- Development Forum 2023
Development Forum 2023
The second OPEC Fund Development Forum in Vienna concluded with solid outcomes and financing commitments from development partners who came together to promote responses to global challenges such as availability of financing, food security and climate change.
OPEC Fund Director-General Dr. Alkhalifa said:
“In its second year the OPEC Fund Development Forum again provided a platform for increased collaboration and decisive action from our partners. We have demonstrated that we are ambitious and that we deliver. We remain firmly committed to addressing pressing global issues and to extending our resources in support of sustainable development.”
A world of instability needs strong institutions, with a clear sense of purpose and the commitment and capacity to deliver on their mandates. The second OPEC Fund Development Forum, held on June 20, 2023 in Vienna saw widespread agreement that development institutions must raise their game in the face of challenges such as climate change, food insecurity and rising poverty. “What is needed is a transformation of development finance,” OPEC Fund Director- General Abdulhamid Alkhalifa said in his opening remarks.
The Development Forum brought together the heads of the Islamic Development Bank (IsDB), Muhammad Al Jasser, the African Development Bank (AfDB), Akinwumi Adesina, and the French Development Agency (AFD), Rémy Rioux, as well as senior representatives of OPEC Fund member and partner countries, multilateral development banks (MDBs), businesses and opinion leaders.
In her keynote address Frannie Léautier, CEO of SouthBridge Investments, called for a reform of the MDB system: “We need to redefine risk, use callable capital to lift the headroom for MDB financing and develop innovative partnerships between the public and the private sector.” She welcomed the current reform process at the World Bank, which is followed by many other international and regional development institutions. “The time is now,” Léautier said.
In the opening panel, the heads of institutions responded to her observations. The OPEC Fund Director- General said: “Our overriding goal is to ensure that we use capital as efficiently as possible to deliver the greatest good for our partners.” AfDB President Adesina spoke of a US$5 trillion financing gap and warned: “We will not be able to provide anywhere near what is needed without the private sector.” IsDB Group Chairman Al Jasser emphasized that the energy transition is needed, but “if it is not just, it will fail”. Looking ahead to the Summit for a New Global Financing Pact in Paris, AFD CEO Rioux said: “The technicalities are clear. For real progress we need political leadership.”
Among the political leaders who spoke at the conference in Vienna’s Palais Liechtenstein were the Prime Minister of Bhutan, Lotay Tshering, and the Minister of Finance of Saudi Arabia, Mohammed Al-Jadaan. While the Prime Minister underlined Bhutan’s efforts to build resilient and sustainable development, the Saudi Minister spoke of the need to “enhance the role of MDBs” because climate change and other environmental challenges are compounding geopolitical tensions. Egypt’s Minister of International Cooperation, Rania Al-Mashat, stressed: “Cooperation is essential to everything.”
The first panel under the theme, “Towards a Transformative Development Model” explored new ways to strengthen cooperation between multilateral development institutions and the private sector. There was mutual agreement that both sides need each other. The Eastern and Southern African Trade and Development Bank’s (TBD) President Emeritus and Group Managing Director Admassu Tadesse called on MDBs to expand their support: “Risk appetite is key,” he said. But experience reminded him: “It’s easy to talk, but difficult to walk.”
Hela Cheikhrouhou, Regional Vice President at the International Finance Corporation (IFC), listed the many new tools offered by her institution: “Blended finance, risk-sharing, first-loss guarantees and other products are examples of how we are aiming to mobilize the private sector.” Addressing changes in the global financial architecture she said of the IFC: “We are moving from generating deals to distributing deals by crowding in others.”
When it comes to strengthening resilience Shukhrat Vafaev, Director General at the Agency for Strategic Reforms under the President of Uzbekistan, made the case for starting with small steps: “How will I be able to reach the United States, if I cannot enter the markets of my neighbor countries?” He added that although Central Asia traditionally looks to Moscow, it is now feeling the growing influence of Beijing: “Diversification is key,” Vafaev stressed.
The second panel on “Regional Collaboration as a Catalyst for Scalable Solutions” heard Ferid Belhaj, Vice President for North Africa and the Middle East at the World Bank Group, raise the alarm when it comes to the Sustainable Development Goals: “We are putting a lot of money on the table, yet we are nowhere near what is needed.” In the Fiscal Year 2022 (July 1, 2021-June 30, 2022) the World Bank deployed a record US$114.9 billion in new commitments, roughly the GDP of the Slovak Republic, a member of the European Union.
However, in a later panel on financing climate solutions, Gernot Wagner, a climate economist at Columbia Business School in New York, warned: “I remember where we stood in 2009, when we gathered for the COP15 Climate Change conference in Copenhagen. Then we coined the slogan: ‘From millions to billions’. Now that we are approaching COP28 what we need is ‘From billions to trillions.’” This, he said, shows that “the price for inaction is enormous”. And – as the conference agreed – it is a price always paid by those who have the least.
The panel discussions covered the subjects of transformative development finance, regional cooperation, food insecurity, climate solutions and partnerships for people and the planet. OPEC Fund Senior Director, Strategic Planning & Economic Services Department, Al Shaimaa Al-Sheiby discussed the institution’s approach to the most urgent challenges and said: “Climate finance is development finance.” She presented the Climate Finance and Energy Innovation Hub as an example of how the OPEC Fund is successfully deploying its leverage to mobilize finance from external partners.
Suzanne Gaboury, who heads up Private Sector Operations at the Asian Development Bank (ADB), said that her institution plans to raise its level of climate financing to US$100 billion by 2030. “The recently launched Innovative Finance Facility for Climate in Asia and the Pacific is a new and innovative approach to provide new financing by leveraging donor countries’ contributions.”
The OPEC Fund and ADB signed a technical assistance grant at the sidelines of the Development Forum. Additionally, a Memorandum of Understanding between the OPEC Fund and the United Nations World Food Programme will create the framework for a joint food security initiative that is currently under development.
The OPEC Fund also signed a US$20 million loan to Access Bank Botswana for on-lending to local micro, small and medium-sized enterprises with a focus on women entrepreneurs. Finally, the OPEC Fund agreed with the International Renewable Energy Agency (IRENA) to join the Energy Transition Accelerator Financing (ETAF) platform, a global initiative to mobilize funds for renewables.
The OPEC Fund plans to support the platform with up to US$250 million in financing until 2030 for renewable energy solutions in its partner countries. The closing panel stressed the urgent need to empower women, youth and the “Global South”. Nawal Al-Hosany, Permanent Representative of the United Arab Emirates to IRENA, said: “Not only do we need a roadmap for our transformation, but it also has to be a roadmap for everybody with no one left behind.”
There is no shortage of challenges the world is facing: Climate change, food insecurity, sluggish and uneven economic growth, armed conflict, severe backsliding in the delivery of the 2030 Sustainability Agenda, where according to the UN only 15 percent of goals are currently on target, and many more. The Director of the United Nations Office for South- South Cooperation, Dima Al-Khatib, summed it up: “Yes it is true, we are facing a polycrisis.”
However, the OPEC Fund Development Forum succeeded in fostering readiness to act and inspired a sense of optimism that by joining forces the international community will be able to rise to the challenge. Ms. Cheikhrouhou said about the new President of the World Bank, Ajay Banga, who assumed his post at the beginning of June 2022: “He wants us to think big.” Veronica Scotti, Chairperson Public Sector Solutions at the insurance company Swiss Re, captured this spirit with the words: “It can be done.”