Business Environment Reform (BER) has long been viewed as a critical tool and foundational enabler, removing the barriers to private capital mobilisation (PCM), growth and investment. This report outlines how targeting BER towards the most effective and expedient mobilisation outcomes is of critical importance to global sustainable development efforts.

The development finance model’s predominant recourse to hard currency lending means it both heals and harms. This Short Read, prefaced by Ricardo Hausmann, proposes that a journey of introspection is necessary to understand that making a financial product available is never neutral. It explores how vulnerable borrowers are too often faced with Hobson’s choice, and how the behaviour of key financial actors is shaped.

Local public capital markets in developing economies can make a key mobilisation-based contribution to solving the local currency issue. Perhaps more crucially, they can provide populations with the fundamental ability to save and insure themselves, securing the financial stability that citizens of developed economies take for granted. Is the development finance system ready to channel resources through local markets rather than around them?

Banks play a crucial role in the development of their domestic financial systems, and are therefore central to the local currency question. This Short Read is the first episode of a series aimed at understanding the business models of commercial banks in Kenya and Nigeria and how they interact with and are influenced by development finance.

Proposing an additional “top-down” approach that leverages existing instruments utilised by institutional investors and exploring their potential to close the funding gap for sustainable development. By introducing securities aligned with sustainable development objectives into the mainstream indices that ETFs and other passive funds are benchmarked against, capital mobilisation can be achieved without resorting to complex structures unfamiliar to most investors.

This study reveals that private capital mobilisation for SMEs by DFIs is not happening in the way that it is usually accounted for and measured. Low mobilisation levels are reported at the point of investment but substantial private capital is being mobilised downstream. The report introduces a new concept: “secondary mobilisation”, and offers a practical roadmap by which to recognise, track, and scale this phenomenon.

Scaling local currency financing solutions in EMDEs requires addressing critical FX risks that limit the mobilisation of resources towards sustainable development outcomes. Challenges include structural constraints in MDB and DFI business models, underdeveloped local financial markets, and a lack of scalable instruments to engage institutional investors. This paper proposes solutions for expanding local currency financing flows and deepening domestic capital markets.

The development finance system of institutions holds immense value. Part of this value lies in the data yielded by their unique experience of lending and investing across developing economies. Sharing this data could accelerate our efforts towards sustainable development by enabling creativity, lowering the cost of capital for key stakeholders and harnessing competitive forces. Transparency has its costs, but these pale in comparison to the costs of prolonged opacity.

Risk transfer and securitisation have at long last been admitted to the development finance conversation. Perhaps owing in part to its contribution to the global financial crisis, any mention of securitisation in development finance circles is typically met with a varying mix of excitement and concern. It may therefore prove useful to demystify a comparatively straightforward mechanism and to assess the potential of its use to accelerate the financing of sustainable development.

This study investigates and compares the funding models of three of the 17 main bilateral DFIs. Its objective is to encourage conversation around their respective merits and demerits, to help stakeholders make informed decisions regarding the DFI’s balance sheet options and the use of debt capital markets-based leverage. This paper has been prepared as an input to the discussion on mobilisation in the OECD Development Assistance Committee CoP-PF4SD.