Integrating Finance for Sustainable Development in Weak Institutional Contexts: Opportunities and Disruptions

Posted: 16 Jun 2021

See all articles by Simisola Akintoye

Simisola Akintoye

De Montfort University - Faculty of Business and Law

Date Written: June 15, 2021

Abstract

The last few years has witnessed considerable attention to sustainable development across the world. With the United Nations Sustainability Development Agenda of 2030, countries have been awakened by the need to critically engage with the economic, social and environmental impact of sustainability that focuses on meeting the developmental needs of the present without compromising the future.

The financial system and indeed finance is at the peak of sustainable development in any economy that rely on local and international sources of finance both at the private and public levels. While adequate revolutionary financial policies and sophisticated regulatory regimes can help situate the role of financial sector in facilitating effective and dynamic economy, evidence suggests disconnect between the financial sector and the future of inclusive sustainable development arising from negative externalities, misaligned incentives and short termism. For developing economies, the problem is more compounded with lack of resources and means to undertake necessary strategies to facilitate the current global transition into a more sustainable economy.

In countries such as Africa, aligning both the process and outcomes of the financial system to sustainable development remains an ongoing debate confronted with a plethora of barriers ranging from financial exclusion to poor institutional regime and corruption.

This paper investigates the role of finance as a tool for sustainable development in countries with weak institutional contexts. The paper focuses on Africa, a continent with increasing international partnership and western-based supply chain, but yet characterised by non-enabling institutional frameworks and disjointed approach to sustainable financial system. The paper analyses Africa’s diverse financial sector as a driver for development of the continent in the public and private financial market. This paper examines the recent European Union High-Level Forum calling for co-operation between Africa and Europe in promoting international and cross-regional partnerships for the achievement of the United Nations Sustainable Development Goals and the Africa Union’s Agenda 2063 and explores opportunities and disruptions to the varying multidimensional levels of finance for sustainable development in Africa.

The paper provokes further thoughts on the impact of co-operation and co-creation between developed and developing economies by suggesting the need for the design and integration of a sustainable financial system through the development of policies, standards and regulations that are tailored to meet peculiar challenges of developing economies whilst also balancing the competing interests of the financial system and sustainable development.

The paper contributes to current debates on finance for development within sustainability boundaries and the role of international and regional partnerships in the wake of Africa's transformation to an innovative financial and capital market society.

The financial system remains at the peak of development in any economy. It goes without saying that the United Nations Sustainable Development Agenda (2030), together with the Sustainable Development Goals (SDGs) are responses towards combating climate change and approach to implementing the Paris Agreement. As with any structural transformation process, the financial system will play key role in this transformation. It is therefore important that finance is strategically harnessed to support this imminent transition to a sustainable world.

Suggested Citation

Akintoye, Simisola, Integrating Finance for Sustainable Development in Weak Institutional Contexts: Opportunities and Disruptions (June 15, 2021). University of Oslo Faculty of Law Research Paper No. 2021-12, Available at SSRN: https://ssrn.com/abstract=3867137

Simisola Akintoye (Contact Author)

De Montfort University - Faculty of Business and Law ( email )

United Kingdom
+44 116257 7790 (Phone)

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