Financing better, together: at the Finance in Common Summit, coordination becomes the key driver of development

Over the past decade, major institutions have converged around several priorities: mobilizing more private capital, improving coordination between public and private actors, and strengthening the role of public development banks. However, these principles have yet to be fully translated into concrete action.

For Ilan Goldfajn, President of the Inter-American Development Bank Group (IDB), the challenge is now clearly identified: "How can the cost of capital be reduced and more resources mobilized for development?" Behind this question lies a clear idea: the issue is no longer just defining principles, but making them work at scale.

A system that remains too fragmented

Development finance is based on a dense and structured ecosystem. Yet its functioning still has room for improvement. "We quickly identified the core issue: fragmentation, lack of communication, and lack of coordination," said Sidi Ould Tah, President of the African Development Bank Group (AfDB).

In practical terms, this fragmentation results in scattered interventions, uneven procedures, and increased complexity for both governments and investors. In this context, the priority is certainly not to add new institutional layers.

Acting in complementarity

To improve efficiency, development actors are now seeking to organize their interventions in a more complementary way. "Under the new approach, national banks operate closest to the ground, while regional banks act according to the principle of subsidiarity," says Thomas Melonio, Chief Economist and Executive Director for Innovation, Strategy, and Research at AFD.

In practice, national or regional banks would identify projects and support them in the early stages, with multilateral banks stepping in to provide financing and secure investments. The challenge is to ensure that this coordination does not remain theoretical. This is precisely the role of “country platforms,” coordination mechanisms set up across multiple countries, which bring together governments, development banks, and financial partners around shared priorities.

Above all, given the scale of needs, public financing must continue to play its leveraging role. “This is already what development banks do in practice: with limited public resources, they attract significant investment,” Thomas Melonio notes. However, this mobilization also requires reducing risks upstream to reassure investors.

Africa and Latin America: two testing grounds

Despite these efforts, the potential to mobilize private capital remains largely untapped, particularly in Africa. "Africa must be viewed through a paradox: $400 billion in investment for $4 trillion in savings,” explains Sidi Ould Tah. "This is why we need a new African financial architecture for development."

Latin America, for its part, offers a prime testing ground for more integrated finance. “Public development banks play a particularly strategic role there. They help structure projects and attract investors, with a clear objective: moving from one-off cofinancing to joint market structuring,” says Marie-Pierre Bourzai, Director of AFD’s Latin America Department.

Harmonizing practices

To mobilize more investment, another obstacle often arises: private investors struggle to navigate the landscape. Development projects vary widely, with different levels of risk, financing structures, and legal frameworks. As a result, they are difficult to compare and integrate into more conventional investment strategies.

One approach is therefore to make them more transparent and standardized. According to Sandra Kassab, Director of AFD’s Africa Department, this involves creating a truly homogeneous asset class. It is also essential to address risk. This is where financial instruments such as partial credit guarantees and portfolio guarantees come in, highlighted as solutions by Alvaro Lario, President of the International Fund for Agricultural Development (IFAD). In practical terms, these guarantees act as insurance, covering part of the losses in the event of a problem. For investors, this is a game changer: risk is reduced, and investments become far more attractive.

The solutions are therefore well known, but implementation remains the central challenge. “Financing is only a means. The goal is to bring us together to deliver results,” concludes Alvaro Lario.