Panama, August 31, 2018- With a financing gap of 2.5 billion dollars to implement the Sustainable Development Goals and two out of every six people in the world without access to a formal bank account, innovative financial mechanisms represent an alternative to close the financial gap and promote sustainable development.
This is said by the team of experts in alternative finance of the United Nations Development Program (UNDP), Marina Petrović and Robert Pasicko. They run the Alternative Finance Lab (AltFin Lab), an initiative created in 2016 to explore and take advantage of new financial technologies and mechanisms to access investment.
"Due to the increasingly changing world of today, governments, citizens and development actors must adapt quickly, understand better advanced technologies and learn how they can be used in the best way for the benefit of society in general", explains Pasicko.
The AltFin Lab experts visited Panama at the invitation of the UNDP Country Office. Their purpose is to learn about advances in innovation with practical cases, and thus be able to exchange with organizations that are already promoting blockchain, fintech and crowdfunding initiatives, such as the City of Knowledge, the Panamanian Chamber of Technology (CAPATEC) and the Authority for Government Innovation (AIG).
The UNDP AltFinLab team and the UNDP Environment and Sustainable Development area in Panama organized a session to exchange experiences, challenges and opportunities, as well as an interactive workshop led by UNDP experts, in which representatives of the UN Environment also participated. There were also participants from the Inter-American Development Bank (IDB), the World Bank (WB), the AIG, the Panama Canal Authority (ACP), and private sector initiatives that are currently innovating in Panama.
Working groups were formed and ideas with development potential were created to catalyze resources through new technologies. "It is expected that new technologies such as blockchain, crowdfunding, social impact bonds, among others, will change the global financial system, and the development issues will not remain immune to these trends", Petrović sums up.
As an organization present in more than 170 countries and territories, UNDP aims to consolidate as an articulator between key stakeholders with needs to advance in sustainable development and change makers of technological innovation through multi-stakeholder platforms that allow concrete, agile and accessible solutions that help improve the quality of life of people.
Jessica Young, National Officer for Environment and Sustainable Development UNDP-Panama, says that "in a context of global financial challenges it is important that the organization develop a new generation of ideas tested in practice, easily adaptable to local contexts, to reach innovative financing strategies.
In the same way, Marina Petrović, from the UNDP Innovation team, explains that "to create an innovative alternative financing strategy for UNDP, it is necessary to consolidate the expertise of the country offices. The easiest way would be to couple UNDP country offices with local partners and empower them for their own alternative financing projects".
An example of alternative finance is the Development Impact Bonds, investment instruments based on payment by results. The infrastructure specialist of the World Bank, Inga Afanasieva, explains that under this type of financing, the reimbursement to investors depends on the achievement of specific social results, which translates the investment risk from the public to the private sector. According to the specialist, these bonds have the potential to improve the effectiveness of development aid and profitability by changing the focus towards the quality of implementation and the delivery of successful results.
Another innovative financing system is crowdfunding. "The crowdfunding is at the origin of all modern development platforms. When we turn to platforms, we direct the money where it is most needed. People can select the best ideas and vote for them. Governments and donors can channel the funds raised, financing projects that citizens support", explains Marina Petrović.
Since 2015, AltFin Lab has conducted 35 crowdfunding campaigns and managed to mobilize more than 1.2 million dollars. The field offices are working on campaigns valued at 7 million dollars, according to the experts.
The blockchain is one of the technologies with the greatest potential for development. It offers possible solutions to a wide range of issues, including the conservation of natural resources, economic growth and financial inclusion and security, areas in which UNDP has begun to work globally.
Fundación Ciudad del Saber, Cámara Panameña de Tecnología (CAPATEC), la Autoridad para la Innovación Gubernamental (AIG), ONU Ambiente, Banco Interamericano de Desarrollo (BID), Banco Mundial (BM), la Autoridad para la Innovación Gubernamental (AIG), la Autoridad del Canal de Panamá (ACP), Municipio de Panamá, Banesco, Consejo Nacional Empresa Privada (CONEP), Corporación La Prensa, Fortesza and Redoxigen.