About 1,500 representatives from more than 520 development banks have attended the fourth annual Finance in Common Summit to discuss ways to mobilize new financial streams in order to combat climate change and protect biodiversity. The participating banks account for 12% of the world’s annual investment total ($2.7 trillion), according to the event organizers.
The summit, held in Cartagena, Colombia, on September 4-6, 2023 was hosted by Bancoldex, the business bank of Colombia, along with the European Development Bank (EIB), the French Development Agency (AFD), the International Development Finance Club (IDFC) the Inter-American Development Bank (IDB) and the Latin American Association of Financial Institutions for Development (ALIDE) in partnership with the Development Bank of Latin America and the Caribbean (CAF), the Spanish Agency for International Development Cooperation (AECID), the Italian public development bank Cassa Depositi e Prestiti (CDP), and the Caribbean Development Bank (CDB).
This year’s summit was divided into four main themes:
- Small and Medium Enterprises (SMEs) and financial inclusion
- Climate and biodiversity
- Sustainable infrastructure
- Strengthening National Public Development Banks
Takeaways From the 2023 Finance in Common Summit
As approximately 100 million people in Latin America live in extreme poverty, the speakers and experts on the first day strongly emphasized the fact that attracting new and diverse sources of investment flows is required in order to break the impasse of continuing poverty in the region.
In particular, Ana Maria Ibáñez, Vice President of Sectors and Knowledge at the Inter-American Development Bank (IDB), stated that the region continues to face significant challenges, including persistent issues around high levels of poverty, high levels of inequality, significant gaps in infrastructure, low productivity, and a general lack of economic growth. She called on PDBs to to redouble their efforts to mobilize more financing from the private sector.
The second day of the Finance in Common Summit was dedicated to small and medium enterprises (SMEs) and their crucial role in “cementing social transformation” and driving the economy, particularly in Latin America and the Caribbean. Keynote speakers emphasized that SMEs which receive financing and support from PDBs help “enable and motivate” people out of poverty.
The focus on the second day of the summit was how PDBs can work to create attractive and diverse investment funds in order to entice global investors.
It was announced that PDB-organized projects in the Latin America and Caribbean region aimed at SMEs have totaled $18 billion over the past three years, of which $6 billion was spent in Mexico alone. Other top SME recipient nations include Brazil ($4 billion), Colombia ($3 billion), and Argentina ($2 billion), with the majority of projects related to renewable energy, sustainable transportation, agriculture, and education.
The third day of the Finance in Common Summit was dedicated to “natural” solutions for climate change that are designed to protect ecosystems, preserve biodiversity, and safeguard water sources.
Keynote speaker Juan Pablo Bonilla, Manager of the Climate Change and Sustainable Development Sector at the Inter-American Development Bank (IDB), stated that 50% of the world’s GDP depends partially or wholly on nature and “nature’s services,” therefore, the loss of nature is of great importance to private sector companies. Mr. Bonilla also revealed that the IDB has invested more than $800 million in projects with a “nature-based solution component.”
The final day of the summit also saw a panel that addressed the challenges for financing programs for women and women-owned businesses. The speakers noted that a complete lack of gender-segregated data and a very limited understanding of the financial needs of women-owned businesses continue to hamper further progress.
At the end of the summit, a final communique was signed wherein all participating representatives of PDBs vowed to scale up “green lending” in ways that are also “socially just” and that nature-based solutions are the key component to reducing vulnerability to climate change.
History of the Finance in Common Summit
The first Finance in Common Summit was held in 2020 in Paris, France, where all attending representatives of public development banks signed a joint declaration in which they agreed to shift their activities, operations, and investments to the sole objective of achieving the 2030 UN Agenda SDGs and the Paris Agreement on climate change. The summit was held in Rome, Italy in 2021 and in Abidjan, Côte d’Ivoire in 2022.
Public development banks (PDBs) are state-owned financial institutions which support economic development in a country or region and share four important characteristics:
- They have independent legal status and financial autonomy;
- They are controlled or supported by local governments;
- They are tasked with executing a public mandate; and
- They are not engaged in commercial banking of any kind.
The permanent base of operations of the Finance in Common Summit is in the Agence française de développement (AFD) headquarters in Paris, France, and the president of the AFD also serves as the president of the Finance in Common Summit.