What does it take for a Development Bank to succeed?

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By João Carlos Ferraz, Instituto de Economia, Universidade Federal do Rio de Janeiro, Brazil


This blog is part of an ongoing series evaluating various facets
of
Development in Transition. The 2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


bank-finance-growth-financePublic finance institutions, or development banks, have “development DNA”. But, can they effectively engage in financing “development in transition” or the call to rethink international co-operation to help countries at all levels of income sustain their development gains? What would it take for such institutions to succeed? How can they anticipate and effectively respond to societal and market needs and aspirations?

Political space for this does exist. A consensus exists that development banks must have at least four priorities: infrastructure, innovation, sustainable environment and firms of smaller size. That’s the easy part! No policy maker or analyst in their right mind would be against these priorities. But, consider the nature of these priorities: each one is time- and place-specific but evolving permanently; they are moving targets. More importantly, they are risk-intensive, given the duration and unpredictability of associated projects and/or the potentially low credit worthiness of economic agents pursuing these priorities.
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Getting private resources on board for sustainable development

By Royston Braganza, CEO, Grameen Capital India


To learn more about this topic, check out the Global Outlook on Financing for Sustainable Development 2019


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GOOOOAAAAAALLLLLL! The frenzied celebration that reverberates across the globe, every time a goal is scored, reflects the seemingly universal passion for football – be it the FIFA World Cup, the Champions League or any other national or local leagues. The game cuts across generations, blurs political boundaries and traverses ethnic divisions. Sadly, some other things do too – hunger, refugee crises, poverty and global warming, to name a few. And yet, everywhere I look, shining examples exist of H.O.P.E.

Holistic approach. Governments, corporations, capital markets, non-governmental organisations need to find integrated solutions. One exceptional example is the catalytic potential of using corporate social responsibility/philanthropic capital to de-risk investment from capital markets. The financial sector can help guide companies to look towards a sustainable future. Grameen Foundation’s Growth Guarantees programme, for example, did precisely that by bringing together donors, international and local banks, microfinance institutions, and poor, vulnerable women borrowers.
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Data: The first step to improving finance in African cities

By Astrid R.N. Haas, Manager of Cities that Work, International Growth Centre


This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development


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Hargeisa, Somalia. Photo: Shutterstock.com

Many African cities are urbanising rapidly. Yet, they are unable to adequately service their growing populations with the necessary infrastructure and amenities due to a lack of finance. Furthermore, retrofitting infrastructure on a city that has already grown is significantly more expensive. Improving local government finance is therefore very high on these cities’ agendas.

Cities can improve their finances in various ways. Perhaps one of the most underutilised yet high potential methods is property tax. Why? Rapid population growth is generally accompanied by a construction boom, increasing the number of properties. Furthermore, if demand for properties rises faster than supply, this will also increase property values. And such values will further benefit once public investments in infrastructure as well as improvements in service delivery are made. All these factors have a positive impact on property tax collection, and thus have the potential to unleash a virtuous cycle for local government revenue.
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Make AfCFTA a reality

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By Abdoul Salam Bello, Advisor to the Executive Director, Group Africa II, World Bank Group; Visiting Fellow, Africa Center, Atlantic Council; and Author of “La régionalisation en Afrique: Essai sur un processus d’intégration et de développement” (L’Harmattan 2017)


Learn more about this timely topic at the upcoming
18th International Economic Forum on Africa


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The March 2018 signing of the framework agreement to form a continental free-trade zone throughout Africa is raising a lot of expectations. In fact, the African Continental Free Trade Area (AfCFTA) would be the largest free trade agreement since the founding of the World Trade Organization. It will include 1 billion people and up to USD 3 trillion of cumulative GDP.

Amongst the AfCFTA’s expectations is a significant boost in intra-trade. At just an 18% share of total trade, Africa has the lowest levels of intra-continental trade in the world. While the continent’s trading blocs have helped to improve these figures, the level of intra-trade in Africa is a far cry from the levels witnessed in Latin America (35%) and Asia (45%). Furthermore, Africa’s intra-continental trade has been substantially outpaced by trade with the rest of the world – often by as much as 90%.

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Raising capital for intermediary cities

By Jeremy Gorelick, Senior Infrastructure Finance Advisor, USAID’s* WASH-FIN (Water, Sanitation and Hygiene – Finance) Programme, and Joel Moktar, Project Leader, Open Capital Advisors


This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development


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Intermediary cities are the fastest growing cities in the developing world. Often referred to as secondary or second-tier cities, intermediary cities typically have a population of between 50,000 and one million people. They play a fundamental role in connecting both rural and urban areas to basic facilities and services.[1] Driven by population growth and rural-urban migration, intermediary cities worldwide are projected to grow at almost twice the rate of megacities (those with more than 10 million inhabitants) between now and 2030.[2] Of these, the fastest growing cities are in Africa and Asia.[3]

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It is time for a new finance paradigm in development

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By Arthur R Wood, Founding Partner, Total Impact Advisors; Convenor, Project1800.org


This blog is part of an ongoing series evaluating various facets of Development in Transition. The 2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


On 27 November 1095, Pope Urban declared the crusades ostensibly a religious call, but one that reinforced the power of the spiritual over the temporal. To support the crusades, the church built a financial institution by leveraging the Templars under the Papal bull Omnes Datum Optimum, creating a monastic banking system that gave birth to such financial innovations as letters of credit, banking and, by extension, fiduciary products like trusts.

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Development Finance 2.0: From Billions to Trillions

By Harald Hirschhofer, Senior Advisor, TCX [1] 

development-financeAchieving the Sustainable Development Goals (SDGs) will require an enormous increase in external financing flows to developing countries. Development Finance Institutions (DFIs) have gradually started to shift their business model towards de-risking services to crowd in long-term, low-risk private capital. However, the targeted scaling up of private investment from billions to trillions to realise the SDGs contains massive risks for stability. And good macro-policies are needed, in turn, to address such underlying risks. Countries that need the greatest amount of development finance are often those that have domestic financial resource constraints and underdeveloped markets. Financing their growth and investment opportunities makes the management of exchange rate risks, which are inherent in development finance, a critical challenge.
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