Publish What You Fund is launching a new 2.5 year multi-stakeholder initiative to increase support for the transparency of Development Finance Institutions (DFIs). It follows a 12 month scoping exercise, during which we’ve been getting into the detail of DFI operations, making connections, learning from others and building our understanding of the opportunities and challenges for DFI transparency.
Now we are embarking on a focused, strategic programme to move things forward. Based on our initial research, and the previous work of academics, practitioners and policy-makers, we have set out a collaborative, evidence-based approach that we believe can inform and improve DFI transparency, accountability and decision-making.
What impact are our public funds having?
Increasingly, DFIs are using public funds to invest in private companies in low-and middle-income countries, with the aim of creating jobs and supporting sustainable economic growth. The number and scale of DFIs has grown in recent years, and they are becoming a significant player in the development landscape. However, DFI operations are often opaque, with little information available about the terms, performance, and development impact of their private sector investment portfolios.
Without greater transparency we do not know where our scarce public resources are going, what impact our public funds are having, or if they could be used more effectively. And equally important, without this information being made publicly available, DFIs will struggle to show the value they add towards contributing to the Sustainable Development Goals.
Our goal is to lay the foundations for more informed decision making, more accountability and better allocation of resources. We want to see greater information sharing about development impact and learning from different projects and approaches.
Why we need a collaborative approach
We have been encouraged by high-level support for more transparency. In a sentiment often repeated by his successors, Ray Washburne, former President of the Overseas Private Investment Corporation, stated that he wants the new US development finance corporation to set the gold standard for a modern and transparent DFI. Philippe Le Houérou, CEO of the International Finance Corporation, recently wrote: “I believe transparency is critical in ensuring public confidence that we are applying the highest standards in the use of blended finance. So, starting with projects mandated on or after Oct. 1, IFC will publicly disclose the estimated subsidy for each proposed project along with the justification for why it is necessary.”
We want to bring our rigour on aid transparency to work with the development finance community. We will adopt a consultative approach, working with a multi-stakeholder advisory board and working groups. From that, we will develop transparency recommendations for DFIs that are both ambitious and actionable. We’ll share these recommendations widely and work with policy makers, shareholders, DFI decision makers and civil society to garner support for greater transparency.
Bringing over ten years’ experience of aid transparency, we have a good understanding of transparency at the micro and macro level. We appreciate the complexities of DFI operations and funding mechanisms, the differing models and approaches used and the confidentiality and commercial sensitivity concerns at play. Given this, we believe that our approach is a constructive way to drive forward the transparency debate and achieve real change.