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Governors' Event

Governors’ Plenary: Private Sector Mobilization in Challenging Markets

Friday, 3 May 2019, 4:00 pm–5:30 pm, Intercontinental Fiji Natadola Ballroom

Achieving the Sustainable Development Goals will require finance from all possible sources being applied toward investments that deliver sustainable development outcomes, particularly for the poorest and most vulnerable countries. Facilitating private investment into frontier markets, including fragile environments, requires a customized approach to the distinct development challenges in these economies.

ADB is expanding and diversifying its nonsovereign operations in frontier markets and in high development impact sectors, particularly in agriculture and social sectors such as health and education. Unique challenges that are not otherwise faced in larger or more mature markets require ADB to take an innovative and integrated approach. Expanding ADB’s nonsovereign operations into more frontier markets and new sectors can build upon enabling environments supported through ADB’s sovereign operations.

The plenary focused on the role of ADB and other multilateral development banks (MDBs) in mobilizing more private investment into development, particularly for frontier markets. Participants discussed:

  1. the wider use of credit enhancement products, including guarantee instruments;
  2. the need to increase risk tolerance, together with the processes and capacity to undertake and manage many small and higher-maintenance deals;
  3. creating markets through MDB private investment; and
  4. mobilizing concessional resources for blended finance and/or parallel nonsovereign investments, including raising more resources through ADB trust funds.

In line with the recommendation of the Eminent Persons Group, MDBs can enhance coordination and collaboration by working together as a system. MDBs should consider, in relation to frontier markets in particular:

  1. establishing country platforms to encourage and support private investment;
  2. developing high-level common approaches for greater coordination, including joint project level due diligence and country level private sector diagnostics; and
  3. taking a coordinated approach for improving the business environment and strengthening governance.