Monday, May 27, 2024

Why a Finance 4 Sustainable Development (F4SD) platform?

In July 2015, at an international conference held in Addis Ababa, the 17 Sustainable Development Goals (SDGs) were approved and formally registered by the UN General Assembly as the “2030 Agenda”. Now, almost nine years after the launch of this project, the UN has issued a warning: “The Sustainable Development Goals (SDGs) are increasingly far from being achievable by 2030”.

Before that, in 2003, a group of Mozambicans comprising a wide range of personalities with in-depth knowledge of Mozambique’s society, culture, politics and economy discussed for many months a vision and strategies for the nation, which became known as Agenda 2025. In a mid-term review, in 2013 it was noted that despite the “remarkable economic growth of 7% to 8% per year in recent years”, the structure of the economy was fragmented with weaknesses and fragilities of various kinds.

Now it’s 2024. In theory, the SDGs should have been achieved within six years. However, a recent assessment made by the United Nations and presented by Secretary General António Guterres himself states the following: (quote)

“While rich economies have largely recovered from the COVID-19 pandemic, developing economies have lost ground. Many are drowning in debt, with more than a third at risk of crisis. Investment in climate action and sustainable development is falling far short. Hunger and poverty are on the rise. And growing divisions between countries and economies are preventing an effective response.”

“… 2024 is set to be another difficult year. Weak global growth is expected to continue to slow. Investment will remain weak. The debt crisis will continue to spiral as debt service obligations reach new heights. And devastating conflicts and escalating extreme weather conditions are bringing uncertainty and risk to the global economy. The result: delayed and denied development.”

The warnings issued by the Mozambican compatriots who worked hard in 2013 to update the Nation’s Vision and Strategies included, among other things, the need to “create jobs in volume to absorb the population into the labor market, and to reduce the volume of informal income-earning activities”.

And they concluded that “In the current dominant patterns of concentrated accumulation, the distribution of the benefits of growth requires structural changes in the economy, towards the configuration of socially broad bases of accumulation and more transparent and equitable redistributive systems”.

Gapi has always learned to listen to the opinions and analyses of the institutions and personalities mentioned above, whose mission and competence are obligatory references in the regular updating of our strategy.

As a development finance institution, we are aware of the role we must and can assume and carry out so that not all development objectives and goals are frustrated. We cannot ignore the recommendations of international and national institutions, as well as the knowledge shared by personalities whose expertise is of extraordinary value.

The challenges facing the country today are numerous and somewhat well-known. There are many, but within the framework of Gapi’s mission, which is to:

Contribute to economic, social and financial inclusion in Mozambique by promoting innovation, entrepreneurship and job-creating investments.

In this context, Gapi prioritizes the following issues:

The marked inability of our formal business sector to absorb the approximately 500,000 young people who reach working age every year, with consequences in the continuous increase in the number of poor people;
The poor performance of the productive fabric of national capital due to barriers in access to capital and technology and aggravated by processes of disinvestment motivated by factors induced by the crime of kidnapping, corruption and others;

The persistent low level of financial inclusion in society in general, with an emphasis on discrimination against women, particularly in rural areas, having a negative impact on gender equality and, in effect, reducing the contribution of millions of Mozambican women to building a more prosperous society;
The stagnation of agricultural productivity and food security, impacting on the growing dependence on food imports with the inevitable risks of inflationary pressures;

In order to respond to these challenges, Gapi intends to strengthen its capacity to carry out the mission that its shareholders set out to accomplish.

To this end, a project has begun to update the institution’s strategy and business model (as referred to in our BCP). This project has already improved financial elements such as the credit product offering grid, as well as technological elements, namely banking management applications and the creation of an infrastructure to digitize procedures and processes with an impact on the speed and quality of information on operations in rural areas.

However, the challenge of updating Gapi’s strategy has other key components so that the role and contribution of an IFD is more widely assumed and participated in.

This is where the F4SD platform comes in. The objectives, analyses and recommendations presented in the agendas and visions cited above continue to inspire Gapi’s strategy. We believe, however, that we can and should internalize within our network and broaden the information and debate on the SDGs and development strategies that are relevant to our mission as an IFD.

Let me make it clear that this is a space managed by Gapi, with the legal responsibilities we assume vis-à-vis the authorities that license the media. However, in this clarification, I would stress that this space was created to be open and to mobilize the participation of entities that share with us objectives and agendas for building a fairer society and a more inclusive economy with greater equity.

By launching this platform, Gapi is opening up to expand its network of partnerships, and is also preparing to open up its shareholder structure.

With the history and responsibilities we have assumed, today, 34 years after we were founded, we are in a position to promote and participate in the debate and the development of knowledge that supports the formulation of strategies, programs and even the monitoring of the efficiency of the application of resources allocated to development.

For this reason, this platform is open to organizations that, within the framework and scope of their mission and priorities, are willing to build partnerships with Gapi.

The first partnership came about with AMOMIF (Mozambican Association of Microfinance Operators) whose agenda is focused on relaunching the microfinance industry as a way of improving financial inclusion. Through and using this platform, AMOMIF members will have the space to debate and propose solutions so that SDGs and strategies for financial inclusion are better designed and implemented.

By: Francisco António Souto (Senior Adviser in Gapi Sociedade de Investimentos SA)

Learn more at: Gapi – Sociendade de Investimentos, SI.

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