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“The current juncture presents a strategic opportunity to strengthen the global development finance architecture and facilitate greater alignment among national, regional and multilateral actors”
to confront multidimensional crises, per- sistent inequality, and productivity and climate-related challenges. REORIENTING FINANCE TOWARDS LONG-TERM INVESTMENT Development banks have expanded and modernised their institutional man- dates within a mission-driven framework that integrates macro financial stabili- sation, market creation and productive transformation. This evolution incor- porates cross-cutting global priorities – climate resilience, digitalisation and social inclusion – reflecting the shift towards development models that rely on long-term investment, countercycli- cal financing and the generation of public goods. As a result, contemporary develop- ment banks operate not only as providers of financing but also as systemic ena- blers of economic intelligence, identifying market failures, regulatory bottlenecks and governance gaps that constrain devel- opment trajectories. The current juncture presents a stra- tegic opportunity to strengthen the global development finance architec- ture and facilitate greater alignment among national, regional and multi- lateral actors – as well as private capital – with global development objectives. Advancing this agenda requires pro- gress in three key dimensions. First, access to resources managed by multilateral institutions must be sim- plified and operationally streamlined to ensure that NDBs participate meaning- fully in decision-making and consultative platforms. This is fundamental for accel- erating capital deployment towards productive sectors and vulnerable popu- lations, particularly in high-risk segments that fall squarely within the development mandates of NDBs. Second, there is a need to expand the supply of risk sharing and risk trans- fer instruments, tailored to the financing realities of developing economies. This includes mechanisms to mitigate foreign exchange risk, enhance creditworthi-
ness, reduce project level uncertainty and crowd in private investment for long-term development priorities. Third, countries must invest in insti- tutional capacity building, ensuring that NDBs can design, implement and evaluate complex programmes aligned with national development strategies. Increased availability of grant-based financing for pilot initiatives is essential to support market development, data gen- eration and knowledge creation – critical public goods that enable policy effective- ness and investment readiness. The shifting global context also
highlights opportunities to deepen collaboration among NDBs, regional development banks, multilateral insti- tutions and private sector financing coalitions with significant liquidity. Strengthening these linkages is essential to mobilise resources at scale, accelerate progress towards the Sustainable Devel- opment Goals, and address climate and development challenges in a coherent manner. COLLECTIVE EFFORTS FOR A MORE COHERENT FINANCING ECOSYSTEM In this regard, the World Federation of Development Financing Institutions – chaired by ALIDE and comprising AADFI in Africa, ADFIAP in the Asia-Pacific region, ADFIMI in the Middle East and North Africa, and ELTI in Europe – along with the Finance in Common initiative, plays a central coordination role. Together their work supports the dissemination of global financing agendas, peer learning and operational harmonisation across the development banking ecosystem. These collective efforts have strength- ened the visibility and influence of development banks in global policy dis- cussions, including within the G20, the United Nations and at the meet- ings of the Conference of the Parties to UN agreements. Additionally, the white paper ‘NDBs: The Unsung Heroes of the Global Development Finance Archi- tecture’, developed with support from Momentus Global, makes a strong case for granting NDBs greater voice and rep- resentation in the governance of global development finance. With the G7 summit in Évian, a crit- ical opportunity emerges to address structural challenges such as insufficient long-term investment, unsustainable debt burdens and declining global sol- idarity. The Évian Summit is expected to help reorient global action towards fulfilling development financing com- mitments, recognising NDBs as essential strategic partners in advancing sustaina- ble and inclusive development.
// EDGARDO ALVAREZ Edgardo Alvarez is secretary general of the Latin American Association of Development Financing Institutions and the World Federation of Development Finance Institutions. He has held CEO roles in both private and development financial institutions, brings extensive experience in investment banking with a focus on mergers and acquisitions, and has served as a consultant to the Inter- American Development Bank on the evaluation of financial institutions.
X-TWITTER @_ALIDE_ / @WFDFI_ www.alide.org.pe / wfdfi.org
77 globalgovernancemedia.org
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