The Evolving Landscape of Development Finance and Impact Investing in a Poly-Crisis World 

In the first panel discussion of the EDFI MC Corporate Day: At the crossroads, experts from various development finance institutions (DFIs) and impact investing organizations gathered to discuss the changing role of development finance amidst global challenges. The panel, moderated by David Kuijper of EDFI association, explored how the current global economic turmoil affects impact investing and development finance, and how these sectors can contribute to reducing uncertainty and regaining global stability. 

The Return to Roots 

Bridging Public and Private Sectors 

Matthieu Bousquet from the European Commission highlighted the EU’s efforts in creating predictability and support through strategic partnerships. He noted, “We are working also directly with private sector to understand what the key concerns are for the private sector to invest.” 

Roland Siller, CEO of DEG, emphasized the readiness of DFIs to act as a bridge between public policy goals and private finance. However, he pointed out some challenges: “The public sector administration… is not used to private sector. What are the demands of private sector? It’s speed, it’s flexibility.” Siller advocated for a balance, stating, “We need to live with more risk and less control because control is so costly.” 

Impact Investing in a Fractured World 

Charles-Antoine Janssen of KOIS-invest discussed how the current geopolitical situation has affected impact investing. Janssen emphasized the potential unifying role of Europe, suggesting that it could “Bring back through finance, unity in a fractured world.” 

“I think that we all share in this room, which is the fact that what unites us is our conviction in human rights, our conviction in environmental responsibility. The fact that we’ve brought that in reality through the green deal through Corporate Sustainability Reporting Directive (CSRD), you’re now bringing it through a fundamental commitment to guarantees which are really so needed to derisk and convince private investors to come in, and that can potentially be sort of the light unifying that Europe is there for a greater cause than just one political group – it’s to serve humanity as it has been doing for the last 200 years. It’s to serve a form of capitalism that’s respectful of the environment and hence we could potentially thanks to that rebring through finance, unity in a fractured world.”

Global Investment Trends 

Nan Li Collins from UNCTAD shared concerning trends in global investments: “Globally FDI is dropping 2%. But if we take out the conduit economies in Europe, there will be a 10% drop.” She highlighted significant declines in sustainable development sectors, emphasizing the need for “DFI long term patient capital privacy sector to join hands to address” these challenges. 

Policy Changes and New Initiatives 

Fernando Jiménez-Ontiveros Diego from AECID discussed Spain’s new law on international cooperation, which now recognizes impact investment as an important agent for development. He explained, “We know that the ODA as a stock around two hundred billion a year… compared to the up to 6 trillion dollar need.” To address this gap, Spain has introduced new initiatives, including a fund called FEDES, aimed at reducing red tape and leveraging private investments. 

Conclusion

The panel highlighted the complex challenges facing development finance and impact investing in a world grappling with multiple crises. While the landscape is changing, there’s a clear consensus on the need for greater collaboration between public and private sectors, innovative financing mechanisms, and a renewed focus on the original mission of development finance institutions. As the world navigates through these uncertain times, the role of DFIs and impact investors in fostering global stability and sustainable development becomes increasingly crucial.