October 25, 2017
An expert panel met recently at the Center for Strategic and International Studies to discuss the value of Development Finance Institutions (DFIs). Examples of these institutions include the Overseas Private Investment Corporation (OPIC) in the United States, the African Development Bank, and Swedfund in Sweden. Speakers Martin Wolf, Nanno Kleiterp, Daniel Runde, David Bohigian, Linda Broekuizen, Alain Ebobissé, and Dr. Joachim Nagel considered the possibilities and challenges facing DFIs. As the global community looks to new ways to close the health funding gap, there are three takeaways from the discussion that global health advocates should consider.
First, Wolf, a global economics commentator at the Financial Times, made the case that economic growth is a necessary condition for the world to make progress on the Sustainable Development Goals. Wolf also pointed to a key question for DFIs: Can billions of dollars in investments from these institutions be leveraged into trillions for emerging markets?
Second, Nagel, a member of the Executive Board at the German development bank KfW, emphasized the importance of bringing private money to emerging economies, pointing out that “more than 50 percent of small and medium sized enterprises — and I guess it’s a little bit more if you include the informal business — in Africa do not have access to loans. … For me personally, that’s not acceptable. And that is the reason why I believe that DFIs are so important for the business.”
Lastly, Kleiterp, Chair of the Board of EDFI, the Association of bilateral European Development Finance Institutions, demonstrated the massive growth DFIs have experienced over the past few decades. She explained that in 1992, there were seven DFIs with a total balance sheet of around $1 billion. Today, there are 15 DFIs with $50 billion. This is a rapidly growing type of financial institution, and it should be on global health advocates’ radar.
As global health organizations seek out innovative financial solutions to end the epidemics of AIDS, tuberculosis and malaria, DFIs are worth evaluation. When engaging with the private sector and forming innovative partnerships, DFIs can be another tool in the fight for health.