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About Development Finance

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About development finance

What Are Development Banks And How Do They Operate?

The landscape of Public Development Banks (PDBs) is complex and varied. There is no universally agreed definition of what PDB are, and which institutions the term includes, but in general PDBs share a few key characteristics:

  • PDBs are owned and governed entirely (or at least in part) by one or more governments;
  • they work to channel public resources to the public sector, businesses, or sometimes to individuals or non-governmental organizations;
  • they use different financing vehicles, including grants, loans, credit, guarantees, equity, and indirect investments through other financial institutions ;
  • they act in support of a public policy mission. Contrary to commercial banks, which operate to maximize profits, the stated purpose of PDBs is to serve the public good by supporting infrastructure, economic sectors, or activities that the private sector is unwilling or unable to support on its own.
World Bank protest
EWS

The Early Warning System

The EWS – which is anchored by the International Accountability Project (IAP) – ensures local communities, and the organizations that support them, have verified information about projects being proposed at major development finance institutions, and clear strategies for advocacy – ideally before funding is decided. It includes the first civil society-led database that summarizes projects proposed and approved at the largest development banks, which has been updated daily since January 2016.

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