Financing for development
By Nicolas Vincent
The priority aim of the “Financing for Development” research program is to gain a better understanding of these two aspects of financing for development: How to innovate to finance more and differently? And: How to support the mobilization of local resources?
- Innovating to finance sustainable development: Financial innovation for financial or insurance instruments is a possible way forward, but the greatest potential probably lies in developing innovative partnerships between financing actors as they either create leverage (cofinancing and blending, catalytic effect of public funds on private funds), or allow the risk of operations to be shared (asset class investment funds, first-loss mechanisms…). For example, Development Impact Bonds are innovative partnership models that need to be studied… These new financial tools/partnerships should be able to finance the transitions required by sustainable development (towards more ecological farming, towards the energy transition, towards universal social protection…).
- Helping to mobilize local resources: In addition to the macroeconomic objective of promoting local resources in order to avoid external overindebtedness and the fact that they contribute to greater ownership of the public policies they finance, current – but especially future – local financial resources guarantee that current financing will be repaid in the future. Mobilizing local tax resources is a priority for the donor community and there are a whole host of projects: build tax administration capacities, fight against tax evasion and aggressive corporate tax optimization, taxation of natural resources…
This program consequently focuses on the new public/private partnerships and new risk sharing tools, financing transitions from one development model to another, and the issue of the erosion of the tax base in developing countries. It uses analytical grids from economics, the sociology of organizations and management sciences.