The Agence Française de Développement (AFD), The Bill & Melinda Gates Foundation and the World Bank co-hosted a Marketplace on Innovative Financial Solutions for Development held in Paris on March 4-5, 2010. The Marketplace seeks to garner and highlight fresh ideas on financial solutions for development. It is dedicated to innovative financial mechanisms for better mobilizing, channeling, and using funds.
The Marketplace bought together an internationally diverse set of hundreds of development practitioners, donors, philanthropists, social entrepreneurs, academics, representatives from a range of financial institutions, civil society, and policy makers.
Over the last years, AFD Group has diversified its financial products, including a sub national/non sovereign financing window with discrete ranges of concessionality, guarantee mechanisms, equity funds, support to local financial sectors to address the “missing middle” (mesofinance), contingent lending, and has introduced a countercyclical sovereign loan instrument. More
It also participates in instruments such as the Caribbean Catastrophe Risk Insurance Facility (CCRIF), alongside the World Bank, and in TCX a foreign exchange protection mechanism. AFD’s priority areas for research and development in innovative development finance include enhancement of sovereign bond issues, flexible financing tools to facilitate shocks absorption or providing better focused result incentives (such as “Cash on Delivery”) and guarantee and insurance mechanisms.
The World Bank's support to innovation in development finance range from raising funds to implementing efficient and effective financial solutions, to creating knowledge. The Bank accounts for more than a quarter of innovative fund-raising efforts for the US$57.1 billion in official flows between 2000 and 2008. More
It has raised a total of US$2.15 billion through bonds that tap new sources. Through its experience in development finance, legal services, economics, and trust fund management, the Bank was involved in the creation of the International Finance Facility for Immunisation (IFFIm), of which it is Treasury Manager. It has helped set up and is the Trustee of the Adaptation Fund, for which the Bank Treasury conducts Certified Emissions Reductions sales. It helped develop the Pilot Advanced Market Commitment for vaccines by supporting its design, negotiation and implementation, and has placed the $1.5 billion donor subsidy for the AMC pilot on the IBRD's balance sheet. The Bank has helped mitigate country risks with Catastrophe Deferred Drawdown Options, regional catastrophe insurance pools (the Caribbean Catastrophe Risk Insurance Facility), and weather derivatives insurance in Malawi. It has assisted in the identification and preparation of projects that reduce carbon emissions, moving to a programmatic approach (through the Carbon Partnership Facility) and promoting carbon projects in countries, sectors, and activities yet to benefit from carbon finance (including through the Forest Carbon Partnership Facility).
The Bill & Melinda Gates Foundation has supported the concept development and piloting of numerous landmark innovative finance transactions over the past several years, including the International Finance Facility for Immunization (the debt swap mechanism mobilizing resources for HIV, More
TB and malaria via the Global Fund); Advance Market Commitment for vaccines (in progress now); and in partnership with the IFC, African Development Bank and DEG, a double-bottom line private equity fund for health in Africa. Within the specific areas of its international focus – health, agriculture, microfinance, water and sanitation – the foundation expects to continue its search and support for efficiency-increasing and resource-mobilizing innovative finance transactions.
The key objectives of the Marketplace are to:
– advance the agenda on innovative financial solutions for development;
– facilitate knowledge-sharing and learning, including South/South learning, about which approaches work, which don’t, and how to design solutions to maximize impact and cost-effectiveness; and
– spur the evolution of cutting-edge projects that apply innovative financial mechanisms to development challenges.
A key feature of the event is a grant competition to garner and highlight fresh ideas on how innovative financing mechanisms can be used to better solve development challenges at local, country, regional, or global levels, with the goal that successful innovations can be scaled up and replicated broadly. 5 grants of US$100,000 each have been awarded. For more information see the Competition guidelines.