Development finance needs to be bolder

Institutions are caught between competing expectations

TOPSHOT - This aerial view shows houses in the swamps around Fredrick Island in Monrovia on November 17, 2021. - Fredrick island is a neighbourhood built on a swamp with houses linked with small wooden bridges close to the centre of Monrovia. As land becomes more expensive and further from the business centre, people find ways to live with in the swamps close to the centre of the city. (Photo by JOHN WESSELS / AFP) (Photo by JOHN WESSELS/AFP via Getty Images) — Image: Getty Images

Apr 20th 2023

For cash-strapped governments, development-finance institutions (dfis) offer an understandably alluring vision: that of development executed by the private sector at little cost to the state. Such institutions try to build businesses and create jobs by lending money and buying stakes in firms, and seeking healthy returns. Their aim is “to do good without losing money”, as an early chairman of the British one put it. Of late they have been tasked with fixing the climate, promoting sustainable-development goals and shepherding investors to difficult markets, too.

This article appeared in the Finance & economics section of the print edition under the headline “Cautious pioneers”