AI-Summary – News For Tomorrow
Public development banks (PDBs), holding $23 trillion in assets, are crucial for reforming the global financial system and supporting infrastructure/social investments in African cities. Despite representing a small portion of the financial sector, PDBs facilitate long-term economic development.
Reforms are needed in international institutions like the IMF/World Bank to give developing nations more voice. PDBs can streamline fund flows and promote intra-African trade/investment. Improved access to affordable financing for infrastructure is vital for the AfCFTA. In cities, PDBs play roles in financing, implementation, and integrating services like the Development Bank of Southern Africa’s DLabs.
News summary provided by Gemini AI.
Johannesburg’s inner city. Cities in Africa can benefit from genuinely affordable financing. Photo: Delwyn Verasamy, M&G
Here’s a little-known fact worth considering — the just over 530 public development banks (PDBs) operating globally make up only about 5% of the financial sector yet, between them, they manage around $23 trillion in assets.
To put that in perspective, Africa’s largest multilateral bank, the African Development Bank, holds assets worth $50 billion, while the largest national bank, South Africa’s Industrial Development Corporation, controls $9 billion.
State-owned financial institutions like Nigeria’s Bank of Industry, Côte d’Ivoire’s Banque Nationale d’Investissement and South Africa’s Development Bank of Southern Africa all carry public mandates to facilitate long-term economic development goals within their borders or across regions.
Their work is fundamental and they’re major players in a global financial system desperately in need of reform. As calls grow louder for improving the structure, regulation and operation of the international financial system to support all countries equally, it’s becoming clear that public development banks will be crucial stakeholders. Their success will play an outsize role in determining the future of infrastructure and key social investments in cities across the continent.
Over the past decade, calls for global financial reform have grown impossible to ignore. The demands are clear enough. Reformers want significant changes in how international institutions like the International Monetary Fund and World Bank operate, giving developing nations, which make up a large part of these banks’ client base, a greater voice in decision-making and governance.
Here, development banks can play the important role of ensuring seamless processes that enable funds to flow between international and national spaces. Well-run and fully functional country platforms, led by public development banks at both multilateral and country levels, will be fundamental.
African countries aren’t monoliths, they’re connected not only geographically, but through history, culture, movement and trade. Facilitating intra-African trade and investment by supporting the development of an integrated financial system within the continent could be another important outcome of global finance reform.
Improved access to affordable, long-term financing for infrastructure that connects countries and cities — roads, railways, ports and digital networks — is critical for implementing the AfCFTA, a programme at the centre of Africa’s future. Aligning global finance with Africa’s integration goals can help unlock the continent’s vast internal market potential and drive shared growth.
In cities, PDBs have a direct role to play as financiers, implementers, facilitators and integrators of investments in infrastructure-based services, business-led urban development, social inclusion and learning and development projects.
In 2020, the Development Bank of Southern Africa launched Development Laboratories (DLabs), a programme creating collaborative spaces with local government, private sector and community partners to provide social, economic, health and sports facilities in low-income areas across South Africa. Operational in nine locations, the model provides a platform that helps communities access services and other opportunities.
Zeph Nhleko is the chief economist of the Development Bank of Southern Africa.
