VEB.RF received awards for its social projects from the Association of Asian and Pacific development financial institutions
Deputy Chairman of VEB.RF Cesare Maria Ragaglini took part in the 43rd Annual meeting of the Association of Asian and Pacific development financial institutions (ADFIAP). The main topic of the event was “Financial Development Institutions and the pandemic: the current situation and anti-crisis measures". The two-day online meeting included such events as the General Assembly, the Board meeting, and the Award Ceremony for the winners of the ADFIAP AWARDS 2020 outstanding development projects competition.
This year, VEB.RF has won in two ADFIAP AWARDS categories:
1. "Corporate Social Responsibility" with the Project "Improving the educational results of students in the Republic of Sakha (Yakutia)" and
2. "Economic development of territories" with the Project "Site of attraction" which was implemented jointly with the Monotowns Foundations.
Both projects have a social focus and are aimed at improving the lives of the citizens. The project of distance education for schoolchildren in Yakutia started in June 2019, and became one of the events which helps to achieve the goals of the "Education" national project. It involves about 5,000 students and over 700 teachers from 27 schools in the “Khangalassky Ulus” municipal district.
In the frameworks of the "Site of attraction" project, special territories are being formed in the single-industry towns (squares, streets, embankments), where besides better conditions for the development of small and medium-sized businesses, they also create a harmonious architectural environment of the space around. Such places are designed to become the attraction spot for the recreation of residents and tourists, providing all-season space for comfortable rest, communication and self-realization.
In addition, within the Annual meeting, there was a discussion on the national economies in the context of the pandemic, measures taken by development banks members of the Association in order to overcome the consequences of the crisis, and discuss prospects for the future. Cesare M. Ragaglini spoke about the national plan of the Government of the Russian Federation to overcome the crisis, as well as about the measures of the State Development Corporation VEB.RF, which include unprecedented support for strategic areas (SMEs, development of free telemedicine, free of charge preparation of PPP projects in the regions, etc.).
Cesare M. Ragaglini noted that the pandemic has exacerbated the problems that existed in our society before the crisis, i.e. economic and political barriers, social inequality, and the vulnerability of the global trading system. "The pandemic recognizes neither borders nor frontiers. Today, the world is facing an unprecedented challenge that can only be met through unprecedented international cooperation on key issues." "We are coming to the conclusion that supporting SMEs, developing sustainable infrastructure and a strong healthcare system are the areas through which will pave us the path to recovery," he said.
VEB.RF Corporation was also re-elected to the ADFIAP Board of Directors.
The Association of Development Financial Institutions of Asia and Pacific ADFIAP was founded in 1976. Today it is one of the largest international associations of development institutions, which includes 87 organizations from 36 countries. Russia has been a full member of ADFIAP since January 2013 and is a member of the ADFIAP Board of Directors. The Association's work is aimed at coordinating the actions of development financial institutions for the social and-economic development of the region's countries.
Igor Shuvalov: ‘VEB.RF Sees Great Potential of Impact Investing for National Projects’
VEB.RF has held a conference to bring together Russian and international experts discussing social impact projects in Russia. The event was attended by representatives of international organisations, financial institutions and associations, experts in impact investing, and representatives of Russian federal and regional executive authorities.
A distinguished guest was Sir Ronald Cohen, a British and American investor, businessman, manager and political figure, described as “the father of British venture capital” and “the father of social investment”. The conference was moderated by Nyuta Federmesser, founder of the VERA Hospice Charity Fund, and Gor Nakhapetyan, a businessman and philanthropist, honorary professor at SKOLKOVO Business School, co-founder and partner of Sensemakers.
VEB.RF Chairman Igor Shuvalov said in his speech at the conference that investing in human capital is increasingly important, smart investment. With limited resources, governments cannot endlessly increase expenditure on the social sphere, and any government initiative in this area should be supported by private investors.
“We see the great potential of this mechanism to obtain private funding for the social sphere, primarily as part of the presidential agenda, under national projects,” Igor Shuvalov said. “Social impact bonds combine private initiative, public funding and, most importantly, outcomes-based contracting. These are new technologies in reaching the government’s goals. VEB.RF took on a new role of the SIB project operator under national projects. Fulfilling certain functions of federal authorities, we are aware that VEB.RF is one of the main tools in the SIB project market, but we perform these functions on behalf of the Russian government, on behalf of the Russian president.”
According to Sir Ronald Cohen, social impact bonds expand the philanthropy market by involving conventional investment resources. “There’s more than 200 trillion US dollars in investment money worldwide, and only 1.5 trillion in money for philanthropy. If government guarantees make it possible to attract investment in social impact projects, this must be done. Impact investment is a social revolution, the same as the tech revolution. It comes from changes in people’s values. Consumers stop consuming products from companies that pollute the environment, exploit other people. And investors who understand that these changed values lead to changes in profit flows avoid investing in toxic companies,” he said.
In her speech, VEB.RF’s Deputy Chairperson and Member of the Board Svetlana Yachevskaya noted that Russia was a unique country in more ways than one, and the introduction of social impact bonds was no exception. “We are the only country in the world where SIBs begin at federal level rather than municipal level. I and most of my team have experience of working both in government and in business. Our first main task was to get the government interested in starting this project. And it was great to receive support from the Ministry of Finance. During the pandemic, we didn’t have time to be bored. We organised seminars for hundreds of people from regional administrations and municipalities, where we told them about the SIB mechanism and its importance. And we have non-profit organisations that know how to improve people’s lives. Now we are at a new stage, facing a new challenge: we should convince investors. Today we live in a paradigm where everything is around people. Well-being became the primary value. This is a growing trend throughout the world. Quality of life is the main priority,” Svetlana Yachevskaya emphasised.
VEB.RF’s Senior Vice-President Mikhail Alashkevich believes that there are certain preconditions for impact investing.
“We should stick to the principle of returnable investment without ignoring social responsibility. We need socially oriented investors, professional non-profit organisations, and the government’s willingness to transfer some of its traditionally public functions to professionals working in the social entrepreneurship sector. The role of a development institution is irreplaceable here; it should structure such projects, balance the interests of government and business, and formalise advantages for both sides. The KPIs for a development institution are maximising the inflow of private investment in social impact projects and switching over to public investment in the social sphere partly on a pay-for-success basis. Government expenditure on social services in Russia is 13 trillion roubles now. If even a small portion of this amount was converted into impact investments, we’d achieve substantial effects,” Mikhail Alashkevich said at the conference.
“I believe that if properly designed, social impact projects have enormous potential. This sector will attract institutional investors if its geographies and products are diversified. That is why our role is to prove that the model works in different regions and in different spheres,” Alexei Chekunkov, CEO, Far East Development Fund, said in conclusion.