With a yearly estimate of $2.5 trillion to meet the Sustainable Development Goals (SDGs) in developing countries, the United Nations Conference on Trade and Development (UNCTAD) has identified Outward Investment Agencies (OIAs) as catalysts for the realisation of Foreign Direct Investment (FDI) to developing countries and in challenging investment environments.

According to UNCTAD, OIAs are institutions which carry out programmes to promote and service investment abroad and they include outward investment promotion agencies, development finance institutions, and investment guarantee schemes using incentive-based measures, adding that, partnerships of OIAs with other institutions will drive investments for sustainable development goals.

Using South Africa as an example, UNCTAD noted that the development institution in the country has been used to drive economic growth and regional integration, which in turn positively affects quality of life and reduces poverty and inequality.

“The Sustainable Development Goals (SDGs) defined by the international community to face the common global economic, social, and environmental challenges in the next 15 years will have large resource implications, especially for developing countries. UNCTAD estimates show that current investment levels in key SDG sectors in developing countries are about $2.5 trillion less than annually needed.

“Private investment, including FDI, could play an important role in filling this gap, but this requires concerted efforts by all stakeholders, including FDI home and host country governments, the private sector, and intermediaries. Through OIAs, governments and multilateral agencies offer a wide range of programmes to mitigate the risks and reduce costs associated with investing abroad and attempt to encourage overseas investments”, UNCTAD explained.

To address challenges with funding development, UNCATAD noted that a paradigm shift in investment policymaking is needed while recommending actions to catalyse investment promotion in SDGs.

“OIAs will be natural partners in this endeavour. Together with the expertise and services that IPAs can offer in investment promotion and facilitation, these partnerships can be crucial for attracting significant numbers of SDG related projects and for fostering their performance and success”, UNCTAD added.