The UNDP and the Ministry of Finance of the Slovak Republic (MFSR) hosted an international workshop on innovative financial instruments for development from May 28-29, 2018. The event was attended by development experts from 11 countries, mainly from Ministries of Foreign Affairs, Ministries of Finance and/or national development agencies.
The workshop provided a space for discussion and introduction of a number of innovative initiatives with special emphasis on finance. Tej Dhami, managing director of Numbers for Good, a research company exploring innovative humanitarian crises financing, facilitated the workshop. Among the speakers, one could find not only UNDP experts, but also representatives of renowned development actors such as Strat!Gos, AidTech, and the Swiss Agency for Development and Cooperation. Presented case studies of the applied innovative financial instruments, such as blended finance, impact investment (social-impact bonds), crowdfunding or preventive financing showed remarkable results. These modern financial instruments enable the blending of official development assistance funds with private and other resources. In this way, the international assistance recipients can profit from these combined resources, using them more effectively.
The aim of this workshop was to study, in greater detail, financial instruments which can be used in our region so that the public and private sectors can join efforts to achieve higher effectiveness and measurable results in development,” said Martina Kobilicova, Director General of International Relations at the MFSR.
Why UNDP and why Slovakia?
Since 2000, the UNDP, through its Istanbul Regional Hub (before Bratislava Regional Centre), has been working with the new EU member states as emerging donors. They have been providing them with development knowledge, operational mechanisms and procedures, offering an extensive network of country offices, and serving as a reliable partner in building developmental partnerships and capacities.
The workshop was part of a broader initiative, Capacity Building Series, aimed to support emerging donors, or those countries that are close to upgrading from recipients to donors.
The UNDP partnership with Slovakia, Ministry of Foreign Affairs, as well as with the Ministry of Finance, has been one of the largest and longest initiatives in the region. Within the last 4 years, innovative finance and its use in development has become one of the crucial topics of the partners´ cooperation.
Based on the MFSR’s seed funding, the UNDP was able to establish the Alternative Finance Lab (AltFinLab), a UNDP Istanbul Regional Hub internal start-up. The Lab has been piloting a number of initiatives, including experimenting with the use of alternative finance mechanisms like social-impact bond, blockchain, crowd funding for development, etc. A number of experiments have already shown to be successful, e.g. introduction of the first social-impact bond in Serbia on a municipal level, tackling youth unemployment.
“I was working in the Istanbul Hub as a Team Leader when the idea of setting up the AltFinLab emerged in 2015. The ambition was to use innovation to leverage limited grant funding to attract more robust resources for development. Now, being in the Country Office in Armenia, we are successfully piloting some of these innovative tools developed by AltFinLab, with MFSR support.”, said Dimitri Mariassin, Deputy Resident Representative UNDP Armenia.
Currently, the UNDP´s AltFinLab is providing worldwide assistance to approximately 40 countries in various forms of innovative financing application. Through these activities, the Lab was able to leverage funds invested by the Slovak Ministry of Finance fivefold.