Development finance must adapt to meet new needs, experts say

The year ahead will be pivotal in development finance. Against a backdrop of geopolitical and economic instability, it will be hard for low-income countries to access capital as many face debt distress. As the World Bank continues its reform efforts, one question is how changes might go beyond that institution to the broader development finance system and its myriad institutions. While many of them may get a capital boost in the year or two ahead, that’s not enough, experts told audience members at a recent Devex Pro event. “Getting more money into those institutions and deploying it in the same old way is not going to give us the multiplier that we need to make a difference,” said Stephanie von Friedeburg, managing director of banking and capital markets advisory at Citi. These institutions need to think about “product reform” and changing the way they work, particularly to better understand and work with commercial investors, she added. In addition to technical changes around how they manage investments, they also need to grapple with how lower-income countries can have more of a voice in the system. Joan Larrea, CEO of Convergence, and Kevin Gallagher, director of the Global Development Policy Center at Boston University, also joined Devex for the event. You can watch the robust and wide-ranging discussion about key development finance trends below.