Multi-stakeholder Consultations on Financing for Development:
“Rethinking the Role of National Development Banks in Africa”
(Johannesburg, South Africa, 22-23 November 2006)
Alex Trepelkov
Deputy Director, Financing for Development Office
Department of Economic and Social Affairs
United Nations
Financing for Development Office
Mandate
Mandate
Expert Group Meeting
Multi-stakeholder Consultations
Output and Follow-up
Financing for Development Office
P
R
O
J
E
C
T
Mandate (1/2)
In resolution its 58/230 of 23 December 2003, entitled “Follow-up to and
implementation of the outcome of the International Conference on Financing for
Development”, the UN General Assembly requested the Financing for
Development Office to:
“organize workshops and multi-stakeholder consultations, including experts
from the official and private sectors, as well as academia and civil society, to
examine issues related to the mobilization of resources for financing
development and poverty eradication”
and
“convene activities involving various stakeholders … to promote best practices
and exchange information on the implementation of the commitments made and
agreements reached at the International Conference on Financing for
Development”.
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Mandate (2/2)
In its resolution 60/188 of 22 December 2005, the General Assembly
“recognizes the work of the Financing for Development Office of the Secretariat
in organizing, within its mandate, workshops, multi-stakeholder consultations,
panel discussions and other activities aimed at better enabling member
countries to implement their commitments as agreed in the Monterrey
Consensus, and requests the Office, in collaboration with experts from the
public and private sectors, academia and civil society, to continue its work in
this area”.
Financing for Development Office
Mandate
Expert Group
Meeting
Expert
Group
Meeting
Consultations
Output and Follow-up
Financing for Development Office
Expert Group Meeting
Goal: How to enhance the role of National Development Banks (NDBs) in
promoting economic and social development ?
First step: Expert Group Meeting on “Rethinking the Role of National
Development Banks” (New York, 1-2 December 2005):
 Launched a series of “multi-stakeholder consultations”, organized
by the Financing for Development Office of UN-DESA in cooperation
with NDBs, International Financial Institutions (IFIs), Regional
Development Banks (RDBs), UN regional commissions and other
interested parties;
 Agreed on a draft model agenda to serve as a framework for the
proposed series of follow-up regional meetings;
 Discussed a tentative calendar of regional consultations in various
parts of the world, with a final conference to be held at the Center for
International Development at Harvard University’s Kennedy School of
Government.
Outcome: This project is expected to produce a publication on the role of
NDBs as a renewed tool of development finance.
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Draft Model Agenda
I. THE EVOLVING ROLE OF NDBs
1.
2.
3.
4.
Setting the Stage: Evolution of Development Banking
Addressing Market Failures and Development Gaps
Relationship with Other Development Institutions and the Private Sector
Defining the Rationale and Missions of NDBs
II. FILLING THE GAPS: FUNCTIONS AND INSTRUMENTS OF NDBs
1.
2.
3.
4.
Providing Effective Financing Mechanisms
Assisting Financial Sector Development
Supporting the Local Business Sector
Facilitating Regional Cooperation and Integration
III. ENHANCING THE EFFECTIVENESS OF NDBs
1.
2.
3.
4.
Rating, Regulation and Supervision
Governance, Management and Skills
Measuring and Monitoring Results
Sustainability and Funding
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Background document (1/3)
Background Document on “Rethinking the Role of National
Development Banks” aims to:
1. Provide a possible framework for analyses at follow-up regional
meetings, with a view to deriving conclusions and recommendations.
2. Offer a number of examples and specific cases – from best practices
to failures – that may serve as points of reference in the envisaged
discussions and further analyses.
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Background document (2/3)
Overview of National Development Banking
An NDB can be defined as a “Financial institution primarily concerned with
offering long-term capital finance to projects generating positive
externalities and hence underfinanced by private creditors”.
NDBs often design and implement their objectives through:
(i) Appraising economic and social impacts of projects that seek financing;
(ii) Accompanying investors over the long run through long-term loans;
(iii) Assisting sectors that are key to growth through technical assistance;
(iv) Attracting investors by playing a role of catalyst for large operations; and
(v) Alleviating the negative impact of financial crises through counter-cyclical
financing by offering loans even during downturns.
Lines of activity evolved significantly since the 1990s, as a result of deeper
global integration and a reshuffle of national development banking strategies.
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A Pyramid of National Development Banking
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The Five A’s of National Development Banking
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Background document (3/3)
The Evolving Role of National Development Banks
A.
1.
2.
3.
Filling Gaps in Financial Sector Development
Providing Long-term Financing
Providing Other Financial Products for Development
Building Inclusive Financial Sectors
B.
1.
2.
3.
Improving the Business Climate
Promoting and Supporting SME development
Reducing Volatility
Acting as a Catalyst
C.
1.
2.
3.
Capacity-Building of NDBs
Improving Prudential Regulation and Supervision
Enhancing Governance and Management
Measuring and Monitoring Results
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Process
December 2005
1
Spring 2006
Fall 2007
2
3
Consultations
Consultations
Group Meeting
2008
• Focus on Latin America (Lima, Peru)
• Focus on Africa (Paris, France & Johannesburg, South Africa)
• Focus on the Middle East (Cairo, Egypt)
• Focus on Asia and the Pacific (India)
• Final meeting (Cambridge, USA)
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Output and Follow-up
Mandate
Expert Group Meeting
Consultations
Consultations
Output and Follow-up
Financing for Development Office
First Regional Consultation: Highlights
First Regional Consultation on
“Challenges of National Development Banks in Latin America”
(Lima, Peru, 12-13 June 2006)
•
Organized by the Latin American Association of Development Financing
Institutions (ALIDE) and Corporación Financiera de Desarrollo (COFIDE).
•
Co-chaired by José Antonio Ocampo, Under-Secretary-General for
Economic and Social Affairs, United Nations; Rommel Acevedo, SecretaryGeneral of ALIDE; and Daniel Schydlowsky, President of COFIDE.
•
Attended by some 80 representatives from NDBs in Latin America, Asia,
and Africa, international organizations (ECLAC, CAF, CAN, IMF, IADB,
GTZ), academics and civil society.
Financing for Development Office
First Regional Consultation: Conclusions
1.
There is no single development banking model. Each country adopts
its own model depending on its own situation and needs.
2.
Regardless of their ownership (public, private or mixed), public service
is central to NDBs’ mission and, as such, should be supported and
enhanced.
3.
In the area of development finance, NDBs should provide leadership,
but should also be innovative and pioneering in playing a
complementary role.
4.
Subsidies can be granted, if necessary, for undertakings that require
public action, but they should be duly budgeted and clearly
transparent.
Financing for Development Office
First Regional Consultation: Conclusions (continued)
5.
NDBs should, whenever possible, develop cooperation with multilateral
development banks, in order to diversify and reduce risks and facilitate
resource mobilization. It can also increase effectiveness of financial
intermediation through long-term instruments, guarantee funds,
securitization and venture capital.
6.
The problem of development finance is not that of cost or lack of
resources, but rather of access to finance, especially for SMEs.
7.
Activities of NDBs in financial markets can have positive countercyclical effects.
8.
NDBs should act as public policy instruments that have a specific
function, which should not be distorted to serve political interests.
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First Regional Consultation: Action-oriented Proposals
Three action-oriented proposals have emerged:
-
Create a “think tank” to pursue technical analysis
-
Enhance exchange of information on NDBs between the United Nations
system and regional associations of DFIs
-
Disseminate information on best practices and lessons learnt
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Second Regional Consultation: Highlights
Second Regional Consultation on
“The Role of National and Regional Development Banks in Africa”
(Paris, France, 27-28 June 2006)
•
Organized by Agence Française de Développement (AFD) in collaboration
with KfW (Germany) and the European Investment Bank (EIB).
•
Co-chaired by Jean-Michel Severino, CEO, AFD; Jomo Kwame Sundaram,
Assistant Secretary-General for Economic Development, United Nations;
Bruno Wenn, First Vice-President for Sub-Saharian Africa, KfW; and Daniel
Ottolenghi, Chief Economist for Development, EIB.
•
Attended by some 100 representatives from NDBs in Africa and Europe,
international organizations (World Bank), bilateral aid agencies, academics
and civil society.
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Second Regional Consultation: Discussion Points
The meeting addressed:
 Evolution of development banking
 Case studies: how to address market
failures?
 Roles and instruments
 Tools, governance and monitoring of results
 Role of ODA and PPPs
Major discussion points:
 Reasons for decline in development banking
 Role of the State
 Utility and use of subventions
 Roles of development and commercial banks
 Banking legislation
Financing for Development Office
Second Regional Consultation: Conclusions
1. The role of DFIs deserves special attention and should be defined based
on holistic and functional rather than institutional approach (even if
institutions matter).
2. DFIs’ raison-d’être is to bring finance to specific clients or projects that
lack access to credit, particularly in the medium and long term. Thus, DFIs
should fill development gaps and both market and State failures (e.g.,
in infrastructure).
3. DFIs provide not only financial instruments (grants, loans, credits,
guarantees, etc.) but also non-financial services (policy advice, technical
assistance and capacity-building).
Financing for Development Office
Second Regional Consultation: Conclusions (continued)
4. Resources are needed to build financial instruments. There is no lack
of liquidity in Africa. When DFIs are banks, they have access to resources
through clients and government deposits, but banking legislation imposes
restrictions on the use of funds. When DFIs are not banks, it is harder to
mobilize resources, but DFIs have greater flexibility how to use them.
5. DFIs often have a complex structure of knowledge-based organization
capable to perform multiple functions (finance, advice, partnership) and to
play the role of catalyst/facilitator. How to coordinate commercial and
development activities (single organization or separate entities)? Different
models exist and seem viable.
6. DFIs must guarantee their own durability and can be profitable!
7. In general, DFIs are state-owned institutions. In order to avoid
government interference, DFIs must have independent governance
and high standards of professionalism.
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Second Regional Consultation: Action-oriented Proposals
Five action-oriented proposals have emerged:
-
Make an inventory of DFIs’ success stories and lessons learnt
-
Organize sub-regional consultations
-
Promote the exchange of information on standards and best practices
among DFIs
-
Liaise with other fora on corporate governance
-
Set up a working group on legislation for DFIs
Financing for Development Office
Mandate
Expert Group Meeting
Consultations
Output and Follow-up
Outcome
and Follow-up
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Outcome and Follow-up
Cons
ultati
ons
in
Latin
Ame
rica,
Euro
pe,
Afric
a,
West
ern
Asia
and
USA
2007Regio
nal
repor
ts,
Case
studi
es
and
Publi
catio
n
Prese
ntatio
n to
UN
Gener
al
Asse
mbly:
HLD
on
FFD
and
Follo
w-up
Build on the outcome of this meeting
for future consultations and final publication
Financing for Development Office
Thank you!
More information: www.un.org/esa/ffd
Financing for Development Office