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“WE NEED TO MAXIMIZE FINANCING FOR DEVELOPMENT BY LEVERAGING THE PRIVATE SECTOR AND OPTIMIZING THE USE OF SCARCE PUBLIC RESOURCES”Pictured: Jim Yong KimPhoto Credit: Bart Verweij World BankThe sustainability of these new investments will require financing beyond what constrained government coffers can support, and the private sector can bring new technologies and operational efficiencies. We have to ensure that preparation is technically sound and incorporates social and environmental protection. The current level of investment in these economies – about 1.3 trillion dollars per year – is simply not enough.The scale of investment needed to meet the Sustainable Development Goals, address the infrastructure financing gap, and meet ever-rising aspirations means that we cannot continue business as usual. We need to maximize financing for development by leveraging the private sector and optimizing the use of scarce public resources (MFD).We developed the Joint Principles for Crowding in Private Sector Finance. The G20 endorsed those Principles in July, and we are applying them to move capital to developing countries.There has never been a better opportunity to attract capital that is desperate for higher returns. Right now, there are more than 10 trillion dollars invested in negative interest rate bonds; 24.4 trillion dollars in low-yield government securities; and 8 trillion dollars sitting in cash, waiting for better investment opportunities. This approach is not based on ideology, nor is it a pitch for privatization. It is evidence-based and focused on outcomes that support our goals to end poverty and boost shared prosperity. Our discussions with clients focus on a search for win-win solutions, drawing on the resources of government, philanthropy, donors, and the private sector – where each is appropriate. Crowding-in private sector finance is where the evidence and the reality of today have led us, and it is the best chance to make the global market system work for everyone.Ambitious initiatives like the Belt and Road can bring substantial development benefits to participating countries through improved infrastructure, greater trade, and higher cross-border investment. We applaud One Belt, One Road, and we are working to support it in any way we can.We hope to convene, along with the Government of China, a meeting every six months during our Annual and Spring Meetings to continue the momentum of the BRI.We are also supporting the work of the Global Infrastructure Connectivity Alliance (GICA), launched by the G20 Finance Ministers and Central Bank Governors in Chengdu in July 2016, to enhance cooperation among various infrastructure connectivity programmes.Crowding in private finance should free up public funds to invest more in people. That has to start early, by ensuring that pregnant women have access to prenatal care, including the right nutrition, and preventing malnutrition in children so they develop properly. Right now, 156 million children worldwide are stunted – which means that their brains do not develop properly. They will be locked into lives of poverty and exclusion before they reach their fifth birthday.This matters. We believe that the premium on human capital will get higher and higher every year. The demands for digital competency are accelerating. Automation will replace scores of tasks, which will eliminate many of the less complex and low-skilled jobs. The remaining jobs will demand new and more sophisticated skills. So it is crucial that all countries invest early in their people. That investment has to continue with education and skill-development to prepare people for the jobs of the future. Some studies estimate that as many as 65 per cent of primary school children today will work in jobs or fields that do not exist yet.It is not effective to prepare students today for occupations. The challenge is to prepare children’s cognitive skills to create and adapt to an ever-changing world. That means developing numerical, problem-solving, critical thinking skills, as well as soft skills such as perseverance, collaboration, and empathy.Last year at Davos, President Xi said that the global market system is the ocean we all swim in. At the World Bank Group, our focus is to make sure that everyone can swim. We know we can make the global market system work for everyone through sustainable development, including inclusive economic growth, investing in people, and building resilience to shocks and threats. It is the only way to meet the world’s massive development needs and ever-rising aspirations. ■ABOUT THE AUTHORDr Jim Yong Kim is the 12th President of the World Bank Group. Soon after he assumed his position in July 2012, the organization established two goals to guide its work: to end extreme poverty by 2030; and to boost shared prosperity, focusing on the bottom 40 per cent of the population in developing countries. In September 2016, the World Bank Group Board unanimously reappointed Kim to a second five-year term as President.Dr Jim Yong Kim, President of the World Bank Group, delivered the above remarks at The Second ‘1+6’ Roundtable Session 1, on 12 September 2017 in Beijing, China.FINANCE AND INVESTMENT 083