MOBILIZATION OF PRIVATE FINANCE by and Multilateral Development Development Finance Banks Institutions 2018 REPORT PUBLISHED AUGUST 2019 BIO Belgian Investment Company for Developing Countries Landor Associates Via Tortona 37 cdp Milan I-20144 Italy Tel. +39 02 764517.1 simest - RGB Company - Cliente CDP Group Date - Data 25.11.16 Artwork - Esecutivo 01_simest_RGB.ai Country - Paese ITALIA Implementation - Esecutivista KN So ware Adobe Illustrator CC Recommended colours - Colori raccomandati Note Text R 213 R0 - - G0 G 32 B 50 B 91 - - - - Il presente documento è un esecutivo. La stampa laser forniti insieme al presente documento in base Approval signature - Firma per approvazione fornisce un'indicazione del posizionamento dei colori, all'art. L. 22-4 del codice della proprietà intellettuale. ma in nessun caso si deve fare riferimento per la veri ca Sul CD-Rom allegato troverete anche una versione dei colori di stampa. I caratteri tipogra ci non vengono del documento in outline. CONTENTS Acronyms and Abbreviations   2 EXECUTIVE SUMMARY   4 REPORTING MOBILIZATION FOR 2018   8 What is Reported   12 About the Data   13 ONGOING DEVELOPMENTS IN THE METHODOLOGY AND ROLE OF SHAREHOLDERS   16 OVERVIEW OF MDB RESULTS   20 Long-Term Finance   22 Short-Term Finance   23 Infrastructure Mobilization   24 TREND ANALYSIS AND REVIEW OF RESULTS   26 APPENDIX: DISAGGREGATED DATA   30 All Countries of Operation   32 By Institution   33 By Income Classification   36 By Region   44 Endnotes   49 This report was prepared by a group of multilateral development banks (MDBs), collectively known as the "MDB Task Force on Mobilization," composed of the African Development Bank (AfDB), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Islamic Corporation for the Development of the Private Sector (ICD), the Inter-American Development Bank (IDB) and IDB Invest, the International Finance Corporation (IFC), the Islamic Development Bank (IsDB), the Multilateral Investment Guarantee Agency (MIGA), the New Development Bank (NDB) and the World Bank (WB). The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the official views of the MDBs’ Boards of Executive Directors, or the governments they represent. MOBILIZATION OF PRIVATE FINANCE 2018  1 ACRONYMS AND ABBREVIATIONS ADB Asian Development Bank AfDB African Development Bank AIIB Asian Infrastructure Investment Bank CAGR Compound Annual Growth Rate DEG Deutsche Investitions- und Entwicklungsgesellschaft DFIs Development Finance Institutions EBRD European Bank for Reconstruction and Development EDFI European Development Finance Institutions EIB European Investment Bank FDI Foreign Direct Investment (D & I capital) FINNFUND Finnish Fund for Industrial Cooperation Ltd FMO Netherlands Development Finance Company HIC High-income country ICD Islamic Corporation for the Development of the Private Sector IDB Inter-American Development Bank IDBG Inter-American Development Bank Group IFC International Finance Corporation IFI International Financial Institution IFU Investeringsfonden for Udviklingslande IMF International Monetary Fund IsDB Islamic Development Bank LDC Least developed country LIC Low-income country MDB Multilateral Development Bank MIC Middle-income country MIGA Multilateral Investment Guarantee Agency Norfund Norwegian Investment Fund for Developing Countries OECD Organization for Economic Cooperation and Development PCf Private Co-financing PDM Private Direct Mobilization PIM Private Indirect Mobilization SBI-BMI Belgian Corporation for International Investment SDGs Sustainable Development Goals SIFEM Swiss Investment Fund for Emerging Markets SIMEST Società Italiana per le Imprese all’Estero SOFID Sociedade para o Financiamento do Desenvolvimento TA Technical Assistance TPM Total Private Mobilization WB World Bank WBG World Bank Group 2  MOBILIZATION OF PRIVATE FINANCE 2018 MOBILIZATION OF PRIVATE FINANCE 2018  3 EXECUTIVE SUMMARY EXECUTIVE SUMMARY THE AMBITIOUS AGENDA OUTLINED AT THE ADDIS ABABA Conference in 2015 and reinforced by subsequent fora recognized the importance of private investment to meeting the financing needs of the Sustainable Development Goals (SDGs). Multilateral development banks and development finance institutions (MDBs and DFIs) play a critical role in helping mobilize this investment through their operations in developing countries. Since 2016, MDBs and DFIs have reported on their mobilization annually in this joint mobilization report. This year’s report contains results that support the recent United Nations Inter-Agency Task Force findings on Financing for Development that, while “there is progress” on increasing financing for development, it is not happening “at the required speed.” Although there has been significant growth in MDB/DFI mobilization of private finance in some areas, in total the report reflects the tough work that remains for MDBs and DFIs and the challenges to be faced in moving development finance from billions to trillions of dollars. Mobilization of private investments is particularly important for financing Mobilization ↑17% of development in both middle- and low-income countries. In 2018, MDBs and DFIs mobilized $69.4 billion from operations in middle- and low-income countries, a 17% increase from 2017. Of this amount $20.1 billion was private direct mobilization (which is a key priority for in middle and many MDBs), an increase of 8% over 2017. low-income countries $5.5B MDBs and DFIs mobilized $5.5 billion in low-income countries versus $5.3 billion in 2017. The reporting also measures mobilization in all least developed countries (LDCs), where total private mobilization was mobilized in LIC $6.3 billion. 6  MOBILIZATION OF PRIVATE FINANCE 2018 The report on mobilization for 2018 has improved in coverage and quality 27 compared with previous years. For the first time, the joint report covers all task force members, with 27 institutions reporting, including coverage for the European DFIs Proparco (France), COFIDES (Spain), and Swedfund (Sweden). Furthermore, more members of the group are using the complete institutions reporting joint methodology, reporting at commitment, and including more products for comprehensive coverage. ↔ Because the report for 2018 is the third joint report on mobilization from MDBs and DFIs, it has been possible to make some preliminary observations on trends, while the analytical foundation will be even stronger with longer time-series of data in the future. The overall Volume of mobilization observation for the three-year period points to a stable pattern in the stable overall volume of mobilization of private investments. 37. Notably, the 2018 results were achieved FDI inflows (US$ billions) World total from a lower level of MDB own account 2,000 Developing countries Developed countries Tota investment than last year and in a more 1,500 Dev Dev challenging global economic environment. 1,000 500 0 2015 2016 2017 2018 Source: UNCTAD MOBILIZATION OF PRIVATE FINANCE 2018  7 1 REPORTING MOBILIZATION FOR 2018 REPORTING MOBILIZATION FOR 2018 IN 2015, THE GLOBAL COMMUNITY ADOPTED THE 2030 Sustainable Development Agenda and the sustainable development goals (SDGs) that underpin it, and countries made commitments at the 21st Con- ference of the Parties to the United Nations (UN) Framework Convention on Climate Change. In July of the same year, the Third International Conference on Financing for Development in Addis Ababa recognized that the finan- cial resources needed to achieve the SDGs far exceeded current financial flows. Those mandates have created a critical role for mul- and new sources of commercial financing for development, tilateral development banks (MDBs) and other development such as institutional or impact investors, to structure and finance institutions (DFIs) in helping attract or “mobilize” deliver private investment to directly leverage MDB resources; private investment to development projects through risk mit- and (iv) developing new financial products to help unlock igation products, advisory services, and the demonstration additional flows. This mobilization report documents the sum effects of their own investments. In adopting the Hamburg of the private investment mobilized through those channels. Principles in 2016, the G20 nations welcomed the role of Research shows the impact that MDBs can have on the MDBs in mobilizing and catalyzing private capital and 1 2 3 financial flows from mobilization. A recent economic endorsed a target of increasing mobilization by 25% to 35% analysis by task force member IDB Group showed that by 2020. The UN recently called for "action…at all levels" MDBs have generated positive and significant direct and to help reach the SDGs, since "it is clear the world will not indirect mobilization.4 MDB mobilization can increase the achieve" them without it. total amount of available private financing in a country and In response, MDBs have taken steps to mobilize more improve the terms for debt financing and available sources private investment. These institutions catalyze and mobilize of financing. The results are economically significant and long lasting. The UN has noted in the Inter-agency Task Force (IATF) on Financing for Development’s Financing for Sustainable Low-income countries Development Report 2019, “there is progress to report on saw their first increase financing … since the adoption of the Addis Agenda in 2015.”5 Private investment mobilized by MDB operations for meeting in private mobilization the SDGs grew in 2018 in middle- and low-income countries, since reporting began, which are the focus of development. Low-income countries also saw their first increase in private mobilization since up 4% from 2017. reporting began, up 4% from 2017. Indeed, this annual mobi- lization report is itself a mark of progress. This document reports on amounts mobilized, directly and indirectly, from private investment through channels related to their invest- private investors alongside MDB and DFI investments across ment operations, including by (i) helping client governments the life of an operation. and the private sector evaluate and structure higher-quality The reporting methodology, adopted in 2016,6 makes investment projects; (ii) helping mitigate real and perceived it possible to measure private investment mobilized over risks associated with investments that have a positive devel- time on a consistent basis using common definitions and opment impact; (iii) actively engage with traditional investors methodologies. It also enables MDBs to report more fully on 10  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE 1.1 Participation Participating Members African Development Bank (AfDB) The International Finance Corporation (IFC) The Asian Development Bank (ADB) The Islamic Corporation for the Development of the Private Sector (ICD) The Asian Infrastructure Investment Bank (AIIB) The Islamic Development Bank (IsDB) Belgian Corporation for International Investment (SBI-BMI) The Multilateral Investment Guarantee Agency (MIGA) Belgian Investment Company for Developing Countries (BIO) Netherlands Development Finance Company (FMO) CDC Group PLC Norwegian Investment Fund for Developing Countries (Norfund) COFIDES Oesterreichische Entwicklungsbank AG (OeEB) Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) Proparco The European Bank for Reconstruction and Sociedade para o Financiamento do Development (EBRD) Desenvolvimento (SOFID) The European Investment Bank (EIB) Società Italiana per le Imprese all’Estero (SIMEST) Finnish Fund for Industrial Cooperation Ltd Swedfund (FINNFUND) Swiss Investment Fund for Emerging Markets Investeringsfonden for Udviklingslande (IFU) (SIFEM) The Inter-American Development Bank (IDB) and The World Bank (WB) Inter-American Investment Corporation (IDB Invest) MOBILIZATION OF PRIVATE FINANCE 2018  11 REPORTING MOBILIZATION FOR 2018 contributions to a range of development priorities, including countries decreased by 19%, while to developing countries climate change and infrastructure development. This pro- 7 it increased only 3%.10 So, taken in the context of invest- cess will contribute to providing an analytical foundation ment growth generally, MDBs are holding their own. But for the many high-level discussions taking place in 2019 2030 is only growing closer, and MDBs recognize they on financing for development; it also provides a common need to continue to push for new products, partnerships, platform and methodology around which MDBs can con- and other innovative tools to accelerate mobilization and vene to share experiences, lessons learned and to identify progress toward meeting the Addis agenda. opportunities to improve mobilization performance. The IATF report also notes that although progress WHAT IS REPORTED This report contains results for private investment mobilized by financial products and investments, as well as results of direct transaction advisory services, for 2018.11 The total MDBs continue to mobilization is split into private direct mobilization and private indirect mobilization per the harmonized definitions. make advances in For financial products, the report also distinguishes the completeness and between long-term (tenors of one year or more) and short- term finance, which is typically offered through revolving thoroughness of their facilities such as trade finance and working capital facilities. data collection practices, Both types of finance are important to support economic growth, with long-term finance essential for financing fixed with many now having capital investment in infrastructure and other sectors and measured mobilization short-term finance important for supporting the expansion of trade and value chains. for three or more years. The report provides a disaggregation of the long term finance results by income level.12 This includes a distinction between “low-income countries” (LIC)—with a GNI (gross has been made, “these changes are not happening at the national income) per capita below a defined threshold—and required scale, nor with the necessary speed.”8 Total private “low-income and least-developed countries” (LDCs) which investment mobilized for all income groups has decreased are low- and middle-income countries confronting severe over the past year and since 2016 by 2%, including in specif- structural impediments to sustainable development.13 The ic areas of need such as infrastructure and education. Even data for long term finance is also disaggregated by region and in middle-income countries and low-income countries (MIC by infrastructure and other sectors. The 2018 report focuses and LIC), which increased their total private mobilization on mobilization for the low- and middle-income countries, levels over the past year, the compound annual growth which is the focus of MDB development operations. All income rate of total private investment mobilized since 2016 is group information is contained in the appendix.14 a relatively modest 6%. This is indeed not the “required 9 For 2018, the group of European Development Finance scale” to move development finance from billions to trillions Institutions (EDFI), which adopted the methodology in 2017, of dollars. Thus, while there is progress, there is a need is reporting for all 15 members; see table 1.1 for the com- to commit to do more to achieve the goals and impact plete list. The MDB Task Force welcomes the contribution of required by the SDGs. these additional DFIs to this joint report, Proparco (France), Note that MDBs are operating in a challenging invest- COFIDES (Spain), and Swedfund (Sweden). In addition, FMO ment environment for private funds. UNCTAD reported and DEG are reporting private indirect mobilization for the that total foreign direct investment (FDI) in 2018 to all first time in 2018. 12  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE 1.2 Definitions Private Co-Financing/Mobilization Private Direct Mobilization The investment made by a private entity, which is Financing from a private entity on commercial terms defined as a legal entity that is due to the active and direct involvement of an MDB leading to commitment. Evidence of active and • Carrying out or established for business purposes direct involvement includes mandate letters, fees and linked to financial commitment, or other validated or • Financially and managerially autonomous from auditable evidence of an MDB’s active and direct role national or local government. leading to commitment of other private financiers. PDM does not include sponsor financing. Some public entities that are organized with financial and managerial autonomy are counted as private entities. Other examples include registered Private Indirect Mobilization commercial banks, insurance companies, sovereign wealth funds, and other institutional investors Financing from private entities provided in investing primarily on a commercial basis. connection with a specific activity for which an MDB is providing financing, where no MDB is playing an active or direct role that leads to the commitment of the private entity’s finance. PIM includes sponsor financing, if the sponsor qualifies as a private entity. Private Direct Mobilization + Private Indirect Mobilization = Private Co-Financing/Mobilization ABOUT THE DATA projects to enable appropriate attribution and avoid double This report uses two primary indicators: private direct mobi- counting, but current limitations on data systems mean lization (PDM) and private indirect mobilization (PIM). PDM that some double counting may remain in this year’s data. involves a transactional relationship between the MDB For 2018, MDB and DFIs have identified jointly mobilized and the client of an MDB-supported project or activity, projects to eliminate double counting as much as possible. and it measures the financial flows that result from that As in past years, the task force believes that any potential relationship. PIM estimates the investment flows into that double-counting amounts involved are not significant relative project that are not directly arranged by the MDB or DFI. to the overall mobilization amounts. See the definitions, drawn from the MDB reference guide, 15 The mobilization data in the report is collected and in table 1.2. reported directly by members. Although most data is col- The report uses attribution rules proportional to MDB lected manually after year close, MDBs continue to make commitments to a project to avoid double counting of pri- advances in the completeness and thoroughness of their vate mobilization where more than one MDB is involved in a data collection practices, with many now having measured transaction. The MDBs exchange information on mobilized mobilization for three or more years. This is particularly MOBILIZATION OF PRIVATE FINANCE 2018  13 14  MOBILIZATION OF PRIVATE FINANCE 2018 true for direct mobilization where some MDBs even release annual audited mobilization data. Most significant are the advances some members have made or are planning to MDBs have made make toward automation, replacing the manual effort of the previous years with real-time, point-of-transaction collection. advances in automation For example, in 2018 the World Bank upgraded its data of data collection collection system to include private mobilization. That infor- mation, which in the past has been collected manually after and completeness of the end of the fiscal year, is now entered directly by the task product coverage. team leader involved in the operation. Thus, the infrastructure is now in place for the World Bank to report mobilization in real time in the future. Another example is the IDB Group, than those at commitment (approvals are made at earlier which has improved its ability to track its mobilization efforts stages in the process). In this case, the alteration caused a by introducing changes to its internal operations’ registration $2 billion reduction in total private mobilization.18 Although system to account for co-financing activities happening this change impacted the total amount of mobilization through its sovereign-guaranteed window. AfDB reported, it increased the accuracy of the estimates: Several members have also enhanced the product cover- approval numbers are higher because projects at that age of their mobilization estimates this year, using the same stage are more prospective, and thus some percentage definition as in previous years but adding more complex or of them do not materialize. smaller-volume instruments to their estimates that they did not include in the past. For example, the IDB Group now • EDFI added reporting for three additional members in includes insurance and secondary sales. Members adding 2018, and two additional members increased their report- new product coverage help enrich the completeness of the ing. In 2017, EDFI reported only 30% of potential indirect estimates.16 and 50% of potential direct mobilization, but EDFI has now The largest change to data coverage and collection full reporting of both indicators for all members.19 This for 2018 involves two factors: (i) overall changes in how additional reporting had the effect of raising mobilization members report mobilization and (ii) additional members amounts for EDFI, solely for the new members reporting reporting. Both modifications affect the reporting for this and new estimates this year, by $7 billion for total private year as follows: mobilization.20 • Most members report mobilization figures at the point The main report presents these numbers all as reported, so of commitment; a few members report at the point of readers should be aware of the incomparability of year-to- board approval. AfDB made a change to report 2018 at 17 year data due to these factors. In section 4, on trend analysis, commitment. This practice had the impact of reducing the to allow for comparability the report team adjusted for these mobilization amounts from AfDB independent of any other large reporting differences for 2018 (and for 2016, when EDFI changes, because approval numbers are generally higher did not report at all). MOBILIZATION OF PRIVATE FINANCE 2018  15 2 ONGOING DEVELOPMENTS IN THE METHODOLOGY AND ROLE OF SHAREHOLDERS ONGOING DEVELOPMENTS IN THE METHODOLOGY JOINT REPORTING OF MDB MOBILIZATION OF PRIVATE finance, critical to delivering the 2030 Agenda, has been a learning-by- doing process. It has evolved to produce a more robust, transparent, and consistent methodology for the aggregation of mobilized amounts, minimizing double counting and assigning attribution properly within and among MDBs in response, in part, to shareholders’ mandates. Over the past few years, this methodology has been In addition to providing the MDBs with capital, sharehold- strengthened and complemented through such steps as ers also act as true partners in development. They stress including European DFIs and expanding the range of prod- issues of common interest to MDBs, such as addressing gen- ucts covered. In addition, given that mobilization comprises der gaps; assisting small and medium enterprises (SMEs); a broad effort that includes many dimensions and sources and engaging in fragile and conflict states, low-income of finance, MDBs have worked together on such topics countries, and vulnerable island states in the Pacific, the as blended concessional finance, which is key for private Caribbean, and elsewhere—and they steer MDBs toward sector mobilization. 21 MDBs also continue to work with working in those areas. Shareholders back up their priorities other mobilization methodology definition exercises, such by deploying scarce taxpayer resources toward them. as those led by the Organization for Economic Co-operation Development partners have recognized that mobi- lizing development finance will require new and innova- tive approaches. Shareholders provide funding using an increasingly broad array of instruments, such as grants, In addition to providing concessional finance to be used or “blended” alongside MDB the MDBs with capital, investments, returnable capital, guarantees, and first-loss facilities. Recent examples of these options include support shareholders also for blended concessional finance to encourage private sector act as true partners solutions and the use of returnable capital whereby funds are invested alongside MDBs’ ordinary capital in markets in development. where it can be difficult to fill a financing round. MDB shareholders are increasingly closer to institutional and other investors in their home countries; they can have and Development (OECD), to explore synergies and oppor- a good sense of what it will take to bring those parties into tunities for collaboration. emerging markets. They have worked with the MDBs to Using those building blocks, the MDBs have developed come up with innovative ways to partner with those inves- a resilient, transparent methodology that builds on best tors and companies. For example, they have helped provide practices and that development practitioners can easily a guarantee alongside IFC for institutional investors who adopt. At the same time, the methodology must continue invest in climate-friendly infrastructure projects in emerging to evolve so that it enhances transparency within the lim- markets. They also have helped IDB mobilize climate-friendly its of possible financial disclosure and better informs the private sector projects in Latin America and the Caribbean expert audience and the public on how the world’s scarce through the US$250 million Canadian Climate Fund.22 The development finance is deployed to maximize financing MDBs value the interest shareholders have to work together for development. to deliver more such effective solutions. 18  MOBILIZATION OF PRIVATE FINANCE 2018 The goal for MDBs must be to preserve the integrity of In this vein, MDBs recognize that donor resources are a an already robust methodology while expanding on the valuable input—especially in blended concessional finance definitions in a rigorous and meaningful manner to include operations—that make riskier projects bankable and con- further measurement of the impact of partners such as ducive to mobilization. shareholders. Through their efforts to continue defining and MDBs also continue to work to assess the catalyzation refining best practices, MDBs have demonstrated their com- of private investment from their investment and advisory mitment to improve reporting while ensuring transparency, activities, as highlighted in the 2017 report, and will provide accountability, and trust among all relevant stakeholders. updates on their progress in future reports. MOBILIZATION OF PRIVATE FINANCE 2018  19 3 OVERVIEW OF MDB RESULTS OVERVIEW OF MDB RESULTS LONG-TERM FINANCE in all LDCs, a broader measure that includes all LIC and For 2018, the MDB Task Force agreed to report results that other countries; total private mobilization was $6.3 billion.23 exclude operations in high-income countries, because Notably, these mobilization amounts were achieved with low- and middle-income countries are the primary focus lower levels of commitment than in 2017.24 of development operations. Based on 2018 commitment Across all regions in 2018, MDBs mobilized private finance. data, the total amount of long-term finance mobilized by the For all income classifications, $19.2 billion in private finance MDBs from private investors and other institutional investors was for projects in Asia; $20.0 billion for projects in Latin (including insurance companies, pension funds, and sover- America and the Caribbean; and $13.6 billion for projects in eign wealth funds) in all low- and middle-income countries Africa. The Middle East had the lowest absolute amount of of operation was $69.4 billion, compared with $59.0 billion total private mobilization, at $5.3 billion.25 in 2017. Of this amount, 29% was direct mobilization and 71% The majority of total private mobilization, 92%, was mobi- was indirect (see figure 3.1). lized by MDBs, with 8% mobilized by DFIs, as illustrated in In 2018 in LIC alone, $5.5 billion was mobilized, versus figure 3.3. $5.3 billion in 2017. The reporting also measures mobilization FIGURE 3.1 Total Private Mobilization, LIC and MIC, 2018, US$ billions All Direct: $20.2 | 29% Indirect: $49.2 | 71% Total: $69.4 billion Infrastructure Direct: Indirect: $25.7 | 78% Total: $33.1 billion sector $7.4 | 22% FIGURE 3.2 Mobilization by Region (without Europe), All Countries, 2018, US$ billions 19.2 20.0 $20 13.6 $15 $10 5.3 $5 $0 Africa Asia Latin America Middle East & Caribbean 22  MOBILIZATION OF PRIVATE FINANCE 2018 FIGURE 3.3 Mobilization by Institution, LIC and MIC, 2018, US$ billions EDFI: 8.6% ADB: 5.5% EDF AfDB: 0.4% AIIB: 0.1% IFC EBRD: 6.5% WB EIB: 7.3% MIG IFC: 17.8% IDB: 3.0% IsDB IDB Invest: 5.1% IDB WB: 7.1% IsDB Group: 1.0% MIGA: 7.0% IDB EIB EBR AIIB SHORT-TERM FINANCE The Addis Declaration identified short-term finance, AfD Short-term finance (STF) for all income levels was $5.0 billion including trade and supply-chain finance, as important to in 2018. This figure represents trade finance, SME finance, achieving the SDGs. Yet, numerous studies, including the ADB and other instruments with terms generally less than one Asian Development Bank’s "Trade Finance Gaps, Growth, year.26 This is an increase over 2017, when the amount of and Jobs" study,27 identify large market gaps of more than short-term finance was $4.2 billion, as well as over 2016, $1.5 trillion globally, with concentrations among SMEs in when the amount was $3.7 billion. emerging markets. MDBs help fill the short-term finance Increasing short-term finance has become a component gap through trade finance programs, which provide loans of MDBs’ strategy for increasing financing for development. and guarantees to banks to support trade. But MDBs alone STF often mobilizes funding for SMEs and other businesses cannot close the gap. to allow those companies to perform activities essential The size of the STF gap requires MDBs to mobilize to development, most typically hiring labor, adding manu- private sector resources. MDB trade and supply-chain facturing capacity, and purchasing raw materials to fulfill finance programs have been successfully mobilizing sub- international and regional contracts. STF facilities also stantial sums from insurance and commercial banks that enable the local companies to manage currency and pay- flow to developing countries to support trade and SMEs ment risk on cross-border transactions. Without drawing in value chains. Some MDBs mobilize through their trade on those facilities, many companies could not participate finance programs slightly more than half their support as fully in international supply chains. Thus, the growth in for trade. this indicator of 35% since reporting began is an important Note that STF is measured for all income groups because and meaningful outcome. data is not collected for this indicator by income. MOBILIZATION OF PRIVATE FINANCE 2018  23 OVERVIEW OF MDB RESULTS INFRASTRUCTURE MOBILIZATION Only 2% of infrastructure mobilization stems from private The amount of total private mobilization for infrastructure investment in social infrastructure such as schools and (including power, water, transportation, telecommunications, hospitals, reflecting the limited extent of private investment information technology, and social infrastructure such as in social sectors in most low- and middle-income countries. schools and hospitals) in middle- and low-income countries Alternatively, 98% was mobilized by investment in econom- was $33.1 billion, or 48% of all private mobilization. ic infrastructure, including power, water, transportation, Private direct mobilization for infrastructure amounted to telecommunications, and information technology. This $7.4 billion or 22% of total private mobilization for infrastruc- situation is an acceleration of a trend seen last year: phys- ture. This amount is significantly lower than for all private ical infrastructure continues to receive almost all private mobilization, where PDM amounts to 29% of the total (see mobilization financing. figure 3.1). 24  MOBILIZATION OF PRIVATE FINANCE 2018 FIGURE 3.4 Infrastructure Mobilization, LIC and MIC, 2018, US$ billions Economic infrastructure: 98% Noninfrastructure Infrastructure projects $36.4 $33.1 projects Non-economic infrastructure: 2% MOBILIZATION OF PRIVATE FINANCE 2018  25 4 TREND ANALYSIS AND REVIEW OF RESULTS TREND ANALYSIS THIS THIRD REPORT ON MOBILIZATION PROVIDES A FIRST opportunity for some observations on trends. When interpreting the trends, one must note two data adjustments: • AfDB has changed reporting from approval-based to The dominant trend over the three-year period is rela- commitment-based amounts for 2018. To ensure compa- tive stability. The total mobilization amount for low and rability of numbers across all three years, the report uses middle income countries reported by the group remained approval-based mobilization amounts in this section. under US$72 billion, with a compound annual growth rate The main body of the report uses commitment-based (CAGR) of −2.4%.29 The distribution between direct and amounts.28 indirect mobilization also stayed relatively consistent: indi- rect flows dominated, with approximately 70% of the total. • EDFI has increased reporting each year, from no members Both direct and indirect mobilization have experienced a in 2016 to 80% of members in 2017 to all members in moderate decline. 2018. To ensure comparability, the report team, in collabo- When comparing developments in low- and mid- ration with the European Investment Bank, has estimated dle-income countries with the overarching trends, we can additional EDFI mobilization amounts for 2016 and 2017 observe a noteworthy divergence. LIC/MIC total mobi- so that all years represent 100%-member contribution, lization decreased at −4.4%, CAGR, a bit more than for using the 2018 numbers reported as a guide. countries overall, but for LIC and MIC direct mobilization rose, which is a trend in the opposite direction from the one observed when all regions are combined. The boost The dominant trend over in direct mobilization of 4.6% CAGR should be highlighted, especially as direct mobilization decreased for countries the three-year period overall. This increase may reflect the higher emphasis on is relative stability. LIC and MIC from MDBs and the greater array of products they are adding to product lines to support investors in The total mobilization these countries, such as platforms and private investment amount reported by “windows.” However, perhaps as a result, indirect mobili- zation fell more rapidly in LIC and MIC than in the total, at the group remained CAGRs of –7.4% and –1.8%, respectively. The overall share under US$200 billion. of direct mobilization, at roughly 30%, and indirect mobili- zation, accounting for about 70%, remained on par with the totals in 2017 and 2018, even though indirect mobilization The yearly numbers may not exactly match the as-reported started off at 77% in 2016. It should thus be noted that this amounts in 2017 and 2018 because of these changes. trend equalized over time. Note that in any given year, large fluctuations can occur As for the share of LIC and MIC of the total private in mobilization reflecting unique, one-off situations, such as financing mobilized in 2016–2018, it is notable that the 2017 large multiyear projects closing, new product introductions, decrease seems to have affected LIC and MIC more than or simply the good fortune of MDB project leads. Having high-income countries (HICs), both in amount and in the three years of data mitigates these single year variations, but share of the total. The share went down from 47%, almost they may remain. Of course, going forward as MDBs continue half of the overall amount, to 38% before it recovered to reporting, additional years’ data will lessen the impact of this 44% in 2018. This movement provides an indication that it “lumpiness” and improve the findings in this trend analysis. remains more challenging to mobilize private financing for 28  MOBILIZATION OF PRIVATE FINANCE 2018 development in LIC and MIC—the countries most in need— rapid decline in that period and overall, as manifested by than in advanced economies and that LIC and MIC suffer the CAGR for infrastructure at –6.6%, alongside –1.7% for greater vulnerability to shocks. non-infrastructure. This trend reinforces the need to step In 2018, mobilization in middle- and low-income countries up global efforts to create an infrastructure asset class with increased by 11%, a turnaround from 2017, when it shrank enough volume of bankable projects to help attract more to 80% of the 2016 amount. However, mobilization has not private capital into the sector. Disaggregation to economic made a full recovery to 2016 levels. 30 and social infrastructure underlines the continuing domi- All regions outside Europe, apart from Africa, saw a nance of economic infrastructure in its capacity to attract rise in private mobilization between 2017 and 2018. The private financing. CAGR for Europe, at –5.7%, suggests that the contraction In conclusion, the Financing for Development agenda of this region’s prominent share in the overall mobilization envisions that the private sector will take a prominent role amount created room for other parts of the world to grow. In in mobilization of private capital to achieve the SDGs. As Asia, especially, mobilization saw an increase at 5.7% CAGR. documented by this report, the MDB/DFIs have contrib - In the Middle East, MDBs and DFIs jointly mobilized US$5.3 uted significantly to mobilization of private capital in the billion in 2018, up from US$0.7 billion in 2017. reported years, 2016–2018. The joint mobilization provides The 2016–2018 trends in LIC and MIC show both infra- an analytical foundation for understanding the enormous structure and non-infrastructure projects suffered from efforts that are still required to move development finance the downward trend in private mobilization in LIC and MIC from billions of dollars to the trillions of dollars required to between 2016 and 2017, but infrastructure underwent a more realize the SDGs. MOBILIZATION OF PRIVATE FINANCE 2018  29 APPENDIX: DISAGGREGATED DATA APPENDIX: DISAGGREGATED DATA THE DATA CONTAINED IN THIS APPENDIX DISAGGREGATES MDBs’ combined direct and indirect mobilization from private investors and other institutional investors (including insurance companies, pension funds, and sovereign wealth funds) on a consistent basis. Please refer to the “Joint MDB Reporting on Private Investment Mobilization: Methodology Reference Guide” (www.worldbank.org/mdbmobguide) for region. “Low-income countries,” “middle-income coun- further information and detailed methodologies. tries,” and “high-income countries” are defined using the The data is disaggregated by country income group World Bank Atlas method. “Least developed countries" (low-income countries, low-income countries and other are drawn from the list maintained by the United Nations least developed countries, middle-income countries, and Committee for Development. Unless noted, all figures are high-income countries) and by institution, as well as by for long-term financing. ALL COUNTRIES OF OPERATION TABLE A.1 All Countries of Operation Total Of which is infrastructure (US$, billions) (US$, billions) Direct Mobilization 45.9 7.7 Indirect Mobilization 115.0 54.5 Total Private Mobilization 160.9 62.2 or Private Co-financing TABLE A.2 All Countries of Operation — Short Term Financing Total (US$, billions) Direct Mobilization 5.0 32  MOBILIZATION OF PRIVATE FINANCE 2018 BY INSTITUTION Note that the Inter-American Development Bank (IDB) Group includes IDB and IDB Invest. The Islamic Development Bank (IsDB) Group consists of IsDB, ICD, ITFC and ICIEC. The organizations that constitute the World Bank are the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA). TABLE A.3 All Countries TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 5,549 793 4,756 AfDB 400 20 380 AIIB 150 – 150 EBRD 12,564 1,213 11,351 EDFI 11,399 1,493 9,906 EIB 87,105 25,134 61,971 IDB Group 8,242 946 7,296 - IDB 2,968 — 2,968 - IDB Invest 5,274 946 4,328 IsDB Group 1,093 430 663 World Bank Group 34,440 15,901 18,539 - MIGA 8,586 5,946 2,640 - WB 7,144 2,851 4,292 - IFC 18,710 7,103 11,607 TOTAL 160,941 45,930 115,011 MOBILIZATION OF PRIVATE FINANCE 2018  33 APPENDIX: DISAGGREGATED DATA TABLE A.4 LIC and MIC TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 5,548.8 793.2 4,755.6 AfDB 399.7 20.0 379.7 AIIB 149.9 0.0 149.9 EBRD 6,481.0 795.2 5,685.8 EDFI 8,569.8 1,396.5 7,173.3 EIB 7,281.7 1,938.9 5,342.7 IDB Group 8,019.4 723.2 7,296.3 - IDB 2,967.9 0.0 2,967.9 - IDB Invest 5,051.5 723.2 4,328.4 IsDB Group 989.7 430.0 559.7 World Bank Group 31,991.4 14,089.8 17,901.6 - MIGA 7,007.4 4,367.5 2,639.9 - WB 7,143.9 2851.45 4292.46 - IFC 17,840.1 6,870.8 10,969.3 TOTAL 69,431.4 20,186.8 49,244.6 34  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.5 Infrastructure Financing, All Countries TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 4,888.3 472.1 4,416.2 AfDB 45.2 7.4 37.8 AIIB 149.9 0.0 149.9 EBRD 996.0 282.0 714.0 EDFI 4,078.1 374.0 3,704.1 EIB 29,347.5 186.1 29,161.4 IDB Group 6,729.2 460.4 6,268.7 - IDB 2,967.9 0.0 2,967.9 - IDB Invest 3,761.3 460.4 3,300.8 IsDB Group 105.5 34.0 71.5 World Bank Group 15,838.9 5,893.2 9,945.7 - MIGA 4,504.0 2,035.2 2,468.8 - WB 5,694.8 1,581.5 4,113.4 - IFC 5,640.1 2,276.6 3,363.5 TOTAL 62,178.5 7,709.2 54,469.3 MOBILIZATION OF PRIVATE FINANCE 2018  35 APPENDIX: DISAGGREGATED DATA BY INCOME CLASSIFICATION TABLE A.6 Low Income Countries Total Of which is infrastructure (US$, billions) (US$, billions) Direct Mobilization 2.3 0.9 Indirect Mobilization 3.2 1.2 Total Private Mobilization 5.5 2.1 or Private Co-financing Note: Low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $995 or less in 2017 TABLE A.7 Low Income Countries — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 186.2 10.0 176.2 AIIB 0.0 0.0 0.0 EBRD 0.0 0.0 0.0 EDFI 829.9 43.2 786.7 EIB 746.5 412.6 333.8 IDB Group 4.0 0.0 4.0 - IDB 0.0 0.0 0.0 - IDB Invest 4.0 0.0 4.0 IsDB Group 824.8 376.0 448.8 World Bank Group 2,933.6 1,496.9 1,436.7 - MIGA 1,157.0 552.8 604.2 - WB 559.0 498.0 61.0 - IFC 1,217.6 446.1 771.5 TOTAL 5,524.9 2,338.7 3,186.2 36  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.8 Low Income Countries – By Institution, Infrastructure Only TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 25.9 7.4 18.5 AIIB 0.0 0.0 0.0 EBRD 0.0 0.0 0.0 EDFI 368.7 — 368.7 EIB 160.9 57.3 103.7 IDB Group 0.0 0.0 0.0 - IDB 0.0 0.0 0.0 - IDB Invest 0.0 0.0 0.0 IsDB Group 0.0 0.0 0.0 World Bank Group 1,559.9 840.1 719.9 - MIGA 1,151.2 547.1 604.2 - WB 289.0 228.0 61.0 - IFC 119.7 65.0 54.7 TOTAL 2,115.4 904.7 1,210.7 MOBILIZATION OF PRIVATE FINANCE 2018  37 APPENDIX: DISAGGREGATED DATA TABLE A.9 Low Income and Least Developed Countries Total Of which is infrastructure (US$, billions) (US$, billions) Direct Mobilization 2.9 1.1 Indirect Mobilization 3.3 1.2 Total Private Mobilization 6.3 2.2 or Private Co-financing Note: Least developed countries (LDCs) are low-income countries confronting severe structural impediments to sustainable development. They are highly vulnerable to economic and environmen- tal shocks and have low levels of human assets. There are currently 47 countries on the list of LDCs, which is reviewed every three years by the United Nations Committee for Development. TABLE A.10 Low Income and Least Developed Countries – By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 200.8 12.9 188.0 AIIB 0.0 0.0 0.0 EBRD 0.0 0.0 0.0 EDFI 943.3 116.2 827.2 EIB 746.5 412.6 333.8 IDB Group 0.0 0.0 0.0 - IDB 0.0 0.0 0.0 - IDB Invest 0.0 0.0 0.0 IsDB Group 894.0 412.0 482.0 World Bank Group 3,471.7 1,993.9 1,477.7 - MIGA 1,694.6 1,048.1 646.5 - WB 559.0 498.0 61.0 - IFC 1,218.1 447.8 770.2 TOTAL 6,256.3 2,947.6 3,308.8 38  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.11 Low Income and Least Developed Countries – By Institution, Infrastructure TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 35.6 7.4 28.2 AIIB 0.0 0.0 0.0 EBRD 0.0 0.0 0.0 EDFI 284.1 0.0 284.0 EIB 160.9 57.3 103.7 IDB Group 0.0 0.0 0.0 - IDB 0.0 0.0 0.0 - IDB Invest 0.0 0.0 0.0 IsDB Group 0.0 0.0 0.0 World Bank Group 1,763.8 1,002.1 761.7 - MIGA 1,355.6 709.1 646.5 - WB 289.0 228.0 61.0 - IFC 119.2 65.0 54.2 TOTAL 2,244.4 1,066.7 1,177.7 MOBILIZATION OF PRIVATE FINANCE 2018  39 APPENDIX: DISAGGREGATED DATA TABLE A.12 Middle Income Countries Total Of which is infrastructure (US$, billions) (US$, billions) Direct Mobilization 17.8 6.5 Indirect Mobilization 46.1 24.5 Total Private Mobilization 63.9 30.9 or Private Co-financing Note: Middle-income economies are those with a GNI per capita, calculated using the World Bank Atlas method, between $996 and $12,055 in 2017 TABLE A.13 Middle Income Countries – By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 5,548.8 793.2 4,755.6 AfDB 213.6 10.0 203.6 AIIB 149.9 0.0 149.9 EBRD 6,481.0 795.2 5,685.8 EDFI 7,739.9 1,353.4 6,386.5 EIB 6,535.2 1,526.3 5,008.9 IDB Group 8,015.4 723.2 7,292.3 - IDB 2,967.9 — 2,967.9 - IDB Invest 5,047.5 723.2 4,324.4 IsDB Group 164.9 54.0 110.9 World Bank Group 29,057.8 12,592.9 16,464.9 - MIGA 5,850.5 3,814.8 2,035.7 - WB 6,584.9 2,353.5 4,231.5 - IFC 16,622.4 6,424.7 10,197.8 TOTAL 63,906.5 17,848.1 46,058.4 40  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.14 Middle Income Countries – By Institution, Infrastructure TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 4,888.3 472.1 4,416.2 AfDB 19.4 — 19.4 AIIB 149.9 0.0 149.9 EBRD 622.0 282.0 340.0 EDFI 2,597.5 314.5 2,283.0 EIB 2,059.1 0.0 2,059.1 IDB Group 6,564.7 296.0 6,268.7 - IDB 2,967.9 0.0 2,967.9 - IDB Invest 3,596.8 296.0 3,300.8 IsDB Group 105.5 34.0 71.5 World Bank Group 13,937.1 5,053.2 8,883.9 - MIGA 3,352.8 1,488.1 1,864.6 - WB 5,405.8 1,353.5 4,052.4 - IFC 5,178.5 2,211.6 2,966.9 TOTAL 30,943.4 6,451.7 24,491.7 MOBILIZATION OF PRIVATE FINANCE 2018  41 APPENDIX: DISAGGREGATED DATA TABLE A.15 High Income Countries Total Of which is infrastructure (US$, billions) (US$, billions) Direct Mobilization 25.7 0.4 Indirect Mobilization 65.8 28.8 Total Private Mobilization 91.5 29.1 or Private Co-financing Note: High-income economies are those with a GNI per capita, calculated using the World Bank Atlas method, above $12,055 in 2017 TABLE A.16 High Countries – By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 0.0 — — AIIB 0.0 0.0 0.0 EBRD 6,082.6 417.8 5,664.8 EDFI 2,829.1 96.6 2,732.5 EIB 79,823.0 23,194.9 56,628.1 IDB Group 222.7 222.7 0.0 - IDB 0.0 0.0 0.0 - IDB Invest 222.7 222.7 0.0 IsDB Group 103.2 0.0 103.2 World Bank Group 2,449.0 1,811.6 637.4 - MIGA 1,578.9 1,578.9 0.00 - WB 0.0 0.0 0.0 - IFC 870.1 232.7 637.4 TOTAL 91,509.7 25,743.6 65,766.1 42  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.17 High Income Countries – By Institution, Infrastructure TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 0.0 0.0 0.0 AfDB 0.0 — — AIIB 0.0 0.0 0.0 EBRD 374.0 0.0 374.0 EDFI 1,111.9 59.5 1,052.4 EIB 27,127.5 128.8 26,998.7 IDB Group 164.5 164.5 0.0 - IDB 0.0 0.0 0.0 - IDB Invest 164.5 164.5 0.0 IsDB Group 0.0 0.0 0.0 World Bank Group 341.9 0.0 341.9 - MIGA 0.0 0.0 0.0 - WB 0.0 0.0 0.0 - IFC 341.9 0.0 341.9 TOTAL 29,119.7 352.8 28,766.9 MOBILIZATION OF PRIVATE FINANCE 2018  43 APPENDIX: DISAGGREGATED DATA BY REGION Classification by region follows World Bank Group guidelines, and maintained the definition from 2017 to ensure consistency.31 TABLE A.18 Africa Total (US$, billions) Direct Mobilization 5.1 Indirect Mobilization 8.5 Total Private Mobilization 13.6 or Private Co-financing TABLE A.19 Africa — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB N/A N/A N/A AfDB 399.7 20.0 379.7 AIIB N/A N/A N/A EBRD N/A N/A N/A EDFI 4136.2 468.7 3,667.4 EIB 887.2 455.6 431.7 IDB Group N/A N/A N/A - IDB N/A N/A N/A - IDB Invest N/A N/A N/A IsDB Group 0.2 0.0 0.2 World Bank Group 8,221.1 4,173.8 4,047.3 - MIGA 2,713.1 1,216.0 1,497.1 - WB 1,923.9 1,451.5 472.5 - IFC 3,584.0 1,506.3 2,077.7 TOTAL 13,644.4 5,118.1 8,526.3 N/A = Not Applicable. The region is not within mandate for this MDB. 44  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.20 Asia Total (US$, billions) Direct Mobilization 5.2 Indirect Mobilization 14.0 Total Private Mobilization 19.2 or Private Co-financing TABLE A.21 Asia — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 5,544.0 793.2 4,750.8 AfDB N/A N/A N/A AIIB 149.9 0.0 149.9 EBRD 29.0 11.0 18.0 EDFI 1818.8 259.2 1,559.7 EIB 603.6 0.3 603.3 IDB Group N/A N/A N/A - IDB N/A N/A N/A - IDB Invest N/A N/A N/A IsDB Group 182.3 10.0 172.3 World Bank Group 10,903.9 4,163.5 6,740.3 - MIGA 1,680.8 979.3 701.5 - WB 200.0 0.0 200.0 - IFC 9,023.1 3,184.2 5,838.8 TOTAL 19,231.5 5,237.2 13,994.3 MOBILIZATION OF PRIVATE FINANCE 2018  45 APPENDIX: DISAGGREGATED DATA TABLE A.22 Europe Total (US$, billions) Direct Mobilization 28.6 Indirect Mobilization 74.1 Total Private Mobilization 102.7 or Private Co-financing TABLE A.23 Europe — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB 4.8 0.0 4.8 AfDB N/A N/A N/A AIIB N/A N/A N/A EBRD 11,857.0 1,171.0 10,686.0 EDFI 2515.7 244.6 2,271.1 EIB 83,223.8 24,247.1 58,976.7 IDB Group N/A N/A N/A - IDB N/A N/A N/A - IDB Invest N/A N/A N/A IsDB Group 153.0 45.0 108.0 World Bank Group 4,941.7 2,890.8 2,051.0 - MIGA 1,350.8 1,343.2 7.6 - WB 1,582.0 1,000.0 582.0 - IFC 2,009.0 547.6 1,461.4 TOTAL 102,696.0 28,598.5 74,097.5 46  MOBILIZATION OF PRIVATE FINANCE 2018 TABLE A.24 Latin America and Caribbean Total (US$, billions) Direct Mobilization 5.2 Indirect Mobilization 14.8 Total Private Mobilization 20.0 or Private Co-financing TABLE A.25 Latin America and Caribbean — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB N/A N/A N/A AfDB N/A N/A N/A AIIB N/A N/A N/A EBRD N/A N/A N/A EDFI 2899.1 491.5 2,407.6 EIB 555.9 7.7 548.2 IDB Group 8,242.2 945.9 7,296.3 - IDB 2,967.9 0.0 2,967.9 - IDB Invest 5,274.3 945.9 4,328.4 IsDB Group 28.6 0.0 28.6 World Bank Group 8,296.1 3,739.0 4,557.2 - MIGA 2,137.1 2,125.2 11.9 - WB 3,258.0 400.0 2,858.0 - IFC 2,901.0 1,213.8 1,687.3 TOTAL 20,022.0 5,184.1 14,837.9 MOBILIZATION OF PRIVATE FINANCE 2018  47 APPENDIX: DISAGGREGATED DATA TABLE A.26 Middle East Total (US$, billions) Direct Mobilization 1.8 Indirect Mobilization 3.6 Total Private Mobilization 5.3 or Private Co-financing TABLE A.27 Middle East — By Institution TPM PDM PIM (US$, millions) (US$, millions) (US$, millions) ADB N/A N/A N/A AfDB N/A N/A N/A AIIB N/A N/A N/A EBRD 678.0 31.0 647.0 EDFI 29.1 29.1 0.0 EIB 1,834.1 423.2 1,411.0 IDB Group N/A N/A N/A - IDB N/A N/A N/A - IDB Invest N/A N/A N/A IsDB Group 729.0 375.0 354.0 World Bank Group 2,077.6 934.3 1,143.3 - MIGA 704.6 282.8 421.8 - WB 180.0 0.0 180.0 - IFC 1,193.0 651.5 541.5 TOTAL 5,347.8 1,792.6 3,555.2 48  MOBILIZATION OF PRIVATE FINANCE 2018 ENDNOTES 1. Hereafter for brevity, MDBs and DFIs will mostly be referred to jointly used in 2016 MDB reporting excluded some products but covered 93% as “MDBs.” of own account amounts. 2. Mobilization is also referred to as “co-finance,” and the MDB definitions 17. Inter-American Development Bank, the World Bank, and Islamic Devel- allow use of these terms interchangeably. For clarity and consistency, opment Bank data is based on approvals. The remaining MDBs report the term “mobilization” will be used in this report. at commitment. All amounts are U.S. dollars. 3. As defined by the G20 International Financial Architecture Working 18. Based on 2018 approval numbers also provided by AfDB. Group in the “Principles of MDBs’ Strategy for Crowding-In Private 19. The percentage of “potential” is based on own account: for 2017, only Sector Finance for Growth and Sustainable Development” (April 2017, 30% of total “own account” investments for EDFI also had private indirect 12), private investment catalyzed is private sector financing that results mobilization reported, and 50% had private direct reported, according from the development impact of an activity or multiple activities, of an to EDFI data. MDB. It includes investments made as a result of an operation up to 20. Based on 2018 data for the same members that reported in 2017, pro- three years after completion. vided by EDFI 4. See the IDB Invest blog post, Alessandro Maffioli, Giulia Lotti, and Jozef 21. The DFI Working Group on Blended Concessional Finance for Private Henriquez, “Mobilizing Private Finance towards Development,” April Sector Projects comprises IFC, AfDB, ADB, AIIB, EBRD, EIB, IDB Group, 5, 2019, https://blogs.iadb.org/bidinvest/en/mobilizing-private-fi- ICD, and several European DFIs (EDFIs). nance-towards-development/, or the original research article, Chiara 22. Inter-American Investment Corporation, “Canadian Climate Fund for Broccolini and others, “Mobilization Effects of Multilateral Development the Private Sector in the Americas (C2F),” https://www.iic.org/en/c2f/ Banks,” IMF Working Paper 19/28, February 2019. canadian-climate-fund-private-sector-americas-c2f. 5. Inter-Agency Task Force on Financing for Development, Financing for 23. The UN defines less-developed countries through an annual review Sustainable Development Report 2019 (New York: United Nations, 2019), iii. process, conducted by the UN Department of Social Affairs. It includes 6. See the World Bank, “Joint MDB Reporting on Private Investment Mobi- LIC status as one of three criteria; the others are human assets and lization: Methodology Reference Guide,” Washington, DC, June 2018, economic vulnerability. There are 47 countries with LDC status and 34 and table 1.2 of this report for definitions of these terms. LIC. 7. See the “Joint Report on Multilateral Development Banks’ Climate 24. Mobilization ratios, or total mobilization over own account investment, Finance,” European Bank for Reconstruction and Development, London, rose in 2018. June 2018, for reporting on climate-related mobilization specifically. 25. Note that these figures include a very small amount of high-income 8. World Bank, “Joint MDB Reporting,” and table 1.2 of this report. country mobilization per region, impossible to remove because mobi- 9. For the main section of the report, compound annual growth rate and lization is not collected by income by region. Thus, the sum of those other comparative figures use the data in this section. The trend analysis figures will not equal the $69.4 million reported earlier in this section section (section 4) compares three years of data and makes adjustments and in figure 3.1, and also because this regional breakdown does not to ensure comparability. Using that adjusted data, the MIC/LIC number include Europe, which is primarily high income. Note that currently, actually declines by 4.7%. members report mobilization by income group, and by region, but not 10. UNCTAD Investment Trends Monitor, January 2019. by income group by region. 11. This report does not measure public mobilization. 26. Short-term finance by agreement of MDBs is tracked and reported sep- 12. Short term finance as of now is collected only for all income levels and arately from mobilization, which includes only long-term instruments. regions, and not disaggregated. 27. Asian Development Bank, “Trade Finance Gaps, Growth, and Jobs 13. For the current fiscal year, low-income countries are defined as those Survey” ADB Brief 83, ADB, Manila, the Philippines, September 2017. with GNI per capita calculated using the World Bank Atlas method, 28. The AfDB estimate uses a ratio of commitments to approvals from the of $995 or less in 2017; middle-income countries are those with a previous two years applied to this year’s commitments data reported GNI per capita between $995 and $12,055; high-income economies in section 3. AfDB completed this analysis itself. are those with a GNI per capita of $12,056 or more. See more infor- 29. Compound annual growth rate (CAGR) is an estimation of the growth mation at https://datahelpdesk.worldbank.org/knowledgebase/ rate of an indicator on an annual basis based on a rate of change across articles/906519-world-bank-country-and-lending-groups. There one or multiple years. are currently 47 countries on the list of LDCs that is reviewed every 30. Recall that this section uses modeled or otherwise different data from three years by the Committee for Development and, for 2018, 34 LIC the rest of the report for two members, so the rate of change will not countries, so LDC is a broader measure. See also note 22. match that in the rest of the report, which relies only on figures as 14. This focus is set by consensus of the MDBs on the task force, who reported. recognized that although mobilization in higher-income countries may 31. In 2018 the World Bank changed regional definitions, but the MDB Task be part of the mandate of some member institutions, it is not for most Force elected to keep reporting with the 2017 definitions to ensure and does not reflect the orientation of this report and MDBs overall consistency among years. toward maximizing impact in developing countries. 15. World Bank, “Joint MDB Reporting.” 16. This is one factor making estimates not directly comparable to those from previous years. But the additional instruments added to estimates are a small percentage of the total mobilization typically, so there is not a great impact from adding them. For example, WBG’s FY15 estimate MOBILIZATION OF PRIVATE FINANCE 2018  49 50  MOBILIZATION OF PRIVATE FINANCE 2018 PHOTO CREDITS Cover: IFC/Dominic Chavez Inside cover: Metro de Quito S.A. 3: EIB 4–5: IDB Image Bank 7: IDB Image Bank 8–9: City of Bogota Mayor’s Office 14: World Bank/Sarah Farhat 16–17: Snowman Logistics 19: World Bank/ Vincent Tremeau 20–21: EIB 24–25: Masen 26–27: EIB 29: EIB 30–31: EIB 50–51: World Bank/Dominic Chavez Back cover: EIB MOBILIZATION OF PRIVATE FINANCE 2018  51