How to make more green investments — likely in middle-income countries — while still tackling poverty in the world’s most disadvantaged places?
That’s the main dilemma the outgoing CEO of British International Investment, Nick O’Donohoe, sees awaiting his successor at the U.K.’s development finance institution, which made £1.31 billion (about $1.7 billion) in new commitments in 2023.
For O’Donohoe, the answer is clear: Fight poverty first.
“I think it’s really important that development finance institutions stay focused on their core function of development,” he told Devex’s U.K. correspondent Rob Merrick. “That means providing money that will help support livelihoods, create jobs, help to pay tax, build a tax base, in the poorest countries in the world where capital is scarcest and where we can be most additional.”
In a candid exit interview after seven years at the helm, O’Donohoe had some other prescriptions for the world of development banking:
• More equity investments, where BII has invested 75% of its funds, to best mobilize other capital
• Better tap into insurance companies’ “appetite for investment”, and
• No new gas projects in Asia and only in very limited circumstances in Africa.
O’Donohoe also defended the healthy salaries at BII, saying they are in line with other development banks and the going rate for the kind of financial expertise required.
Some 75 BII staff members earned more than £250,000 in 2023, an increase from 57 in 2022. And 35 took home over £300,000 last year, compared with 30 the year before.
“We are responsible for £10 billion of taxpayers’ money and it has to be invested properly. There are certain skills that are needed to do that — and, I suppose, a price for those with that skill set,” O’Donohoe said. “Almost everybody here could earn more money somewhere else in the city, but they come here because they care about the mission.”
Read: ‘Core’ task is poverty not climate, outgoing BII chief tells DFIs (Pro)
See also: BII chief says top-earning staff join for ‘the mission’ not high pay (Pro)
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Speaking of salaries …
We are also watching the International Rescue Committee, where 1 in 9 staff members in the U.K. office are at risk of being laid off, according to internal emails obtained by Rob.
Similar cuts of “around 10 percent” are anticipated in positions funded from unrestricted revenues across the NGO’s worldwide operation, according to a letter to staff from IRC President and CEO David Miliband.
“Some origins fall beyond our control, like the rising costs of compliance and the headwinds of private fundraising,” Miliband wrote. “However, some of the causes of the deficit are within our control. Notably, some of IRC’s systems have not kept pace as we have doubled in size in the last five years.”
That has left staff angry, not least at Miliband’s salary, which hit more than $1.25 million in 2023, up from $1.14 million a year earlier.
Exclusive: IRC poised to shed 1 in 9 UK staff amid funding crisis
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In May this year, we told you how World Bank Senior Managing Director Axel van Trotsenburg had questioned the effectiveness of the roughly $45 billion he said had gone into “intermediary funds” such as The Green Climate Fund and the Global Fund to Fight AIDS, Tuberculosis and Malaria. An effort to “more smartly combine” that money with the leveraging ability of MDBs could have garnered $100 billion, van Trotsenburg argued.
Now comes a paper from the Center for Global Development, partly inspired by a World Bank health financing forum in June, titled “Are Global Health Funds Falling Behind on Financial Innovation?”
Authors Kalipso Chalkidou, Victoria Fan, and Clemence Landers argue these global funds risk disincentivizing recipient governments’ own spending and should embrace more innovative models, such as bonds and loan buy-downs — which some are already doing — and be more open to blended finance.
Overall, while the authors don’t advocate for a wholesale transition of grants to loans, they do argue that “the global health community should also reconsider its value-add compared to the prevailing MDB country-level concessional model.”
The nuances of that debate might have to wait for a future article. For now, though, we’d say that the elbows appear to be coming out in the battle for donors’ affection ahead of the replenishment logjam for the Global Fund, GCF, and IDA — among others — all due in the next 18 months.
Background reading: IMF greenlights new financing mechanism for MDBs
Women in tech
Most everyone is familiar with the digital development agenda — the European Union has a whole secretariat working on the topic.
Nigerian journalist Pelumi Salako cuts through the rhetoric with his latest piece to look at what is stopping, particularly women, from getting more involved in the tech sector in Africa.
Prejudice is one problem: Regina Honu, the founder of Soronko Academy training girls and young women in Ghana, told of the “perception that [women’s] brains are not wired to that and they should be more focused on female-concentrated sectors.”
Internet affordability is another: On average, Nigerians have to work for nearly two days to afford the cheapest broadband internet compared to France — which is ranked first — where people have to work for just 54 minutes per month.
Add to that unfriendly policy environments, unequal pay, lack of role models, and scarce opportunities.
“The male-dominated nature of the sector and issues like gender-based violence further alienate women and girls,” said Miriam Beatrice Wanjiru from Paradigm Initiative, an organization that connects underserved young Africans with digital opportunities. “As long as professional and decision-making bodies lack gender sensitivity, the gender gap will persist due to exclusive laws and policies.”
Read: How African NGOs are working to close the gender gap in tech
The World Bank pipeline
Some 206 new projects have been added to the World Bank’s project pipeline in the past 12 months. And Devex’s Alecsondra Si has crunched the numbers for Devex Pro subscribers.
The biggest? $1.3 billion for the Transport Resilience and Connectivity Enhancement Project in Kazakhstan.
The top recipient? Brazil, with 19 pipelined projects worth $3.8 billion.
And the leading sector so far? Agriculture, fishing, and forestry, with 34 projects and $6.1 billion worth of grant commitments.
Read: What’s in the World Bank’s $226 billion project pipeline?
What we’re reading
The World Bank is behind the first carbon removal bond to fund reforestation of the Amazon rainforest. [Bloomberg]
Development banks back the use of SDRs for a G20 anti-hunger alliance. [Mirage News]
Leaders back new United Nations global tax body despite EU and U.S. opposition. [EU Observer]
About the author
Vince Chadwickvchadw
Vince Chadwick is a contributing reporter at Devex. A law graduate from Melbourne, Australia, he was social affairs reporter for The Age newspaper, before covering breaking news, the arts, and public policy across Europe, including as a reporter and editor at POLITICO Europe. He was long-listed for International Journalist of the Year at the 2023 One World Media Awards.
