Bilateral development financiers are a growing force in global development, with combined portfolios now worth more than $84 billion. A new Devex report looks at how they have evolved and where their money is going.
The development of development finance
In 2019, we produced a special report on The rise of development finance institutions, or DFIs. At the time, we chronicled how the sector had grown rapidly, with new organizations forming and the balance sheets of established players expanding.
Three years later, we thought it was worth it to go back to the data and see how this industry has evolved. Despite major speed bumps due to the COVID-19 pandemic, DFIs now have more money and more clout than ever before.
At the end of 2021, the total portfolio of the DFI sector stood at more than $84 billion. Our analysis found that the sector has grown by 75.4% since 2019, substantially faster than either overall official development assistance or the wider world economy.
With the global economic and social order in serious flux, DFIs could play a crucial role as a source of funds as capital dries up everywhere else. But can they deliver? That was what we set to find out in our new special report on the sector.
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From the archives: The Rise of Development Finance Institutions
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Kenya’s new economy man
Kenya is a crucible of development in East Africa. The region’s most advanced economy received about $4 billion in aid in 2020 and is headquarters to some of the largest aid organizations and multinational firms that operate in East Africa, including U.N. agencies and companies like Google.
So, if Kenya sneezes, there is a chance that the entire region will get a cold. This is why the recent appointment of Njuguna Ndung’u as the country’s new finance minister caught our attention. It is a key indicator of how the new administration of President William Ruto plans to approach economic development.
Ndung’u, who served as head of the central bank in a previous life, is an advocate of universal health care and the expansion of financial services to the poor. But he comes into the job faced with ballooning debt, soaring inflation, and a struggling currency — all of which are throttling the economy.
I took a look at his record to give you, dear reader, a sense of how he might shape economic development in Kenya.
Read: Who is Kenya's new finance chief and what are his development goals?
Background reading: What William Ruto's manifesto means for development (Pro)
Funding activity
ADB. $7.5 for economic recovery from the COVID-19 pandemic in Samoa.
CABEI. $1M for emergency aid and disaster response in Belize.
EBRD. $80M for the development of a green hydrogen facility in Egypt.
IDRC. $21.2M (CA$28.5M) to accelerate equitable and inclusive climate change adaptation in the global south.
JICA. $7.1M (¥1B) to strengthen the health care sector in Moldova.
USAID. $43.5M to empower and enhance the livelihoods of young people in South Sudan.
Chasing $100B
Featured opportunity: USAID climate funds
At the 27th United Nations Climate Change Conference in Egypt, the U.S. Agency for International Development announced a suite of programs to invest in gender-responsive climate action.
These include $21.8 million funding for organizations working in over 37 countries to address gender-based violence connected to climate. And $23 million for Egyptian Pioneers, a project to build a more inclusive and capable Egyptian workforce, while contributing to climate goals.
The Global Energy Alliance for People and Planet has new partners and new ambitions. Launched at COP 26, it arrived at this year’s COP 27 in Egypt with a new CEO, Simon Harford.
The alliance has also secured the financial backing of the Bezos Earth Fund, IKEA Foundation, and The Rockefeller Foundation, and has set itself the goal to raise $100 billion in public and private capital for renewable energy projects in the global south, reports my colleague Stephanie Beasley.
Read more: Green energy alliance with $100B goal gains new partners at COP 27 (Pro)
Backgrounder: How a new $100B green energy alliance will work (Pro)
+ Was COP 27 a success for climate advocates or did key demands fall short? In the aftermath of the negotiations, join us for a Devex Pro Live event tomorrow at 9 a.m. ET to assess the outcomes.
Mo’ money, mo’ problems
The United Kingdom will set aside £2.5 billion more (roughly $3 billion) through 2024 to pay for what it described as “unanticipated cost” placed on the aid budget by its spending on refugees.
But it’s not enough to avoid further cuts, experts tell my colleague William Worley.
However, a freeze on nonessential aid spending will be “lifted shortly,” International Development Minister Andrew Mitchell told Will.
Autumn budget: UK to spend an extra £2.5B to help refugee costs
ICYMI: FCDO pipeline contains just £30.7M of development opportunities (Pro)
+ Catch up on all the latest news and analysis on the U.K. aid sector.
Bill won’t foot the bill
Some experts are second-guessing the wisdom of rolling out the world’s first malaria vaccine, arguing that it costs too much money to roll it out and its efficacy levels at 30% is too low.
Citing the shot’s low efficacy, short-term immunity, high price, and limited supply, the Bill & Melinda Gates Foundation — financiers of vaccine development — announced that it would not directly support the vaccine rollout, writes Madalitso Wills Kateta for Devex.
Read: Is the first malaria vaccine worth the cost?
Background: The significance of the first WHO-approved African malaria medicine
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About the author
Omar Mohammed
Omar Mohammed is a Foreign Aid Business Reporter based in New York. Prior to joining Devex, he was a Knight-Bagehot fellow in business and economics reporting at Columbia University Graduate School of Journalism. He has nearly a decade of experience as a journalist and he previously covered companies and the economies of East Africa for Reuters, Bloomberg, and Quartz.
