By Rob Mosbacher
Right now, enormous sums are being committed by western nations to shore up the health care systems and economies of many low and middle-income countries. The money is taking myriad forms including debt relief, grants, loans and concessional finance. It is absolutely necessary and the right thing to do. However, at times like these, there’s going to be tension between getting the money to where it’s needed as quickly as possible and doing it in a way that is consistent with the principles of development effectiveness. I am particularly interested in investments being made by Development Finance Institutions (DFIs). As we wrapped up the second Project Advisory Board meeting of the DFI Transparency Initiative yesterday, I couldn’t help but think about the tension between speed and effectiveness.
DFIs in the time of COVID
Today, rightly or wrongly, a large part of DFI bandwidth is going to be occupied by shoring up the operations and balance sheets of current investees. But beyond their existing portfolios, and as CGD’s Nancy Lee highlights, there is likely to be greater demand for DFI financing than ever before – and this will come from both low and middle income countries. Put simply, DFI’s are going to be extremely busy – but that’s the kind of responsibility that comes with having multi-billion dollar balance sheets at a time when the world needs capital. In such an environment, it makes sense to review investment approval processes, including ways to expedite financing and reduce bureaucracy. But this should not come at the expense of transparency in how investment decisions are made, where the funds go, and what the impact is. Stakeholders – including recipient governments, their citizens, and taxpayers in donor countries – need to know that these funds were invested in a way that maximizes development impact.
And as difficult as it is to look ahead right now, we have to think about the lessons we’ll be able to draw on after COVID has been defeated or contained, and how difficult it will be to learn if we haven’t made an effort to ensure maximum transparency in our efforts. If we want to encourage the private sector to come with us and co-invest in pandemic response funds, or we want governments to make capital available in future, we’re going to have to illustrate the role that these investments made in responding to, alleviating, and then resolving the impact of the COVID-19 pandemic.
The work of the DFI Transparency Initiative is really starting to take off. In our first meeting we confirmed the membership of the Project Advisory Board and defined the core areas where we believed the Initiative should best focus its efforts.
Over the past three months, the project research team has sought to develop a greater understanding of the current status of basic project information disclosure and transparency by a group of leading bilateral and multilateral DFIs. They have documented what types of data DFIs are, and are not, making available to the public. Through a landscape analysis of the disclosure of basic project information and a series of interviews with DFIs, NGOs, think tanks, and the private sector, the project has developed the beginnings of an approach to how, what, and when this information should be disclosed. The first Expert Working Group (on basic project information) met last week to discuss the research. There were a range of stakeholders and the issues discussed included commercial confidentiality as well as identifying a number of opportunities for increased disclosure of information. The DFI Transparency Initiative team has been pleased by the engagement of the DFIs and other stakeholders so far. We look forward to this continuing and will share further updates in due course.
Note: Rob Mosbacher is the Chair of the Project Advisory Board for Publish What You Fund’s DFI Transparency Initiative and is the former Chairman and CEO of OPIC.