IACPM paper on Bank interaction with DFI’s for the mobilisation of private capital for the SDG’s
Content-Type: Policy Brief
In the context of Development Finance Institutions’ (DFIs) efforts to mobilise private sector capital in support of the UN Sustainable Development Goals (SDGs) and the Paris Agreement, this document explore the progress to date from the perspective of private sector banks and focus, among others, on how banks choose to align their operations with the SDGs and the nature of the relationship that banks have with DFIs.
This research paper seeks to broaden the understanding of private sector capital mobilization by exploring the relationship between private sector banks and Development Finance Institutions (DFIs) from the perspective of the private sector. Twenty interviews were conducted with private sector banks on a confidential basis either online or over the telephone due to Covid restrictions. The discussions around risk and reward had to determine how the involvement of a DFI affected the economics of a transaction and the relative appeal of different transaction structures. Overall, the sentiment toward DFIs is positive. DFIs are perceived as important clients and as valuable partners to private sector banks. Nonetheless, giving DFIs’ staff more autonomy on risk acceptance would mirror the private sector, and in the context of mobilization, would be a consistent way to approach crowding in.
