RIYADH: Developing countries are facing an annual investment deficit of $4 trillion as they battle to achieve their Sustainable Development Goals, a UN report said Wednesday.
The UN’s agency for trade and development, or UNCTAD, noted in its World Investment Report 2023 that the deficit has grown from $2.5 trillion since the adoption of the SDGs in Paris in 2015.
Expressing concern about the insufficient investment, the UN body said that 31 developing countries require approximately $1.7 trillion annually for renewable energy projects but were able to attract only $544 billion in 2022.
This massive gap between the required investment and the actual funds received raises concerns about the ability of these countries to meet their renewable energy goals and transition to sustainable sources of power, according to the agency.
“A significant increase in investment in sustainable energy systems in developing countries is crucial for the world to reach climate goals by 2030,” UNCTAD Secretary-General Rebeca Grynspan said.
The largest gaps are in energy, water and transport infrastructure, the report said, attributing this to both underinvestment and additional needs.
The report highlights that global foreign direct investment fell by 12 percent in 2022 and proposes to take priority actions ranging from financing mechanisms to investment policies.
“The global environment for international business and cross-border investment remains challenging in 2023. Geopolitical tensions are still high. Recent financial sector turmoil has added to investor uncertainty,” UNCTAD said, adding that downward pressure on global FDI to continue in 2023.
While investments in renewables have shown growth since 2015, the report noted the majority of funding has flowed to developed countries.
To address this pressing issue, the report urges immediate support for developing countries to attract a more substantial amount of investment for their clean energy transition.
UNCTAD highlights that the gap was mainly driven by the Ukraine-Russia war and increasing debt pressures.
The report underlines the need for concerted efforts from global stakeholders to create an enabling environment and mobilize the necessary resources, facilitating sustainable and inclusive development in line with the 2030 agenda.
UNCTAD also emphasizes the need for debt relief to offer developing countries fiscal space to make the investments necessary for the clean energy transition.
