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Introduction to Innovative Finance

Introduction to Innovative Finance. British Red Cross Int’l Directorate Briefing 6 Dec. Contents What is Innovative Finance? Why is it important ? How is it relevant ?.

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Introduction to Innovative Finance

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  1. Introduction to Innovative Finance British Red Cross Int’l Directorate Briefing 6 Dec

  2. Contents • What is Innovative Finance? • Why is it important ? • How is it relevant ?

  3. Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions. https://en.wikipedia.org/wiki/Innovative_financing

  4. Economic Resource Flows Total flows to low and middle income countries 1990 ODA = Traditional Flows • Overseas Development Assistance (ODA) • Includes International Humanitarian Assistance (IHA) • Remittances • Foreign Direct Investment (FDI) • Portfolio Flows Source: World Bank, OECD

  5. Traditional Flows have change Overseas Development Aid has boomed, but has become less important compared to other resource flows and international humanitarian assistance is <10% of the total resource flows.

  6. ODA in ContextResource mix in the 20 countries receiving the most international humanitarian assistance, 2016 Humanitarian aid is dwarfed by other flows Source: World Bank, OECD

  7. DFID Strategy (Jan 2017) • “Aid is changing. The significance of aid alone is decreasing….” • “Our focus is on economic empowerment to ensure that the poorest and most marginalised benefit from new opportunities.” • Five Topics - • New approaches, finance and partnerships • We will work with the insurance and risk finance industry to expand access to climate and catastrophic risk insurance….This can reduce the need for expensive humanitarian relief, reassure private investors and help people rebuild their lives. • Harnessing financial technology and new financing models • DFID is partnering with firms to test new business models, scale up existing successes and encourage replication by others

  8. Strategy 2030 Consultation with over 100 Red Cross and Red Crescent National Societies and external experts. https://future-rcrc.com/ Future of Finance The gap between humanitarian and development needs and financing is growing, yet largely we still rely on just a few traditional sources of funding. How do we mobilize alternate sources of capital to support communities?

  9. Global Innovative Finance Team (GIFT) • Aim is to build innovative finance capacity, alternative financing mechanisms, and access to private capital within the movement’s 191 National Societies. Programmes Resource Mobilisation Govts FBF Philanthropy One WASH Donors Currently a partnership with British, Danish, and Kenyan National Societies convened and coordinated by the IFRC. Shaun Hazeldine(Geneva), Ramya Gopalan (Beruit), Adam Bornstein (Addis Ababa), Simon Meldrum (London), CPs Cash GIFT Activity s2030 Futures & Foresight Innovation

  10. Innovative Finance Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions.

  11. How GIFT can support International Directorate • Promotes Sustainability • Flexibility • Supports new approaches • Risk Transfer • Leverage (Scale) • Professional Development • Develop Organisational Capacity • Additional Skills • How you can help • Develop Awareness & Dialogue • Build & Expand Capacity • Find [Qualified] Opportunities

  12. Next Steps Are you developing a programme? • Let’s talk - We could consider adding or including new/different financing mechanisms • Restricted Fundraising colleagues • Format of further sessions / training • Examples & Case Studies • How to develop the dialogue ? • Relevant & Important?

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