SUPPORTING PRIVATE INITIATIVES IN FRAGILE COUNTRIES: WHAT ROLE FOR DEVELOPMENT FINANCE INSTITUTIONS?
A “DFI PACK” ATTUNED TO LOCAL NEEDS Today, there is consensus among public development banks and DFIs on the role that entrepreneurs need to play to contribute to the development of their countries. The implications this will have for the approaches and tools of DFIs, their economic models, and the new areas of cooperation that are now necessary prompted Paul Collier to say that “Fragile states are the future of aid”.
With support from its network, the AFD Group has analyzed the conditions for implementing these programs to create jobs via a sector-based approach. Findings are emerging that will guide PROPARCO’s action in the coming months.
GOOD PUBLIC GOVERNANCE AN ESSENTIAL BASIS FOR INVESTMENT In fragile countries, the political sphere is closely involved in the economy. This means that conflicts of interest can arise among policymakers, leading to a given corporation, sector or company being favored, to the detriment of the collective interest. In addition, political control over the economy holds back entrepreneurial aspirations and the willingness to invest. Infrastructure and training are not sufficient
to support business growth, due to the lack of resources. These are well-known facts, but they still hamper market development and job creation in the formal economy. The dialogue needed between the State and sector players must benefit from support provided by development banks and DFIs.
Partnerships on a new scale: The MoU between IFC and PROPARCO These developments and this new strategy to support sectors are central to the Memorandum of Understanding (MoU) signed between the International Finance Corporation and PROPARCO in April 2019. This agreement aims to more effectively share and coordinate the operations of both institutions in fragile countries, particularly in the “G5 Sahel” countries and Democratic Republic of Congo (DRC), which have been designated as pilot countries. The areas of enhanced cooperation include information sharing, the coordination of strategies, and the identification and co-financing of development projects. This agreement has increased the effectiveness of the operations of both DFIs on the ground. It is also aimed at coordinating actions on the economic fabric, through the interactions of the two groups with public players.
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