UNIDO's recipe for success in development finance

By Richard Jones 23 September 2015

Li Yong, director general at UNIDO. Photo by: UNIDO / CC BY

When you start thinking of specialized United Nations agencies, the ones that typically come to mind are heavyweights such as UNESCO, the World Health Organization or the Food and Agriculture Organization.

Less prominent, perhaps, is the U.N. Industrial Development Organization, or UNIDO, whose mandate is to promote industrial development for poverty reduction, inclusive globalization and environmental sustainability. UNIDO, however, is known to be very active within global development circles and punch above its weight — and its relatively small annual budget of $200 million and about 700 permanent staff.

The new development agenda set to be adopted at the U.N. Summit in New York gives UNIDO even more relevance, particularly in light of SDG 9 — “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.”

So how has UNIDO managed to sustain its relevance — and attract increased funds from international donors and the private sector — in today’s increasingly challenging development finance landscape? And how does agency prepare itself for such a prominent role in the upcoming SDGs framework?

It’s all about innovation and focusing on broader international issues rather than staying the course and looking inward, UNIDO Director General Li Yong explained during an exclusive interview with Devex on the sidelines of the third International Conference on Financing for Development in Addis Ababa, Ethiopia.

Below are some highlights from our conversation with Li:

How do you ensure policy coherence for development, to avoid each organization in the U.N. family working in isolation and instead achieve forward movement and traction? And looking ahead to the SDG summit in New York and the COP21 negotiations in Paris later this year, what is your call to action on making partnerships work in practice?

In this world there is no single organization, no single country, no single entity that can accomplish any of the 17 proposed goals by itself. Only by working together as partners can we achieve something in the new agenda. Partnership means public and private sectors need to work together, just as CSOs and development institutions need to work together. And UNIDO really strongly supports this endeavor, as a genuine partnership. I believe that the SDGs present us with a big challenge and organizations in the U.N. system have the big responsibility of stepping up to it. We understand every organization has its own mandate and responsibilities, but at the same time we need to coordinate on policy.

The next 15 years will see a radical change in the way development practice is carried out. Ensuring progress on all SDGs will require development practitioners and institutions to tap into the synergies between them, which entails recognizing each other’s comparative advantages and supporting each other’s action through various kinds of partnerships. One possible way to ensure appropriate coordination on issues such as industrialization could be to open thematic platforms for monitoring and review to member states and stakeholders committed to the cause. The next development agenda will be primarily owned by member states and so will its implementation. The United Nations system will make available all its technical cooperation, policy advice, convening and normative role potential to support country action.

And talking about partners, PPPs and the deepening of engagement with the private sector in global development efforts have been issues given a lot of attention here in Addis, together with the need to diversify funding to really put some weight behind the SDG process. At UNIDO, how you are going to engage differently with the private sector going forward?

UNIDO has a long history of engaging with the private sector — a leadership that is recognized throughout the U.N. system. What characterizes UNIDO’s approach is the attention towards both large companies willing to engage in sustainability projects and small- and medium-sized enterprises in developing and middle income countries. Inclusive and sustainable industrialization can only be achieved if both global value chains and the business culture and policy framework in all countries incorporate sustainability criteria.

So partnering with the private sector is fundamental for an organization like ours. But a project-by-project approach is not the only way to maximize impact on the ground. We know industrialization is a driving force for economic growth. Now, the challenge is how UNIDO can move ahead to support industrialization and industrial development. It’s a big, big question and significant challenge for an organization of UNIDO’s size. If we do not innovate with new thinking and a new approach, then it will take years — maybe 100 years — to support developing countries to achieve inclusive and sustainable industrialization. So we’ve developed a new approach: the program for country partnership. We selected countries with strong leadership, with a relatively stable situation, relatively well performing agencies ... and we work together with our partners including the World Bank, the African Development Bank, and in-country partners. We selected Ethiopia and Senegal as pilot countries with industrialization plans or programs and now, we sit down together, design the program and seek approval from government as owners, and implement the program in a partnership to which all stakeholders, including the private sector and civil society, contribute.

Does UNIDO play a watchdog role here? We’ve heard some concerns here in Addis from civil society about a situation in which the private sector is unleashed without adequate regulations being in place to control the social dimension of their work. What conversations have you had with country governments that you are advising in partnership programs? And how do you ensure that the right systems are in place to not only have more jobs and growth, but a more equitable environment for those jobs to flourish within?

This is exactly the issue that we’re looking to solve: how to foster inclusive and sustainable industrial development. Inclusive, meaning for all people at all levels: young people, women and countries having an equal opportunity to generate business. At the same time, most importantly, they share the prosperity, they share the profit of this process equally and fairly. We do not want to see this process generate inequalities among them. So when we design a project or program, inclusiveness is always one of the key issues together with sustainability. For instance, plans for an agro-industrial park must also address issues like renewable energy, environmental sustainability, employment creation, market access, and trade capacity building — these issues are all incorporated into our country programs.

What impact — if any — does a shift in mindset on development financing have on you as an organization in terms of responsibilities, staffing or funding received? What are we going to see changing in a post-2015 context?

The next development agenda, it is already clear, will be significantly different for the MDGs framework. Member states and development institutions have realized that tackling sustainable development implies not only addressing the social and humanitarian challenges the world presents us, but also, and very importantly, the economic causes underlying poverty, and the need to safeguard our environment. With this new scenario, development financing flows will also change radically and official aid will presumably also be channeled towards public investments to drive economic, social and environmental development. In this context, the attention of donors to organizations like UNIDO is expected to increase in the future.

But I don't think any organization should only keep its balance sheets on track to meet their responsibilities; they should also innovate. It’s like UNIDO: we are not very big, there’s a downsizing of the budget and some countries thought — or still think — that we’re too small. But that’s totally wrong: we’re small, but we play big together with our partners, working together with private sector. Our program for country partnerships, for instance, now attracts lots of support from development institutions, from the private sector, and from donor countries. I believe that some other organizations will also increasingly play a role to be more innovative and active in implementing that approach.

So what’s the secret of continuing to innovate and punching above your weight as an organization on a global stage?

I’d say it’s first and foremost our commitment to meeting our international obligations. We must always put this on top of our agenda, and then take action. If we only looked at our own issues, we’d make a very limited impact. If one looks more broadly, more internationally, one recognizes that one really needs to show responsibility, to think big, and to deliver concrete actions.

Sustaining Development is a three-month online series exploring the post-2015 development agenda hosted by Devex in partnership with Chevron, FXB, Global Health Fellows Program II, Philips, Pfizer, UNIDO, U.N. Volunteers and the U.S. Council for International Business. We will look at the practical steps needed to move the sustainable development goals from concept to reality. Visit the campaign site and join the conversation using #SustainDev.

About the author

Richard jones profile
Richard Jones@richard_devex

Richard oversees editorial content for campaigns and media partnerships at Devex. Previously an associate editor, he covered the full spectrum of development aid in Europe, the Middle East and Africa, supervising a team of correspondents and writers, penning articles and conducting high-level video interviews at events across the EMEA region. Currently based in Barcelona, Richard brings to bear 12 years of experience as an editor in institutional communications, public affairs and international development. His development experience includes stints in the Dominican Republic, Argentina and Ecuador.


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