“Reducing the risk of capital is key to scaling up development finance,” Adesina of the African Development Bank tells the OPEC Fund forum | African Development Bank

Global development financers who attended this year’s Organization of Petroleum Exporting Countries (OPEC) Fund Forum in Vienna, Austria, made a strong commitment to reform their investments to support green projects at scale.

The delegates, representing multilateral development banks and intergovernmental institutions, said business and political leaders must do more to encourage the deployment of private sector capital.

Muhammad Al Jasser, chairman of the Islamic Development Bank Group, called the Desert-to-Power flagship renewable energy initiative led by the African Development Bank “an amazing groundbreaking project”.

Al Jasser said that the Islamic Development Bank is fully committed to financing green projects and balancing this with support for poverty reduction.

Akinwumi Adesina, president of the African Development Bank Group, called for new ways to prepare projects and reduce project risks to mobilize private sector investment at scale for sustainable development.

“We have where the private sector is. We have US$145 trillion in assets under management[and]by 2026 it will be there…but the problem here is we need new ways of aggregation to prepare the projects , to make projects less risky and lower transaction costs for those who commit capital,” Adesina reiterated.

The head of the African Development Bank cited the Africa Investment Forum, initiated by the Bank and seven partners, as a leading continental platform that pools bankable projects to reduce fragmentation and facilitate the attraction of institutional investment.

“It [the Africa Investment Forum] has become today the most important investment platform to leverage investments in Africa, and over the past four years we have leveraged approximately US$142 billion of investment interests in energy, water and sanitation, infrastructure and transportation corridors,” said Adesina.

He added that the African Development Bank and its partners are also creating opportunities for the private sector to invest in agriculture special agro-industrial processing zonesestablished across the continent.

Adesina said: “We are bringing private capital into agriculture, giving the private sector opportunities to go into rural areas close to where the farmers are producing – they can buy food, they can process food, they can package food, they can export food and have greater competitiveness across different value chains.”

Rémy Rioux, CEO of Française de Développement, called for consensus on redefining development finance.

He said: “We need a new story. We need to build a framework to fund what no one is financing: the most vulnerable communities. This is our core mandate, and we must be able to allocate some of the precious concessional resources to mobilize, to reduce emissions, to go private.”

Rioux said he looks forward to this week’s summit for a new global finance pact to establish a roadmap to ease the debt burden of low-income countries while freeing up more resources for climate finance.

The Paris talks will include reallocating special drawing rights (SDRs) from the International Monetary Fund, Rioux said, acknowledging Adesina’s advocacy of the African Development Bank as a conduit for redeploying the SDRs in Africa.

Frannie Leautier, expert chair of the Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks, outlined the areas her committee identified to maximize the impact of their capital.

She cited these areas as including recognizing callable capital as a powerful tool for shareholder engagement; applying more financial innovations in capital deployment; improving dialogue with credit bureaus; and implement reforms to increase transparency.

Prime Minister Lotay Tshering of Bhutan paid tribute to multilateral development banks for their support, especially to vulnerable and low-income countries. He said, “You are the group of people who work beyond the opportunities to make a profit. You embrace countries beyond your own.”

Abdulhamid Alkhalifa, director general of the OPEC fund, stressed the need for development financers to reform their operations to attract other resources to close the huge financial gap.

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