policy recommendations
for the G7

Brookings Center for Sustainable Development

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Global Public-Private Digital Utilities for MSME Recovery and Transition

A robust and equitable digital economy needs to promote the inclusive and sustainable recovery and growth of MSMEs (Micro, Small and Medium Sized Enterprises). Globally, these offer most of the formal employment, ranging from 53% to 86% (Kamal-Chaoui, L. 2017), providing the local infrastructure for capital circulation that most directly benefits communities. Today, the funding shortfall for formal MSMEs is approximately 55% of demand or an estimated $5.2 trillion dollars (International Finance Corporation, 2017). Drivers of global job creation, they suffer lower rates of digital adoption which constrains their growth. The opportunity exists for global leaders to nudge industry towards a profitable, inclusive, and self-sustaining future.  A country-specific pilot defining global protocols, with configuration capability for national needs, is estimated to cost $2M and could be completed by 2023.  Attractive markets for piloting a data utility have been identified, such as Indonesia, Puerto Rico, and Kenya.  The pilot is intended to yield a self-sustaining model, and success metrics should include financial sustainability, adoption of the solution and impact on G7 priorities such as Net Zero transition. The initial use case proposed for pilot is in supporting access to finance and literacy programmes for communities that offer carbon sequestration potential, facilitating those communities in developing sustainable practices whilst supporting preservation and conservation activities. Success in these pilots could be readily transferred to other countries and expanded into other communities. By engaging local governments, traditional lenders, fintech firms, and larger pools of global capital, financial services firms will obtain the data transparency they need to facilitate funding for MSMEs and, through secondary markets, keep that capital in circulation, where it can have the greatest economic impact.

This policy brief proposes a better way for MSMEs to leverage their digital data for increased and cheaper access to finance and other value-added services via a public-private partnership establishing “Data Utilities” to provide real-time and affordable access to trusted data on MSMEs for better access to financial services, helping lenders better assess MSME credit risk and support faster onboarding.

Issue Paper: Ramping up Investments in a Better Future: The Need for a Refreshed G7 Approach to Realize the Opportunity of Global Sustainable Development

The world’s systems of international cooperation are facing three great conflicts at once: violent conflict in Ukraine, political conflict between great powers, and a fissure between the near-term priorities of the world’s rich and powerful societies and the long-term needs of both poorer societies and the planet itself. The first two conflicts exacerbate the third. Amid massive investment shortfalls, the global sustainable development agenda is on the brink. Next year, 2023, will mark the midpoint to the Sustainable Development Goal deadline of 2030. It’s high time to start preparations for a better “second half” of the SDG era. The G7 needs to be a two-pronged leader, one that lends all its supportive muscle to mobilize required forms of capital while also leading through the power of its own influential example. Three deep structural changes over the past two decades have shifted the context for G7 contributions: (1) the smaller relative power of G7 countries on the global stage, (2) the more complex and fragmented policy terrain, and (3) the flawed heritage of high-profile G7/8 commitments. Amid the world’s deep practical interconnections between the “infrastructure agenda,” the “climate agenda,” and the “sustainable development agenda,” all G7 countries need to prioritize their domestic implementation of the SDGs. In parallel, they need to help mobilize a massive scale-up of public and private resources for global sustainable development. This includes partnering with other countries to instigate profound changes in the scale and business models of the multilateral development banks, while also taking a leadership role to promote SDG alignment in public and private financing systems.  G7 efforts relating to infrastructure should be pursued in the larger context of the 2023 moment for the SDGs and existing efforts coordinated through the G20 and elsewhere. The G7 can further consider a range of proposals to boost a partnership-driven approach to international cooperation on specific issues.

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