public management, technology and innovation. I think the areas of finance are strong. The one on trade is not strong enough. Public debt management is common sense. It is good that it is there. But as it related to technology and innovation, I think it was put into an experimental phase. And it was only dealing with the shortcomings of technology in the developed countries, rather than talking about technology, science and innovation for all.
I was just reading an interesting speech by the managing director of the IMF, Madame Lagarde, who said that 90% of the data that we have today has been generated during the last two years. This means that since Addis [Ababa] 2015, we have 90% or more data. This doesn’t necessarily mean that we have more knowledge, because for data to become knowledge it has to go through a complicated process. But here is what’s happening — we are not measuring matters by 20 years or 30 years or 40 years.
“We have seen [that once the right information is there] you can get the private sector [funds] flowing.”
When I was a student of development economics and finance back in the early 1990s, the unit of measure was a decade. They came through the gates comparing what happened in India or Egypt over a decade. Then, you called it a “dark decade” or a “good decade” for development. Now, a decade is like measuring a century or more of data. What has happened since Addis is that I haven’t really seen such an embrace of ideas related to science, technology and innovation in this institution since I joined it in 2010, as I saw during the last six months or so. Or say a year. But in the last six months, I’ve seen more. If you measure it by the number of events and activities and sessions and speakers on this topic in this year’s annual meeting, I bet this is the biggest since the creation of this institution.
And here the talk is not about the fear of technology or the concerns about science, but basically how to use the best of our knowledge to generate good ideas supported by finance and directed towards the benefit of the general public. What kind of partnerships we need to have in this institution, say, versus Silicon Valley. Or, with the likes of the Valley around the world, not just in this country, but in India, in Africa. There are many great, bright minds around us with their own ideas and many of their good solutions are happening in Eastern Europe, Estonia and its neighborhood. So we cannot really say where the good ideas and technology will come from. In the past, it was easy. If you needed a scientific solution in medicine, you’d go to London, or you would get it from the U.S. Today, it is very different, which is great.
Knowledge at Wharton: You mentioned finance as a key component. As is well known, there is a significant shortfall in the amount of funding that is needed annually to fulfill the Sustainable Development Goals and the amount of funding that is available through traditional sources. In your estimate, what are some of the best ways to bridge that gap, and what are some of the innovations you are seeing on the financial front to find a solution?
Mohieldin: Globally, we have the resources. The World Bank Group president Jim Yong Kim in his speech at Columbia University recently gave examples of assets globally that are with negative yield or negative return or just waiting for an opportunity for the trillions of dollars around the world. What we need for achieving the Sustainable Development Goals is only a fraction of that, but it’s not easy.
You’d say, “Well, these trillions of dollars are sitting in accounts in Europe or in the States or in Tokyo, but definitely they are meeting a particular return-to-risk mix which is satisfying those who are managing these assets.” So the first thing is basically information and knowledge about risk and return. In many cases, especially in the emerging markets and developing countries, finance is not flowing because of lack of knowledge or because the perception of the risk is worse than reality. We have seen [that once the right information is there] you can get the private sector [funds] flowing.
Then there is the role of the [World] Bank, as well, and the IFC [International Finance Corporation] and MIGA [Multilateral Investment Guarantee Agency], that we encourage these financiers and [enterpreneurs] to go into high-risk frontier markets, if we are willing to take the first loss, which we do. If we are willing to take the risk, which we do. We are willing to provide grants. We are willing to provide guarantees. At IFC, they have [a tool called] blended finance. The blending of finance is basically about public/private funding, then you get a component from fixed income, a component from equity, and a component from insurance and you are in business.
So this is the new world. The first [aspect] is information and knowledge about the opportunities. I was thrilled to see that the business community went through the Business and Sustainable Development Commission and identified areas like energy, cities and agriculture as huge opportunities worth trillions for investment. They identified these by sector, and now they are doing it by region. So from global, they went to Asia, and now I understand that they are going to be [releasing] a report in the Middle East and North Africa, which is known to be high-risk but at the same time, it’s high-return.
“The power of this institution is sharing of knowledge.”
We tell people, “This is your return for investing in renewable energy, in education, or in the social sector or in infrastructure. And here are the risks and the costs. And here are the banks around the world, including ourselves, of course, that could really provide good funding.”
Knowledge at Wharton: In this brave new world that you’re describing with localization, innovation, technology and a lot of decentralization, how does the World Bank need to change to operate in this global ecosystem, to fulfill its goals?
Mohieldin: It’s interesting you mentioned Brave New World, the famous novel, and then there’s a new book by the title Grave New World, which is basically about the fears of globalization, about the concerns around the new mercantilist policies, protectionism, and inward policies — all of that. So I would say, “It’s your world that you create.” Even for the smaller countries, you can’t always blame [your failure] on the rest of the world. I have seen some brave, good leadership around the world from small countries like Singapore to big countries like China. They have managed to do very well for themselves [by] factoring in changes, being supportive of the changes.
But you need to first articulate the priorities. Not all countries have this capacity like Singapore or China. Actually it was very interesting to see that even these countries which are capable of designing priorities are not shying away from checking their arguments with others. Countries that are not able to articulate their priorities can ask for help to come up with the best ideas.
This is not charity. This is their right as members of the World Bank. And that’s the whole idea of bringing officials from Colombia here, the minister of finance, the mayor of Medellin, and the people from the university — to showcase [their achievements]. It’s a country that has done well. We still have problems and concerns, but we are proud of what we have achieved. We are sharing our experiences.
So, more than the money, this is an important platform. Yes, it’s an important institution of development and finance. We are the largest in providing a variety of development finance to developing countries of different categories, but the power of this institution is sharing of knowledge. And with this kind of knowledge sharing and sharing of ideas, you will see transformation.
