About Development Finance

Development Finance Institutions (DFIs) are national and international institutions that provide loans, grants and other investments for projects and activities around the world. They include the World Bank, International Finance Corporation, and Multilateral Investment Guarantee Agency, the International Monetary Fund, the BRICS Bank, regional development banks, including the Asian Development Bank, Inter-American Development Bank, African Development Bank, European Bank for Reconstruction and Development, the European Investment Bank, the Asia Infrastructure Investment Bank, and the Islamic Development Bank, as well as national institutions like the Brazilian Development Bank, or the German Development Bank or the U.S. Overseas Private Investment Corporation. DFIs also include thematic funds like the ASEAN Infrastructure Fund or the Green Climate Fund.

Many DFI projects are easy to see – like dams, roads, and manufacturing plants. However, DFIs also provide loans and grants to governments for things that are more difficult to track, such as conducting technical studies, creating policies or paying for government health or education programs. They also conduct research and write reports that influence national laws and policies such as anti-corruption rules or subsidy reforms.

What do DFIs have in common?

  • Public money
    National DFIs receive money from from the State, while multilateral DFIs often receive a contribution from each of their member countries, as well as additional funds from wealthier countries. Much of these funds come from public, taxpayer money. DFIs may also raise money in other ways, such as by selling bonds or charging interest on their loans.
  • Government representatives make decisions
    DFIs are owned and governed by governments. Decisions to approve projects, policies and strategies are made by representatives of governments – called Directors or Executive Directors. Within the older DFIs like the World Bank, the more a government contributes, the more voting power it has within the DFI.
  • Public interest missions
    DFIs generally have public interest missions, such as poverty alleviation and sustainable development.