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Finding new pathways

Innovative development financing instruments

Different banknotes.

Since the UN conferences in Monterrey (2002) and Doha (2008) there has been much dis­cus­sion of in­no­va­tive de­vel­op­ment financing in­stru­ments. These mechanisms fall into three categories:

  1. Raising additional public funds

  2. Deploying public funds as a lever or catalyst for private capital

  3. Using funding more efficiently.

Any individual innovative financing instrument may fall into one or more of these categories.

For an overview of innovative financial instruments used to raise funds for in­ter­na­tional de­vel­op­ment, visit the "Focus on De­vel­op­ment" section of the KfW De­vel­op­ment Research website, which can be found here (PDF 108 KB).

The Leading Group on Innovative Financing for De­vel­op­ment, of which Germany is a member, was set up in 2006. Sixty-three coun­tries, in­ter­na­tional organisations, foundations and NGOs are now part of the group: they exchange information and work together on a voluntary basis. A number of working groups are exploring the use of innovative financing instruments in different sectors.

Germany draws on instruments from all three categories:

At in­ter­na­tional level, the following innovative financing instruments are also in use or under discussion:

In­ter­na­tional Finance Facility for Immunisation (IFFIm), advance market com­mit­ments for vaccines, taxation of in­ter­na­tional financial trans­actions, an air­line ticket levy and new mar­ket mechanisms under the Kyoto Protocol or a Kyoto follow-up agreement.

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