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Posted on December 18, 2020 | Updated at 2PM

Finance in Common: Joint Approaches to a Shared Crisis

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By Yolanda Banks, Principal Advisor, Corporate Affairs, and
Anne-Marie Lévesque, Head, Gender & Impact

 

International conferences in a physical form have stopped with the COVID-19 pandemic, but fortunately their digital versions continue. Policy and decision-makers know they can address the world’s most pressing issues more readily by participating in fora that offer collective information-sharing, renewed commitment, and mutual accountability.

The inaugural Finance in Common Summit took place on November 9-12, 2020. The event, which was launched as part of this year's Paris Peace Forum, brought together over 450 public development banks (PDBs) from across the globe. These institutions are charged with marshalling government and private sector finance, as well as technical assistance.  The Summit also included development finance institutions (DFIs), along with international financial institutions (IFIs) that focus on how to serve the social and economic development needs of lower-and-middle income countries.

At FinDev Canada, we took part in the Summit alongside colleagues from the world’s other DFIs and IFIs. The underlying theme of the event was how partnerships are key to delivering great economic, social, and environmental development impacts. Working with peer organizations, the private sector, foundations, civil society, and others invested in international development enhances success and impact.

Or, as Anne-Marie Lévesque, Head of Gender and Impact at FinDev Canada, declared: “With the right partners, it’s incredible what can be accomplished.”

Summit sessions were designed to highlight and reinforce the special role of public development banks at this time. We are called upon to develop and deploy short-term recovery responses to the pandemic. At the same time, we must continue, and preferably expand, our already programmed initiatives to meet the Sustainable Development Goals by 2030.

Given FinDev Canada’s strategic objectives and investment priorities, two of the Summit sessions were of particular interest. The first, entitled “Africa: Towards a Sustainable Recovery for the Private Sector”, examined the particular economic and business challenges facing Africa because of the spread of COVID-19, along with answers to the question of “What can be done?”.

The importance of Africa, and the impact of the pandemic on it, is not in doubt. The World Bank estimates that the continent is likely to enter its first recession in 25 years as GDP declines by 3.3 percent this year, costing the region at least US$ 115 billion in output losses. Millions of people are expected to lose their jobs and up to 40 million people may be driven into extreme poverty.

While the impact on the private sector will be serious, micro, small, and medium-sized enterprises, most operating in the informal sector, will be particularly hard hit. That will be felt deeply because they make up 90% of all businesses in Sub-Saharan Africa. Panelists at the session outlined a number of measures to aid African MSMEs, among them: ensure systematic and holistic approaches to support MSMEs from their start-up phase to an IPO; offer more subordinated debt to be leveraged in support of investment needs;I  expand and reinforce policy dialogues to produce more conducive enabling environments for the private sector; provide the burgeoning youth population with good technical and vocational education combined with entrepreneurial skills training; and develop innovative, sustainable solutions to finance the informal sector.

In the end, most of the recommendations revolved around two central ideas: channel more capital, and more technical assistance, to Africa’s entrepreneurs and small business owners more quickly. As part of the response, we, along with other DFIs committed to a series of actions to support the recovery and resilience of smaller businesses in Africa.

These include deepening co-operation amongst our institutions to respond to the crisis with inclusive financial solutions for the private sector, along with technical assistance and advisory services when required. As part of that commitment, we collectively pledged to dedicate at least US$ 4 billion to support businesses in Africa by the end of 2021.

Women as a focus
The second Summit session in which we participated was entitled Development Banks as Actors for Changes Towards Gender Equality. Our Head of Gender and Impact, Anne-Marie Lévesque, joined others to examine how our institutions can respond to the pandemic while advancing gender equality and women’s economic empowerment.

Again, much of the focus was on Africa given that it has the highest proportion of women entrepreneurs in the world. There, one in four women starts a business, accounting for over 70% of informal trade. When African women earn an income, research shows, they invest 90% of it in the education, nutrition, and health of their families. As one panelist said, it is “the biggest return on investment on development dollars that you can get!”

Anne-Marie explained how women’s economic empowerment is a core driver of decision-making at FinDev Canada. We look at all our transactions through a gender-lens and use criteria from the highly successful 2X Challenge as a blueprint for action.

Those criteria are integrated into our decision-making right from the beginning. We strive to deliver on two objectives:

  1. encourage private sector companies to become more gender inclusive, and
  2. use our capital to steer more investment towards opportunities that actively and intentionally benefit women as entrepreneurs, leaders, employees, consumers, and community members.

Panelists agreed that women should be considered as drivers of any response to and recovery from COVID-19. This means pivoting from immediate, rapid responses to the needs of women-owned and women-led businesses, to investing with a gender-lens towards longer-term recovery and growth. Both responses can include funding to support sustainable infrastructure that benefits women, expanded women and children’s healthcare facilities and services, the supply of personal protective equipment, the provision of women-centric products and services, and the expansion of women’s access to finance.

Our response could—and should—also include greater investments in the “care economy” where the workforce is two-thirds female and where, “the burden that women carry in this area, both at home and in the workforce, has become increasingly visible.”

Vanessa Moungar, Director of Gender, Women and Civil Society at the African Development Bank Group said, “We believe in this agenda, not only because it’s the right thing to do, it’s the smart thing to do economically for more inclusive, more resilient societies.”

The Finance in Common Summit took place 10 years before the deadline set to achieve the Sustainable Development Goals, and ended with a joint declaration of all participating organizations. We, at FinDev Canada, heartily support that declaration for it is a good representation of our continuing efforts to fulfil our mandate.