“We believe that everyone in the development community should be an honest broker who helps find win-win outcomes – where owners of capital get a reasonable return, and developing countries maximize sustainable investments,” Kim said. “There's never been a better time to find those win-win solutions. The trillions of dollars sitting on the sidelines, earning little interest, and the investors looking for better opportunities should be mobilized to help us meet the exploding aspirations of people all over the world.”
Speaking at the
“All development finance institutions should be working to crowd in private capital through a set of principles that will maximize resources and benefits for the poor,” Kim said. “It's easy to talk about this approach, but it's going to be very difficult to change the global development architecture to move in this direction.”
First, for every project we support, we have to ask the question, 'Can the private sector finance this on commercial terms?' “That will mean that when something is commercially viable, we have to agree across the entire international development finance system – multilaterals and bilaterals – that we will help the government negotiate a private sector deal that provides value for money, ensures good governance, and adheres to environmental and social standards.”
Second, we have to encourage upstream reforms. “With all of our projects, especially those that are not commercially viable because of market failures or perceived risks, we will work with the government on regulatory or policy reforms to make these projects commercially viable, whenever possible. Our goal isn't just to de-risk projects; the goal is to de-risk entire countries.”
Third, we have to use public or concessional finance in innovative ways to mitigate risk, and blended finance to support private sector investment. “Our new tools also include the
Kim stated, “If we're successful at both creating markets and following these principles, countries can use scarce public resources to invest more in people, build resilience, and respond to crises. We need to keep searching for pathways to bring the private sector into these areas as well, but only if it's in the best interest of everyone, especially those currently excluded from the benefits of development.”
However, Kim said there are sectors that can only be funded with public financing, where objectives cannot be met by the cost recovery requirements of commercial financing.
Kim explained an emerging phenomenon that puts new urgency behind the need to reimagine development finance: a global “convergence of aspirations.”
“Someone in Butare,
“Knowing exactly how everyone else lives, in their own countries and abroad, is leading to a convergence of aspirations.”
Kim described how
Looking at the data on satisfaction, researchers found that if an individual's reference income goes up 10 percent, his or her own income has to go up at least 5 percent to reach the same level of satisfaction. And the data suggests that people's reference incomes will become globalized, which will mean that in order for people to feel satisfied, they will need to see significant increases in their own income.
“It's important to remember, rising aspirations aren't just for things that other people have; they're demands for opportunities that too many don't have,” Kim said. “And with high aspirations – embodied in the
Kim stated that, because of rising aspirations, “the task is much more urgent than we ever thought, and we have to move at a greater scale than we ever have before.”
Kim concluded his