Conference on Realizing the Full Potential of NDBs

On May 28th, 2019, the Agence Française de Développement (AFD), the Institute of New Structural Economics at Peking University (INSE), and the Research Institute of China Development Bank (CDB) jointly organized the conference on “Realizing the Full Potential of National Development Banks: Supporting the Sustainable Development Goals (SDGs) and Structural Transformation” at Peking University. The conference gathered together more than eighty experts and scholars from research institutes, international organizations, embassies, and governmental agencies such as Peking University, Columbia University, Boston University, Toulouse School of Economics (TSE), AFD, CDB, the Ministry of Finance of the People's Republic of China, the World Bank, and the Organization for Economic Cooperation and Development (OECD), as well as, to name just a few, French, Italian, Australian embassies in China.

Professor Justin Yifu LIN, Dean of INSE, delivered a welcome speech. He pointed out that job creation is crucial to realizing the 17 SDGs set by the UN’s “Transforming our world: the 2030 Agenda for Sustainable Development”. A country with its economy predominantly based on agriculture can hardly be able to create high-value jobs and escape from the trap of poverty, thus facing difficulties on its way towards sustainable development. To achieve structural transformation, that is, to transit from agricultural into industrial country, infrastructure improvement is the hinge. However, the huge funding gap in infrastructure in developing countries could hardly be filled by the private sectors owing to large investment volume and long investment return cycle. Therefore, development finance institutions (DFIs), such as China Development Bank, can make the best of state support and market resources to advance infrastructure construction. Currently, DFIs face some difficulties and challenges, thus are in need of finding appropriate solutions to translate the SDGs into reality.

Mr. Rémy RIOUX, Chief Executive Officer of AFD, stated in his welcome speech that national development banks (NDBs) are playing an increasingly significant role in achieving the SDGs, and have become rule makers, advocates and facilitators in the fields of climate and low carbon finance and sustainable development. DFIs are committed to realizing the 2030 Agenda and promoting a shift in the economy from high-speed growth to high-quality growth. Data collection, research analysis and knowledge and experience sharing allow people to better understand the strengths of NDBs in driving forward sustainable development and climate finance. In 2015, countries around the world reached an unprecedented consensus on sustainable development, but by far no systematic methodology and operational framework have come into being. It is hoped that all stakeholders will send out a powerful signal to the world through jointly creating new landscapes with actions.

Dr. Yong LIU, Chief Economist of CDB and Dean of Research Institute of CDB, pointed out in his speech that China is undergoing profound changes unseen in a century and that it is just the right time for INSE, AFD and CDB’s Research Institute to hold such a conference on development finance. As a DFI in China, CDB has been actively implementing, guiding and promoting infrastructure connectivity, green and sustainable development in China and around the globe. It is hoped that through this conference, a platform to boost cooperation and exchanges will be established for stakeholders to conduct in-depth theoretical and practice research on how DFIs can better drive economic growth, enhance sustainable development, and support green finance.

Professor Stephany GRIFFITH-JONES, Editor-in-Chief of The Future of National Development Banks and Financial Market Director at Initiative for Policy Dialogue at Columbia University, delivered a keynote speech. She pointed out that it has been widely acknowledged that in the wake of the global financial crisis in 2008, private commercial financial institutions face certain limitations, and private financial capital is unable to meet the demand of large-scale and long-term investment and financing required by sustain global economic development. In the context of the SDGs, DFIs will play an increasingly important role: they can compensate for the limitations of the private sector and partner with private-owned institutions in various ways to fully leverage resources to meet diverse needs. The global economy needs a comprehensive, balanced and diversified financial system that provides medium and long term financing arrangements through continuous financial innovations beyond geographic barriers, to thereby promote economic development and public welfare.

The conference launched two important reports, “Mapping Development Finance Institutions (DFIs) Worldwide: Definitions, Rationales and Varieties”, and “The International Development Finance Club and the Sustainable Development Goals: Impact, Opportunities, and Challenges”.

The first report was accomplished by the research team from INSE led by its executive deputy dean Dr. Jiajun XU. The report begins with the recent renaissance of DFIs worldwide, elaborates on the reasons the indispensability of DFIs, proposes the definition and identification methods of DFIs, and provides a panoramic description of current DFIs worldwide on the strength of firsthand data. The report aims to fill the research and data gap in development financing worldwide. For the first time a list of more than 500 worldwide DFIs has been published also in the report.

The second report was launched by Scott MORRIS, Senior Fellow at the Center for Global Development and Director of the US Development Policy Initiative. It introduces the financing activities that the members of the International Development Finance Club (IDFC) engage with, while aligning with the SDGs. Endowed with large financial assets, IDFC is in a leading position to set the SDG agenda. Its member institutions have gathered considerable, well-matched financial assets and strategic resources to respond effectively to the investment and financing needs of the SDGs. IDFC champions an investment development strategy that is led by the state and participated by the private sector. Its members are dedicated to SDG-oriented activities, active in facilitating communication among national, bilateral and multilateral institutions, and play an important role in promoting sustainable development.  

The conference followed three panel discussions on “Aligning National Development Bank Mandate with the SDG Agenda”, “The Adapting Role of NDBs in Promoting Sustainable Economic Structural Transformation and the Role of NDBs in Fostering Green Finance”, and “The Adapting Role of NDBs in Fostering China-based Green Finance”.

The conference concluded with a Communiqué containing three statements: First, enabling DFIs to play a critical role. Both developed and developing countries alike should promote and pay close attention to development financing to meet challenges in economic, social, and environmental development; Second, conducting the in-depth DFI research. Government agencies, international organizations, financial institutions, academic think tanks, and all relative stakeholders should leverage their respective strengths and cooperate in joint research on development financing. Third, a call for setting up a network of open working groups for DFI studies. Such network of thematically-focused open working groups gathers policy makers, academia, and practitioners, in an effort to make better institutional design and fulfill their mandates through collaboration.