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| | | Title | The Simple Math of Development Finance | | Author | Charles Kenny | | Subject | Governments and Development, Sustainable Development Finance | | Date of Publication | 2022 | | Publisher | Center for Global Development | | Number of Pages | 6 | | Abstract | Global gatherings from Addis Ababa to Glasgow are setting targets from climate through health and education to energy and transport that call for a lot of investment for sustainable development. But how much you can afford to invest depends on how much you’re paying for it. And that’s where the simple math of development finance comes in. The short answer: if poorer developing countries face a cost of capital that requires a 20 percent annual return or more, about the rate being demanded by international private investors at the project level, there isn’t going to be much investment in clean energy, green transport, better healthcare, or more education. The situation is dramatically improved if projects only need to generate financial returns of 1 or 2 percent, closer to the interest rates currently demanded by multilateral development banks. In turn, that suggests any investment gap will only be substantially reduced with massive subsidies for private companies or considerably smaller financial infusions to bankroll international public investment. | | Filesize | 333392 MB | | File Format | PDF | | [ View / download original document ] |
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