What is an INFF?
The United Nations Development Programme (UNDP) is helping countries to meet their Sustainable Development Goals (SDGs) by encouraging the adoption of an Integrated National Financing Framework (INFF).
An INFF[1] is a planning and delivery tool developed by UNDP to provide a policy focus to financing the SDGs at the national level. The INFFs spell out how the national strategy will be financed and implemented, using a variety of public and private financing sources. Many developing countries are choosing to adopt INFFs in order to help strengthen their planning processes and overcome existing challenges to financing sustainable development.
An INFF lays out the full range of potential financing sources, primarily domestic and international sources from both public and private sectors, to help to increase investment in a country’s SDG priorities. The INFF also sets out a plan for managing risks and provides a governance framework for enhancing accountability. In a nutshell, an INFF has four key building blocks: assessments and diagnostics; financing strategy; monitoring and review; governance and coordination.
The INFF is helping alignment of different types of finance (domestic, international, public, private) with national priorities and needs. It also helps them to enhance coherence across different financing policies, aligning them to medium and long-term sustainable development priorities while better managing risks in a complex financing landscape.
How National Export Credit Agencies (ECAs) play a key role in financing the SDGs.
Most ECAs around the world serve a general mandate to support national exports and foreign direct investment. As such, they generally do not have an explicit mandate to support the SDGs. However, even though they may not have the direct objective to support the SDGs, the trade transactions and projects they support, are likely already well-aligned with the SDG objectives and can be enhanced even further.
As critical policy instruments, ECAs fundamentally – if not intentionally – help achieve SDGs by supporting job creation and the generation of foreign exchange for countries (SDG 8–Decent work and Economic Growth), increasing competitiveness of industries (SDG 9 – Industry, Innovation and Infrastructure), and giving countries balanced access to international trade (SGD 10 – Reduced inequalities). Additionally, as ECAs have the function of providing financing through loans and other credit to consumers who may not be able to access these through traditional banks, they are uniquely placed to finance investments that directly meet any of the 17 SDGs.
ECAs are often supported by the governments of the countries they support through various models, supporting businesses across various industries. As several of these governments (193 Member States of the United Nations) have also adopted the “Transforming Our World: The 2030 Agenda for Sustainable Development’’, which includes the SDGs, there is increasing opportunity for global ECAs to align their mandates with the SDGs.
ICIEC’s role in supporting national ECAs and the INFF
ICIEC’s mandate is to promote trade transactions and facilitate the flow of foreign direct investment for projects that contribute to the socio-economic development of its member countries. The Corporation fulfills these objectives by providing Shariah-compliant credit and political risk mitigation and credit enhancement insurance and reinsurance solutions. ICIEC is at the nexus of global relationships and networks that are essential for fulfilling its mandate and achieving sustainable development outcomes. ICIEC’s support encourages the participation of national ECAs along with banks, investors, and corporates in transactions involving risky markets.
By necessity and design, ICIEC works closely with partners to share information and risk, provide additional insurance capacity, and promote trade and investment in its member countries. One of ICIEC’s important roles in this regard is strengthening its member countries’ export finance systems and providing Shariah-compliant reinsurance to the national ECAs. It also cooperates with non-member country ECAs to facilitate strategic investments for its members’ economies.
ICIEC’s reinsurance solutions are particularly pertinent to the role it can play in supporting national ECAs and the implementation of INFFs. ICIEC is empowered to reinsure the commercial and political risks on national ECAs in its member countries. By doing so, it enhances their financial capacity to support national exports that themselves are aligned with SDGs. By reinsuring a national ECA, it takes the risk off the balance sheet of the national ECA – and hence national government – and does not add to the debt burden of the country, which in many of ICIEC’s members is already elevated and, in some cases, becoming unsustainable. This frees up more fiscal space for the central government to invest in other SDG-aligned activities.
ICIEC is strategically placed to provide capacity-building, joint marketing, and technical assistance to ECAs in member countries, while serving as a credit services information hub. It is also uniquely placed to help ECAs in non-member countries to cover projects in member countries.
Conclusion
The INFF is a guide for countries to use in sourcing and utilizing finances for meeting the SDGs. ECAs support a country’s export and cross-border investment initiatives, including projects and trades that are aligned with the objectives of the SDGs. ICIEC plays a role in providing additional capacity to ECAs so they can insure against risks that arise from member countries and, in turn, helps member countries meet the objectives of the SDGs. As such, ICIEC, plays a vital role in ensuring that the sources of finance (international public and private sources) that form the framework of the INFF are protected against insured the risks of market failures and non-repayment of debt, which would otherwise limit the financing of the SDGs.
[1] https://inff.org/about
