In the fall of 2015, the nations of the Earth came together to do something remarkable in human history. The 193 member states of the United Nations agreed last September to commit to ending poverty and to build a sustainable future by 2030.
Called the Sustainable Development Goals (SDGs), the pact calls for 17 ambitious objectives including an end to poverty and hunger, action on climate change and stopping all forms of discrimination against women and girls.
The SDGs call for the creation of new forms of infrastructure including clean energy, clean water and sanitation, decent jobs, expanded health and education and economic growth that is sustainable for the climate, land, air and water.
Of all the goals, the elimination of poverty is the most striking. The commitment to end poverty in all its forms is a stunning project, full of ambition and complexity. It also comes with a big price tag.
The UN Conference on Trade and Development has estimated that the cost of implementing the Goals worldwide is $5 to $7 trillion per year until 2030, or about $90 trillion in total. For the developing world alone the gap between what is being spent now and what is required is about $2.5 trillion a year.
So this is clearly beyond the reach of governments alone, even if the populations in the Global North and West could pressure their governments to massively increase development assistance. It’s also beyond the capacity of charitable institutions.
What’s required is an effort by the world’s investors — private, philanthropic and public — to commit a portion of their capital to this historic project.
The key to achieving the goals is not charity or aid, although charity and aid could be helpful in meeting some of the goals like health and education. Rather, the key is unlocking capital. We have to figure out how capital can be committed to the goals and investors can be repaid for the risk that they will take. The idea is that sustainable development projects will produce income that can be used to repay investors and produce sustainable infrastructure years into the future.
Clean energy is an example of what could be done. The organization I work for, Oikocredit, is a global development fund and social investor that makes loans and investments in microfinance, sustainable agriculture and renewable energy. Renewable energy is a relatively new focus for us, but it is presenting some exciting possibilities.
One of Oikocredit’s latest investments involves PEG Solar, a company that provides off-grid solar units for poor and rural people in West Africa. Oikocredit recently teamed up with two other social investors to provide $1.5 million in capital to the company to expand its operations in Ghana, where their customers typically earn between $1 and $6 a day. Without access to electricity, children of these poor families are unable to study at night, and recharging cellphones and computers is out of the question. This means that these poor families are shut out of the opportunities in the emerging digital economy.
Yet even with such small incomes, it is still possible for poor people to pay small amounts for off-grid solar units. Through its recent investment, Oikocredit and the other investors are taking a risk that these poor families will want to expand their access to low-cost electricity and will be able to pay small amounts for it into the future. PEG Solar expects this to be the case and plans to provide electricity to half a million homes in West Africa by 2020.
Such concepts are providing exciting new ideas about how to end poverty. Off-grid solar is a low-cost, low-impact solution to this problem. Microfinance is another response to poverty by providing small loans and financial services to the poor. And sustainable agriculture is yet another route out of poverty by expanding co-ops and services to smallholder farmers.
Such solutions can pave the way to eliminating poverty by 2030, meeting the commitment set out in the SDGs. But these solutions require private capital, capital that can be provided — in large part — by investors who believe in the dream of the Sustainable Goals and want to make them a reality.
Ellmen is the Canadian director of Oikocredit and lives in Toronto. For information on how to invest in Oikocredit, visit its website at www.oikocredit.ca.