Head of France's AFD reflects on development finance's uneven evolution

Rémy Rioux, CEO of the French Development Agency, or AFD, since 2016, is a seasoned figure in global development financing, with a track record stretching back decades that includes the landmark 2015 Paris climate talks and the third Financing for Development conference in Addis Ababa, Ethiopia. Now, heading into FfD4 in Sevilla, Spain, this week, he reflected on the evolution — good and not so good — of development financing and the role banks such as AFD play in a rapidly changing and increasingly complex fiscal space. While some have lauded the fact that a negotiated outcome document was largely done and dusted ahead of FfD4, Rioux sees it as a mixed bag. “I don't think the clarification will be totally [there] in Seville and after Seville, which is not to criticize … the parties and ambassadors who did their best to reach this compromise,” he said during a recent Devex Pro Briefing. “It was actually quite a success because I remember when I arrived in Addis in July 2015, there was no compromise,” he said, noting that the issue of a global taxation system was particularly contentious. “So there was a bit of work for diplomats in Addis. They will probably have a more pleasant stay in Seville now that they have done their work.” At the same time, he doesn’t expect firm commitments to come out of FfD4, but that doesn’t mean it won’t be valuable in the long term. “I don't expect Seville to be the place of commitments,” he said. “But I really expect — and it's important because [the conference] happens … once a decade — to have the widest and clearest photography of where we are in terms of development, climate, sustainable development finance as possible. And what I have seen from the compromise text … makes me confident that Seville will form a basis on which we will be able to continue working and building.” Seville will also keep building on the role of development finance institutions, and specifically their ability to act as a “bridge” between national banks and, on a global level, multilateral development banks, or MDBs, such as the World Bank, in order to strengthen the former, Rioux explained. And DFIs — or public development banks as Rioux prefers to call them — can also act as “intermediaries” as they work to turn private investment into public good. “There's a real interest in many actors, especially investors … rather than to finance directly … to have public intermediaries. That's the role MDBs have played forever — transform private investments into investments in Burkina Faso or Peru or Indonesia,” he said as an example. “That has always been the work of public banks — to transform private into public [money] in places where private investors are not going and will maybe never go, at least for the time being.” But the financing landscape has become increasingly complex, with myriad players from sovereign governments to MDBs to private creditors sometimes at odds with one another. This complexity, Rioux said, makes restructuring debt — one of the primary goals of debt-distressed countries, particularly in Africa — all that much harder. Another problem: someone gets stuck with the tab. “When you cancel debt, of course, it adds up to your own debt. There's no miracle. Someone has to pay the debt. So it can be the client countries or the creditors. So I think [it will be] interesting in Seville to hear all the positions.” “It's a bit of a collective effort that has to happen. That's why Seville is so important. Because this is the moment where you can feel and understand where are the other stakeholders on a specific country or on a broader set of issues,” he added. And while he applauded the diverse set of players that will be in Seville — from private investors and government leaders to civil society and academics — that also means expectations for a cohesive, comprehensive outcome need to be tempered. “Seville is open to everybody, and many, many voices will be heard, so maybe that's one of the reasons [why] we will come out of Seville with a lot of information, but probably not a totally clarified framework.”