Panel, Conference Presentation, Roundtable
From Aid to Investment: New Models in Development Finance
Milken InstituteGlenn Yago, Richard Blum, Michael Kashani, Jonathan Medved, Stephanie von Friedeburg, Aubrey Ruby, Chukwu The Ugu, Elizabeth Hausler, Henry Lee
- Global food production must increase by 60% over the next 20 years to accommodate population growth from 7.1 billion to nearly 10 billion by mid-century, a challenge addressed by new storage technologies that could extend the shelf life of degradable crops like cassava to five months and reduce post-harvest waste from the current 30–40% range.
- Meeting Sustainable Development Goals requires annual investments of $5 to $7 trillion, with $3 to $5 trillion specifically allocated to infrastructure, while 70% of global GDP growth over the next 15 years is projected to originate from emerging and frontier markets.
- By 2050, 70% of the world's population is expected to reside in cities, including two billion people in slums, while 26 million people annually may fall into abject poverty due to climate change and 40% of the world's poorest countries could face debt crises within the next five to 10 years.
- Critical resource pressures include the disappearance of Himalayan glaciers threatening water supplies for two billion people in Southeast Asia, rising sea levels causing the loss of coastal towns, and a potential demographic bomb characterized by migration and climate stress if current trajectories remain unaddressed.
- Development finance strategies involve shifting from direct government lending to de-risking private sector investment, with institutions aiming to create triple B-rated portfolios by pooling assets with eight pension funds and raising approximately $10 billion from 58 investors and 13 funds for equity projects.
- The International Finance Corporation (IFC) plans to expand local capital markets by issuing green and gender bonds, refinancing state-owned enterprise projects to remove them from government balance sheets, and implementing Impact Investment Principles Management requiring intent, measurement, and independent verification.
- Specific infrastructure initiatives include the Blum-Latin Center's focus on precision irrigation to decouple water from output, a Global Program for Resilient Housing in partnership with the World Bank, and regional refinancing mortgage banks in West Africa and Rwanda offering 15-year mortgages with average house costs around $29,000.
- Technology deployment in developing regions targets digital economy creation in Africa through regional data centers, 5G networks, and policy changes for cross-border data movement, alongside the use of satellite data for cost-effective censuses and sensor/drone monitoring for water, energy, and crop usage.
- Agricultural and urban challenges are being addressed through drone technology for crop picking to offset labor shortages, AI solutions for local medical imaging to replace radiologist needs, and alternative transportation systems like Skytran's flying cars to resolve city congestion where autonomous vehicles are insufficient.
- Investment trends show key performance indicators linked to SDGs becoming material data for fundamental analysts, a growing market for green and social bonds creating trillions in opportunity, and crowdfunding platforms democratizing venture capital access to raise billions from a global base of accredited investors.
- Regional cooperation is anticipated to expand the California-Israel Innovation MOU to include international development finance and training for fellows from Africa, India, and Latin America, while a Marshall Plan approach is proposed to foster prosperity and prevent conflict among nations.
- Education programs at Berkeley and Jerusalem are expected to continue fostering interest in global development, with students participating in projects across 60 to 70 countries and engaging in three-to-four-month overseas minor or master's degree components.
- Affordable housing is identified as the second-largest priority for institutional investors after clean energy, with future challenges focusing on establishing local supply chains for building materials and transitioning from centralized facilities to lower-capital distributed models for energy and water.