MDBs must reform faster and shed ‘culture of competition’
GlobalMarkets, is part of the Delinian Group, DELINIAN (GLOBALCAPITAL) LIMITED, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 15236213
Copyright © DELINIAN (GLOBALCAPITAL) LIMITED and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement
Emerging Markets

MDBs must reform faster and shed ‘culture of competition’


Center for Global Development tool is tracking six MDBs’ progress on G20 and Bridgetown reforms

Multilateral development banks are failing to collaborate with one another in pursuing solutions to the world’s myriad crises, preferring instead to tackle challenges solo, according to a leading development expert.

The result is a pervasive “culture of competition, not collaboration” that has stymied global development and prevented multilaterals from seeking more radical and much-needed reform agendas, Nancy Lee, director of sustainable development finance at the Center for Global Development in Washington, told GlobalMarkets.

The thinktank this week launched its MDB Reform Tracker, an online tool that assesses progress the world’s six largest MDBs have made towards meeting the three most important reform agendas.

Two are from the Group of 20 nations: the Capital Adequacy Report published in 2022, and the G20 Experts Group on Strengthening the MDBs, which reported this year. The other is the Summit for a New Global Financing Pact in June, which closely followed the Bridgetown Initiative.

The tracker gives each MDB a score for whether it has made no or some progress on each of 43 reforms recommended by these groups, or completed them.

They include issuing hybrid capital and incorporating uplift from callable capital into their capital frameworks.

“The picture is very mixed,” said Lee. “You can’t single out one institution and call them a poor or a good performer. No one institution has performed well across the board.”

She said the MDBs needed to do more in the face of huge problems, exacerbated by climate change, war and Covid-19. MDBs had the wherewithal to help countries tackle such challenges but they needed to expand their lending capacity, cooperate more and react faster to unfolding crises, Lee said.

“Changes to adapt to the 21st century have not happened — and we are well into a century that requires change. That’s why you’re seeing a rising chorus of voices in borrowing and non-borrowing countries saying the pace of [reform at MDBs] is too slow.”

Bottom-up strategy

International financial institutions must get better at working with nations that support and rely on them. “They need to be better partners, more proactive in responding to their needs, more focused on mobilising private finance, on working with other MDBs, and in listening. The best strategy is a bottom-up one driven from the country level.”

Lee said success would hinge on two critical factors. The first was to ensure the shareholders of MDBs remained committed to long term reform. Second, that the MDBs are led, now and in the future, by leaders with the vision to change their institutions from within.

“Institutional leadership is key,” says Lee. “Change has to come from the very top.”

Gift this article