Microsoft founder and global philanthropist Bill Gates is continuing to help set the international development agenda with his mind as much as his wallet. Gates’ transition from pure philanthropist to global development strategist was recently highlighted at the G-20 Summit where he presented a Bill & Melinda Gates Foundation report titled, “Innovation With Impact: Financing 21st Century Development.” The report, which appears to have been well-received by the G20 and development practitioners across the world, organized and articulated several interesting development themes and approaches including innovation, partnerships, and the mobilization of domestic resources. Gates also urged traditional public sector donors to maintain official development assistance (ODA) commitments during these times of economic uncertainty.
You may view the entire report here.
Perhaps most significantly, and unexpectedly, Gates highlighted several new and highly promising sources of development funding. In addition to the sheer amounts that Gates attached to these potential funding sources, an intriguing point is that most of these sources will require difficult governance and policy choices within developing countries themselves. While some of these sources have been proposed and/or leveraged in the past, it will be interesting to see if developing countries adopt these alternatives with more vigor now that the largest private funder of global development programs has formally endorsed them.
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Realizing that the foreign aid community cannot possibly fund the infrastructure improvements needed across the world, Gates recommended that developing countries tap into Sovereign Wealth Funds – globally-invested, state-owned investment funds composed of stocks, bonds, property, etc. – to fund infrastructure projects.
Gates also recommended that developing countries, particularly those with many workers abroad and/or expatriates, leverage remittances and diaspora bonds. The former is the money that migrants send to their home countries while the latter is debt investment that governments issue to their migrants abroad. According to Gates, reducing the transaction cost of remittances to 5% would save US$15 billion for developing countries. Moreover, said Gates, diaspora communities in the First World countries can also invest in bonds issued by their home governments to finance development projects back home.
Equitable taxes are another source, particularly those imposed on tobacco and fuel because they simultaneously encourage better health (smokers to quit) and environmental protection (money will be diverted to climate change initiatives). Gates also proposed a Financial Transaction Tax (FTT) or securities transaction tax. Gates noted that an FTT falls in line with efficient taxation because it is levied at a low rate on a large base and asserted that 15 G20 countries have implemented an FTT in some form or fashion.
Read more:
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About the author
Juan Carlos Concepcion
Juan Carlos is a former analyst at the Devex Manila Office. A strong advocate of civic education, he also teaches undergraduate courses on Philippine politics and governance.
