Development banks help finance projects that support sustainable economic development.


Related SDGs


Sustainability challenge and related SDGs

To achieve the UN 17 Sustainable Development Goals (SDGs) by 2030, an annual investment of 5.9 trillion USD is needed. Governments and public money already finance approximately 1.6 trillion USD annually. However, there is still a significant financial gap of 4.3 trillion USD (Source: UNCTAD, 2022) and this is where the private sector has a role to play. Public and private sectors must work hand in hand to reach the SDGs.

Possible solutions and their contribution to achieving the SDGs

Development banks, also called development financial institutions (DFIs) are organizations usually majority owned by governments. They can be national or international, established by one or several countries. National DFIs include the German development bank KfW or the Swiss SIFEM. International DFIs include the African Development Bank or the European Investment Bank.

They finance and facilitate projects that foster private sector development and sustainable economic growth, such as infrastructure, agriculture, energy, water, telecommunications, access to finance, health, or education. As such, they can be regarded as an important component of development aid.

Development financial institutions often serve as a catalyst to mobilise private investors to finance public and private sector projects. Moreover, they usually provide consultancy and technical assistance and therefore serve as channels for policy implementation in areas such as governance, compliance with environmental or social regulations. SDG 17 “Partnerships for the Goals” targets such public-private partnerships to “Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development”.

Primarily related SDG Targets: 17.3, 17.7, 17.9, 17.17

Investment Rationale and Growth Potential

Development banks are key issuers of sustainable finance such as #GreenBond, #SocialBond, #SustainableBond as well as #SustainabilityLinkedBond and thus contribute to the sustainable development and the achievement of the SDGs.

The fact that development banks are supported by government funding ensures their credit worthiness and enables them to raise large amounts on global capital markets. As a result, they can provide attractive, even subsidised loans and competitive conditions for equity investment. Development banks and financial institutions have significant growth potential due to their capacity to assist economic development, foster innovation, and facilitate long-term investments.