Two weeks ago, the first ever international summit of Public Development Banks (PDB) went down in Paris, unfolding over four days. Named the ‘Finance in Common Summit and under the patronage of the French Government and the aegis of AFD (Agence Française de Développement) and the International Development Finance Club (IDFC), it gathered virtually the world’s 450 public development banks, representing 10 per cent of global investment.
The summit gave rise to a series of major announcements. They all point towards a global financial system dedicated to fulfillment of the Sustainable Development Goals and alignment with the 2015 Paris Agreement: the first global agreement on climate and global warming.
The most impressive was a joint declaration signed by all public development banks, where they affirmed their determination to collectively shift strategies, investment patterns, activities and operating modalities to contribute to the achievement of the SDGs and objectives of the Paris Agreement, while responding to the Covid crisis.
Additionally, and for greater impact, they committed to join forces and form a global coalition of all PDBs around the world. The International Development Finance Club (IDFC), representing the 26 largest regional and national development banks in the world, and for which climate is already a priority, announced new measures, such as tools allowing PDBs to further align policies with the Paris Agreement and add a social dimension to their response to the Covid-19 crisis, while recognising the interplay between climate change and biodiversity. The IDFC also announced several flagship decisions, such as creation of the IDFC Climate Fund, announced at COP25, and a strategic partnership with the Green Climate Fund (GCF).
But that’s not all. Public development banks, and in particular Development finance institutions (DFIs) which provide technical and financial assistance to the private sector in developing countries, further committed to backing inclusive financial solutions for micro, small and medium enterprises.
On gender equality, ResponsAbility Investments committed to applying a gender perspective to its investments through its climate fund. The IDFC also announced a massive investment in the conservation, sustainable use and restoration of biodiversity. These commitments, in continuity with the 2015 Paris agreement, and despite the Covid-19 pandemic, are good and helpful news for the way we build tomorrow.
But coming closer to Nairobi, what does it mean for us in Kenya and East Africa? During the summit, the Trade and Development Bank in Eastern and Southern Africa (TDB) and the Agence Française de Développement (AFD), both members of IDFC, and both operating in Kenya, committed to gather their effort for a better resilience of the health systems in Africa. They announced their next partnership in financing together infrastructure and equipment projects aimed at strengthening the health system of TDB’s countries of intervention through a dedicated funding to a tune of €100M.
The health and economic crisis caused by Covid-19 has once again highlighted need to improve health systems, particularly by sustainably strengthening health infrastructures, on a continent where the number of hospital beds per population still needs to be strengthened. One of the main weaknesses in this context is the lack of long-term funding.
In Kenya, we could also take the example of KenGen, whose CEO, Mrs Rebecca Miano also participated in the summit, on the topic: “PDBs can and must drive delivery of the Paris Agreement by “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. Kengen and AFD have been long term partners. Historically, AFD contributed to development of the geothermal capacities of Kenya by co-financing with other development institutions Kengen’s Olkaria I, II & IV power plants. Today, AFD and Kengen are working together to adapt the existing hydropower capacities.
As far as private sector is concerned, a group of 20 Development Finance Institutions (DFIs) including the 15 European DFIs (EDFIs) announced they would mobilise 4 billion dollars for African enterprises (SMEs) by the end of 2021 to support inclusive economic recovery. This can be implemented, among others, by Proparco, AFD’s subsidiary dedicated to private sector financing.
-The writer is the AFD Kenya Director