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ContentsAcronyms 1
1. Introduction 2
2. Methodology 2
3. Definitionalissues 2
3.1 Innovativefinancing 2
3.2South-SouthCooperation 3
3.2.1NewinitiativesforSSC 3
3.3TriangularCooperation:Adefinition 4
3.4IDFCpartnerships:CooperationforDevelopment 5
4. WhyDeeperCooperation? 5
5. LessonslearnedthroughTriangularCooperation 6
6. IDFCexperienceswithSouthSouthand/orTriangularCooperation 6
6.1 Bancóldex(Colombia) 7
6.2CAF(LatinAmerica) 7
6.3JICA(Japan) 7
6.4CDGGroup(Morocco) 8
6.5EIB,KfWandAFD(MutualRelianceInitiative) 8
6.6BNDES(Brazil) 8
6.7TSKB(Turkey) 8
6.8DBSA(SouthAfrica) 9
6.9CDB(China) 9
6.10NAFIN(Mexico) 9
7. WhitherTriangularCooperation? 9
7.1 UNStrategicPlan2014-2017 9
7.2Guardingagainstpaternalism 10
8. Analysis 11
8.1 Modalitiesofcooperation 11
8.2Capacitybuilding 11
8.3Knowledgesharing 12
8.4Deepenexistingcooperation 12
9. Conclusion 13
10. AnnexureA–Currentareasofcooperation 14
11. Annexure2:NewareasforCFD 19
AcronymsAFD AgenceFrançaisedeDéveloppement
AfDB AfricanDevelopmentBank
ALIDE LatinAmericanAssociationofDevelopmentFinanceInstitutions
APEC Asia-PacificEconomicCooperation
BANDESAL BancodeDesarrollodeElSalvador
BCIE BancoCentroamericanodeIntegraciónEconómica
BMZ FederalMinistryforEconomicCooperationandDevelopment
CAF DevelopmentBankofLatinAmerica
CDB ChinaDevelopmentBank
CDG GroupeCaissedeDépôtetdeGestion
CFE(Ecuador) FederalElectricityCommission(Ecuador)
COFIDE CorporaciónFinancieradeDesarrolloS.A.
DAC DevelopmentAssistanceCommittee
DBSA DevelopmentBankofSouthernAfrica
DFI DevelopmentFinanceInstitution
EIB EuropeanInvestmentBank
EU EuropeanUnion
GEF GlobalEnvironmentalFacility
GIZ GesellschaftfürInternationaleZusammenarbeit
IADB Inter-AmericanDevelopmentBank
IBSA IndiaBrazilSouthAfricabloc
IDFC InternationalDevelopmentFinanceClub
IIF InstituteforInternationalFinance
IIPSA InfrastructureInvestmentProgrammeforSouthAfrica
JICA JapanInternationalCooperationAgency
JBPP Japan-BrazilPartnershipProgram
KfW KfWBankengruppe
MIDA MalaysianInvestmentDevelopmentAuthority
MRI MutualRelianceInitiative
MTPA MalaysianTradePromotionAuthority
NAFIN NacionalFinancieraS.N.C.,I.B.D.
ODA OfficialDevelopmentAssistance
OECD OrganisationofEconomicCooperationandDevelopment
SADCDFRC SouthernAfricanDevelopmentCommunityDevelopmentFinanceResourceCentre
SIBDI SmallIndustriesDevelopmentBankofIndia
SSC South-SouthCooperation
TC TriangularCooperation
TIB TanzanianInvestmentBank
TİKA TurkishCooperationandCoordinationAgency
TSKB IndustrialDevelopmentBankofTurkey
UNIDO UnitedNationsIndustrialDevelopmentOrganisation
UNOSSC UnitedNationsOfficeofSouth-SouthCooperation
ZITPO ZambianInvestmentandTradePromotionAgency
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1.INTRODUCTION11
In2014,themembersoftheInternationalDevelopmentFinanceClubbegantoexploreaframeworkthatbestdefinedanddescribeddevelopmentcooperationwithintheClub.InitiallytheproposalwasbasedontheconceptofTriangularCooperation(TC)thatwouldprovideaplatformfortheconcretedeepeningofcollaborationbetweenmembers.
ThispaperisinformedbyaresearchprocessledbytheDBSAonmembers’understandingof‘South-South’Cooperation(SSC),TCandotherformsofmultilateralcooperation.TheideasinthisDiscussionPaperwilllaythefoundationsofdeepercollaborationbetweenmembersandcouldpotentiallyresultinconcreteprojectsco-financedbyIDFCmembers.
ThepaperexplorestheprocessthatledtotheIDFCmemberscoiningtheterm‘CooperationforDevelopment’(CfD)tomoreaccuratelydescribethekindofcollaborationthattakesplacebetweenmembersandwithnon-members.CooperationforDevelopmentincludescooperationwiththeintentiontohaveasignificantdevelopmentimpactaswellasthedevelopmentofmembersthroughknowledgesharing, capacity building and adoptionof best practice across theClub. The IDFChas since adopted the termCooperation forDevelopment,whichbestdescribestheirmodesofcollaboration.
2.METHODOLOGY
Theleadontheworkstream,theDevelopmentBankofSouthernAfrica,convenedaroundtabletoexplorethefollowingaspectsofTC:
•TheirunderstandingandexperienceofTC;
•Theexistingmodelsforco-financingandwhattheyentail;
•Theaccelerationanddeepeningofeffortstomakeourrelationshipsmoreeffective;
•TheroleoftheprivateandpublicsectorsinTCandtherolecivilsocietyplays,ifany;
•Sourcesoffinanceavailabletosupportsustainabledevelopment(includingbutnot limitedto infrastructurefinance,socialprogrammes,etcetera);
•New financial instruments and investment options that need development tomeet the increased demand for sustainabledevelopment,domesticresourcemobilisationandareducedrelianceonOfficialDevelopmentAid(ODA);and
•Developmentofaframeworkforcooperationthatreliesonmutualreliance,mutuallyagreeddiagnostictools,mutualassessmentreviews,etceteratomakefinancemoreeffectiveandsustainable.
ThreeteleconferencecallswereheldwiththeJapanInternationalCooperationAgency(JICA),GroupeCaissedeDépôtetdeGestion (CDG),MoroccoandNacionalFinanciera,S.N.C(Nafinsa),Mexico.Twodiscussionswereheldwithacademics/think-tankmemberswhoworkonSouth-Southandmultilateralcooperation.
3.DEFINITIONALISSUES3.1Innovativefinancing
ThereisatrendtowardsdefiningandfindinginnovativewaysoffinancingfordevelopmentthatshowshowdevelopmentpartnershavebeguntolookbeyondOfficialDevelopmentAssistance.InnovativeFinancingisonesuchtrend,whichtheWorldBankhasdefinedas
Budgetoutlaysfromestablishedsovereigndonorsorbondsissuedbymultilateralandnationaldevelopmentbanksexclusivelytoachievefundingobjectives.Innovativedevelopmentfinancethereforeinvolvesnon-traditionalapplicationsofsolidarity,PPPandcatalyticmechanismsthat(i)supportfundraisingbytappingnewsourcesandengaginginvestorsbeyondthefinancialdimensionoftransactions,aspartnersandstakeholdersindevelopment;or(ii)deliverfinancialsolutionstodevelopmentproblemsontheground2.
1AspecialthankyoutoBancóldexforcollaborationoncontentandtoallIDFCpartnersfortheirfeedback,whichhascontributedtothedevelopmentofthispaper.
2UNDP,2012.‘InnovativeFinancingforDevelopment:ANewModelforDevelopmentFinance?’p.5.http://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Development%20Cooperation%20and%20Finance/InnovativeFinancing_Web%20ver.pdftoaddressmarketfailuresorscaleupongoingdevelopmentalactivities’
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TheOECDdeterminesthatinnovativefinancingincludes‘mechanismsofraisingfundsorstimulatingactionsinsupportofinternationaldevelopmentthatgobeyondtraditionalspendingapproachesbyeithertheofficialorprivatesectors,suchas:
•Newapproachestopoolingprivateandpublic revenuestreamstoscaleupordevelopactivities for thebenefitofpartnercountries;
•Newrevenuestreams(e.g.anewtax,charge,fee,bondraising,saleproceed,orvoluntarycontributionscheme)earmarkedtodevelopmentalactivitiesonamulti-yearbasis;and,
•Newincentives(financialguarantees,corporatesocialresponsibilityorotherrewardsorrecognition)toaddressmarketfailuresorscaleupongoingdevelopmentalactivities’3.
3.2South-SouthCooperation
TheUnitedNationsOfficeforSouth-SouthCooperationoffersthefollowingdefinitions:
Theterminologyusedtodefinethetypeofengagementdeterminesthekindsof relationshipsentered intoduringcollaborativeinitiatives. Some traditional development partners could argue that the term ‘South-South cooperation’ does not include theirinvolvement in development partnerships and that the focus is shifted towards a geographical construct. In some contexts,South-Southcooperationcouldcarrytheweightofpoliticsandculturalimpolitenessasitdenotesaparticularlevelofpowertotheparticipantsinthatrelationship.
Intheearlystagesofthedeliberations,memberssuggestedthatTCwasamoreeconomicallyandpoliticallyinclusivetermasitis neither attached to geographic origin nor ‘old’ terminology (developed vs developing) but recognizeseachparticipant as anequalpartnerintherelationship.TCallowsforarelationshipthatgoesbeyondthreepartners,asevidencedintheOECDdefinitionbelowbutthroughcurrentuse,thetriangularreferencelimitsthekindsofrelationshipsthatcouldpossiblyemergeincollaborativeinitiatives.
InthediscussionsinformingthisDiscussionPaper,afewalternativeswereposited:
• Mélangecooperation,whichencompassesthedifferentpartnersintherelationship;
• Transformationalcooperation,whichspeakstotheintendeddevelopmentimpactofthecooperation;and,
• Traditionalandemergingcooperation,whichdefinesthenatureofthepartnersengagedinthecollaboration.
What becomes clear is that the terminology is steeped in a particular history, geography and politics. In defining cooperation,thedevelopmentsectorneeds to take intoconsiderationanypriorsensitivity relatedto thosetermsandattempt to forgenewdefinitionsthatmoreaptlydescribethecurrentrelations.
3.2.1NewinitiativesforSSC
AnumberofnewinitiativeshaveemergedaroundSouthSouthCooperation.TheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)co-hostedaTechnicalWorkingGroup (TWG) inGenevawith theNetworkofSouthernThink-tanks (NeST). Thenetworkhas committed itself to ‘generating, systematising, consolidating and sharing knowledge on South−South co-operation (SSC)approachestointernationaldevelopment’.TheGenevaTWGmeeting’sthemeofthemeetingwas‘Defining,measuringandreportingonSouthSouthCooperation’.NeSTprovidesinputsintoglobalandregionaldebatessuchastheAfricanPlatformforDevelopmentEffectiveness(AP-Dev),AfricaVision2063,thePost-2015DevelopmentAgenda,FinancingforDevelopment(FfD),BRICS/IBSAAfricaSummitsandtheGlobalPartnershipforEffectiveDevelopmentCooperation.
ThediscussionsinGenevalookedatthedifferencebetweenSouthSouthDevelopmentCooperation(SDC)andSSCandhaddetaileddiscussionsaboutwhateachapproachwouldentail.In2015,ataNeSTworkshopinSouthAfrica4,participantsgrappledwiththedefinitionandparametersofSSCandSDC.Anumberofdifferentinputswereprovided:
•TheBuenosAiresPlanofAction(1978)definesSSCtoincludetechnicalandeconomiccooperationbetweendevelopingcountries.SCCwouldthenincludetrade,investment,aid,lending,debtrelief,capacitydevelopment,technologyandknowledgetransfer.SSCshouldbeinclusiveandincludegovernmentparticipation.
3OECD(2009)cited,inUNDP2012‘InnovativeFinancingforDevelopment’,p.7.4NeissanAlessandroBesharati,MatshedisoMoilwa,KelebogileKhunouandOrnelaGarelliRios,‘DevelopingaConceptualFrameworkforSouthSouthCooperation’,September2015,foundathttp://www.saiia.org.za/news/welcome-to-nest-africa
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•WhendefiningSDC,themotiveshouldbefordevelopmentpurposesandnotforeconomicprofit.
It is important to note thatmanyparticipants on theNeST forumare fromcivil society and fromgovernment institutions taskedwithmeasuringandreportingonSSC.Somecountrieswereaheadofothersinrelationtothemeasuringandreportingwhileotherswerestillsettingupinstitutionsforthosetwoprocessesandrelyontheircentralbanksornationaltreasurydepartmentstostructurethereports.
InevaluatingSSC,thedefinitionalchallengesariseespeciallyonwhatshouldbeincludedandexcludedinthedefinition;whichprocessescount;howshouldSSCbemeasured;and,howdoverydisparatenationalsystemsbegintoalignandcoalesceintoagenerallyacceptedmeasurementsystem.ForthepurposesoftheIDFC,thememberswereoftheopinionthatSSCandSDCinsufficientlydescribedtheuniverseoftheircooperationwithpartners.
AsecondnotableinitiativeistheUnitedNationsEconomicandSocialCouncil’s(ECOSOC)DevelopmentCooperationForum(DCF)forSouthernprovidersofdevelopmentcooperation.ThesecondmeetingwilltakeplaceinDelhiinFebruary.TheDCFisbasedonrespectfornationalsovereignty;nationalownershipandindependence;equality;non-conditionality;non-interference;andmutualbenefit.TheDCFinformstheFinancingforDevelopmentprocess,contributestotheAddisAbabaActionAgendaandthepost-2015developmentagenda.SomeoftheIDFCcountriesarememberstothisforum.
3.3TriangularCooperation:Adefinition
Triangular Cooperation infers a new kind of relationship between partners. It provides a framework within which partners can shareexperiences,strengths,andmitigateweaknessesandthreats.ItwasevidentintheearlierdebatesinformingthisDiscussionPaperthatTCexistsinvariouscomputationswithinthegrouping,eitherbetweenmembersorbetweenmembersandothercountries.
ItisimportanttonotethatanareaofcooperationthathasnotbeenfocusedonsufficientlyisthatbetweenDevelopmentFinanceInstitutions(DFIs)themselves.DevelopmentbankshaveexpertiseintheirowncountriesthatcouldbetransferredorsharedwithotherDFIs.Themainissuesathandarehowmemberscandeepentheircollaboration,poolresources,andoffersolutionstodevelopmentproblemsthatIDFCmembersfaceorpartnersoutsidetheClub.
TriangularCooperationhasbeendescribedasNorth-North-South,South-South-North,South-South-South,andsoon.TheBogotaStatement,TowardsEffectiveandInclusiveDevelopmentPartnerships5,hasreferredtoitasa‘bridge’betweentheNorth-SouthandSouth-Southmodelsofcooperation.
Anumberofdevelopingcountrieshaveadoptedtriangularcooperationintheirdevelopmentfocus,namely,Argentina,Brazil,Chile,China,Egypt,Indonesia,Malaysia,RepublicofKorea,Singapore,Thailand,TunisiaandTurkey.Interestingly,sevenofthe12countrieslistedaboveareinvolvedintheIDFC,whileMalaysiaisinvolvedviaaprojectwiththeJapanInternationalCooperationAgency(JICA).
TheUNDPdefines TriangularCooperation as ‘Southern-drivenpartnerships between twoormoredeveloping countries, supportedby adevelopedcountry(ies)ormultilateralorganization(s),toimplementdevelopmentcooperationprogrammesandprojects’6.
In2010,theOrganisationofEconomicCooperationandDevelopment’s(OECD)DevelopmentAssistanceCommittee(DAC)initiallydefinedtriangularcooperationas:
PartnershipsbetweenDACdonorsandpivotalcountries(providersofSouth-SouthCooperation)toimplementdevelopmentcooperationprogrammes/projectsinbeneficiarycountries(recipientsofdevelopmentaid)7.
Later,in2012,OECDDACamendedthedefinitionto:
ApartnershipwhereoneormoreprovidersofdevelopmentcooperationsupportSouth-Southcooperation,joiningforceswithdevelopingcountriestofacilitateasharingofknowledgeandexperienceamongallpartnersinvolved8.
If thedefinitionused in the IDFC is limited to theOECDDACand theUN’sconceptionsof triangularcooperation,a largecommunityofdevelopmentpartnerswillbeexcluded.ItisintheinterestsofinclusivitythattheIDFCcreatesitsowndefinitionthatallowsforvariousconfigurationsthatencompasscurrentdevelopmentcooperationexamples.
5http://www.un.org/en/ecosoc/newfunct/pdf/bogota-statement-final.pdf6UNDP,FrequentlyAskedQuestions–South-SouthandTriangularCooperationhttp://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Development%20Cooperation%20and%20Finance/SSC_FAQ%20v1.pdf
7http://www.die-gdi.de/uploads/media/DP_14.2014.pdf(p.36)8Ibid.
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3.4IDFCpartnerships:CooperationforDevelopment
TheobjectiveofthisDiscussionPaperistodefinethekindofcooperationinwhichIDFCmembersengage.ThegeneralconsensusisthatitiscooperativeinnaturewithoneormoreIDFCmemberscooperatingwithdevelopmentpartnersinawaythatextendsknowledgesharing,technicalassistanceandfinancinginwaysthatareinnovativeandworkforthepartners.ThemainargumentisthatitdevelopstheIDFCmember(s)aswellasthenon-IDFCpartnerthroughcooperationinareasofmutualbenefitandinterest.
Triangular Cooperation was seen to be the closest descriptor for the IDFC’s cooperation modalities as is evidenced in their currentpartnershipsfordevelopment.However,itwasagreedthatthedefinitionwaslimitedinthatitdidnotcomprehensivelydescribetheentiregamutofengagementsamongIDFCmembers.
ForthepurposesofthisIDFCinitiativerelatedtodeepeningcooperationwithintheClub,theterm‘CooperationforDevelopment’(CfD)hasbeencoined.TheIDFCcooperatesintheareasofknowledgesharing,capacitybuildingandtechnicalsupport.Thesepartnershipsarebasedonsharingknowledge,experiencesandbestpracticesamongmembersformutualbenefitorforthebenefitofadditionalpartieswhomightbemembers.
Thecooperationcanbeasingleeventcollaborationwithinaparticularsector,forexample,energygeneration,oramultiyearprogrammeacrossanumberofsectors.FortheIDFC,CooperationforDevelopment(CfD)indicatesaparticularkindofpartnershipbetweenmembersand/orthirdpartieswiththeobjectiveofdeepeningdevelopmentimpactandforgingstrongerpartnershipswithlike-mindedinstitutions.
4.WHYDEEPERCOOPERATION?TheThirdInternationalConferenceonFinancingforDevelopment(FFD3)washeldinEthiopiainJuly2015underthetheme‘TimeforGlobalAction’.EmergingfromtheFFD3wastheAddisAbabaActionAgenda(AAAA)thatrecognizedthechallengesfacingtheglobaleconomyandhumandevelopment.TheAAAAcommitstodeliveringonsocialprotectionandessentialpublicservices;scalingupeffortstoendhungerandmalnutrition;promoting inclusiveandsustainable industrialization;generatingfullandproductiveemploymentanddecentworkforall; protectingecosystems; andpromotingpeaceful and inclusive societies. To achieve theSustainableDevelopmentGoals,multilateraldevelopmentbanks(MDBs),DevelopmentBanks,countries,financialinstitutionsanddevelopmentagencieswouldneedtoworktogetherwithcivilsocietyandtheprivatesectortoensurethatsufficientfundsareraised.Thedevelopmentimpactoffinancewillbecomeintegraltothesuccessoffinancingeffortsasfinanceismorecarefullyinvestedinstrategicprojects;asdomesticdemandsarebeginningtoplacepressureoninternationalinvestments;asfinancehastostretchfurtherthanbeforeandbemoreeffective,efficientandsuccessfulthaninthepast.Forthisreason,cooperationandstrategicpartnershipswillbeimportanttodrivefuturefinancingfordevelopment.
Duetothegrandscaleneedfordevelopment,theMDBscommittedtoextendmorethan$400billionoverthenextthreeyearstowardsfinancingtheSDGs.Worldinfrastructuregapsareestimatedtobearound$1trillionperyear.ItisimportanttoharnessallsourcesoffinancetomeettheSDGsandallotherdevelopmentneeds,includingsocialandeconomicinfrastructure,andsocialprogrammes.Inlightofthis,newmodelsofcooperationhavetobesought,developedandpracticedinthenextperiodofdevelopment.
The global financial crisis, the Paris Declaration, BusanPartnershipAgreement and increasing domestic demands on countries call foralternativemethodsof resourcemobilisation and innovativefinancing for development. South-SouthCooperation (SSC) and TCprovideopportunitiestopoolresourcesinpriorityareas,sharehumanresourcesandskillsandbestpracticeamongstIDFCmembers.In2011,theUNGeneralAssemblyhighlighted‘theimportanceofscalinguppresentinitiativesanddevelopingnewmechanisms’9todealwiththegrowingneedfordevelopmentfinance.Alltheseopportunityspacesforcollaborationreducecostsandensurethatthesamelevelofdevelopmenteffectivenessandsupportareupheld,despitenarrowedfiscalspaces.
TheexistingexperienceswithSSCandTClimittheengagementstotechnicaltransfersandknowledgesharingpractices.ContinueddemandsonDFIscreateanimperativethattheinstitutionsworksmarter,moreeffectivelyandproduceahigherdevelopmentimpactthroughtheirworkwithpartners.
The IDFCmembers recognize thata triangular relationship is notoneparticular configurationof cooperationbut could involvevariouspartnerships. It is necessary to emphasise that members believe that lessons could be gleaned from the recipients of developmentcooperationaswellastheotherpartners.Therelationshipisthereforeonebasedonsharing,learningandbuildingexpertiseandknowledge.The example that comes tomind isMozambique’s sharing of lessons learned fromBrazilwithMalawi, or theDBSA’s expertise in fundmanagementwithotherDFIsinAfrica.Theseexampleswillbeexpandeduponinthenextsection.
9UNDP,2012.‘InnovativeFinancingforDevelopment:ANewModelforDevelopmentFinance?’p.5.http://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Development%20Cooperation%20and%20Finance/InnovativeFinancing_Web%20ver.pdf
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InapaperonSouth-SouthandTriangularCooperation,AkihikoTanakapositsthatSSCandTChavearoletoplayparticularlyinregionalorcross-borderdevelopmentprogrammesandcollaborationastheyofferopportunitiesformutuallearningandknowledgesharingandareeffectiveinmobilizingskillsfromacrosstheworld.10
TheverysuccessoftheIDFCillustratesaparadigmshiftfromthetraditionalnotionsofdevelopmentcooperationtoonewherenationalandregionaldevelopmentfinanceinstitutionsfromdevelopingandemergingcountriesplayinganincreasingroleinthemobilisation,channelingandimplementationofresources.
5.LESSONSLEARNEDTHROUGHTRIANGULARCOOPERATIONExperienceswithSouth-SouthCooperationandTriangularCooperationarenumerous.Thissectionservestooutlineonlyafewtoprovidepointsofdiscussionfortheproposalsattheendofthisdocument.
Ina2008article,NageshKumarexploredanewparadigmindevelopmentcooperationandhighlightedsix‘appropriate’reasonsforSSCandTC:
•Developing countries share similar structural characteristics such as abundance in labour and relative capital scarcity thereforedevelopingcountrysolutionswilltakethosefactorsintoconsideration;
•Technologicalsolutionsarefromenvironmentsthathaverelativelypoorinfrastructurethereforeparticularsolutionswillbedevelopedforthoseenvirons;
•Developingcountryexpertisewillbeattunedtogeo-climaticconditionsthereforeagriculturalsolutionswillbetailoredtothoseclimes;
•Thedevelopmentoftechnologiesandexpertisewillbeattherightscaletoaddressthesizeofmarketsindevelopingeconomies;
•Technologiesandexpertiseislikelytobecosteffectiveinviewoflowincomeconsumersindevelopingmarkets;and,
•TCcanachievemuchgreatereffectivenessperunitofresourcesspentcomparedtotraditionalNorth-Southdevelopmentassistancerelationships.11
KumaralsonotesthatTCwillcontinuetoexpandbecauseof traditionalandemergingdevelopmentpartners’strategiestoexpand intodevelopingcountries.ChinaandIndiahaveexpressedan interesttoexpandtheirbusinesswithAfrica,whileemergingmarketssuchasMalaysia,Turkey,theRepublicofKoreaandothershavealsodeepenedtheirrelationshipswithotherGlobalSouthpartners.
The article covers different sectors of cooperation ranging from infrastructure to training, to trade facilitation. Kumar’s empiricalevidencehighlightstheSSCinSoftwareTechnology(SSC-ST)asanexampleofhowSSCandTCcouldbeimplementedamongpartners.OnerecommendationKumarmakesfordevelopmentfinanceinstitutionsistogivepreferencetoprocurementfromGlobalSouthsuppliersbyeitherhavingrotationalbiddingbysuppliersorbyreservingacertainproportionofprocurementfromSouthernsupplierstodeliveryinother developing countries.12Thiswouldprovetobeanadditionalformofassistancetodevelopsouthernvaluechainsleadingtoeconomicdevelopment in those countries.
Other forms of TC do exist that have also combined innovative forms of financing for development. These include green bonds, stateguarantees,PPPs, taxes,debt-based instruments,carbon taxes,financial transaction taxes, IMF’sSpecialDrawingRightsandSolidarityTobaccoContributions.Thelatterfourarenewinitiativeswhilepartnershaveinstitutedothersandpracticethosemodalitiestovaryingdegrees.13
Innovative financing and cooperationmodalities could produce research and knowledge sharing among IDFCmembers. TheUNDP callsformoreworkatcountrylevel,‘toexplorecountrylevelperspectivesoftheinnovativemechanismsimplementedsofar–bothpositiveandnegative’.14ThiscallcouldbeansweredbytheIDFCmembersasthereisarichhistoryofcollaborationwithintheClubbuttherewerestillopportunitiestoandacommitmenttoexplorenewmodalitiesofcooperation.ThenextsectionlooksatexistingexperiencesofIDFCmembers.
6.IDFCEXPERIENCESWITHSOUTHSOUTHAND/ORTRIANGULARCOOPERATIONThissection looksateach institution individuallyas theyrespondedto thequestionnaire.AnnexureAprovidesamoredetailedoutlineofcooperationwithineachinstitutionandbetweentheirinstitutionalpartners.ThissectionusestheTriangularCooperationratherthanCooperationforDevelopmentbecausetheinformationwasgatheredpriortotheClub’sdecisiontoadopttheCfDframework.
10http://jica-ri.jica.go.jp/publication/assets/1_PartI-Chapter0.pdfFullpublicationavailableathttp://jica-ri.jica.go.jp/publication/booksandreports/scaling_up_south-south_and_triangular_cooperation.html
11NageshKumar,2008.South-SouthandTriangularCooperationinAsia-Pacific:TowardsaNewParadigminDevelopmentCooperation’inResearchandInformationSystemforDevelopingCountries,RIS-DP#45,pp.4–5.http://www.aideffectiveness.org/media/k2/attachments/dp145_pap_1.pdf
12Kumar,2008,p.4513UNDP,2012.http://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Development%20Cooperation%20and%20Finance/
InnovativeFinancing_Web%20ver.pdf14Ibid.p.40.
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6.1Bancóldex(Colombia)
Bancóldex’ssharinginitiativesarenotscheduledbutdevelopuponspecificrequestsfromcurrentIDFCpartners,governmentswithintheregionandnon-IDFCmemberswhoareawareofBancóldex’sstrengthsandexpertise.Theyshareknowledgethroughmultilateralgroups,governmentrequests,bilateralinitiatives,intraregionaltechnicalcooperationandinstitutionalisedsharingprogrammes.BancóldexisoneofthemoreexperiencedTCmembersoftheIDFC(alongwithJICA)andhasextensiveexpertiseinknowledgesharingandcapacitybuildingwithintheregionandwithotherpartners.
6.2CAF(LatinAmerica)
CAFcooperateswithIDFCmembersandotherdevelopmentbanksandinstitutionsinavarietyofways,includingknowledgesharing,capacitybuildinginitiatives,networkingactivities,inter-regionalforumsandevents,jointpolicyresearch,syndicatedloans,co-financing,refinancing,guarantees,grantsandtechnicalassistance.
Examplesofcooperationwithpartnersincludebutarenotlimitedto:
CAF-KfW:
CAFandKfWhaveworkedtogethertowardthedevelopmentoftheLACregionformorethan30years(since1977).Currently,CAFhas6creditfacilitieswithKfWforatotalofUSD844.10MM.ThiscooperationhashelpedfinanceprojectsinPeru,Panama,Uruguay,Ecuador,Brazil,Venezuela,DominicanRep.,Mexico,ColombiaandBolivia,insectorslikeinfrastructure,energy,climatechange,transport,andwaterandsanitation.
Afewprojectexamples:
-MassiveTransportProjectsinPeru:USD140M
-MetroofPanama:USD110M
-WindpowerprojectinMexico:USD20M
-InfrastructureinDominicanRep.:USD40M
-HydroelectricProjectinVenezuela:USD50M
CAF-AFD:
CAFsigneditsfirstcreditfacilitywithAFDin2011,forUSD260MM,tofinanceurbantransport,energy,waterandwastewaterprojectsinBrazil,Colombia,DominicanRep.andMexico.CAFandAFDarecurrentlyclosingasecondcreditfacilityforEUR100MMtofinanceclimatechangemitigationandadaptation,urbandevelopment,massive/urbantransport,andwaterandsanitationprojectsinColombia,DominicanRep.,Peru,EcuadorandBolivia.
Afewprojectexamples:
-EnergyinBrazil:USD65M
-TransportinBrazil:USD20M
-InfrastructureinBrazil:USD47M
-WaterandSanitationinBrazil:USD25M
-UrbanTransportinColombia:USD70M
-UrbanDevelopmentinDominicanRep.:USD33M
CAFhascooperationagreementscoveringarangeofactivities,withAFD,KfW,VEB,BNDES,CaribbeanDevelopmentBank,CentralAmericanBankforEconomicIntegration(CABEI),AgenciaEspañoladeCooperaciónInternacionalparaDesarrollo(AECID),BelgianInvestmentCompanyforDevelopingCountries(BIO),NetherlandsDevelopmentFinanceCompany(FMO),ItalianMinistryofForeignAffairs,SimestItalia,EuropeanInvestmentBank(EIB),AsianDevelopmentBank(ADB),ChinaEximBank,JapanBankforInternationalCooperation(JBIC),OPECFundforInternationalDevelopment(OFID),EximbankofIndia,EximThailand,InternationalEnterprise(IE)Singapore,KoreanInstituteforInternationalEconomicPolicy(KIEP),KoreaDevelopmentBank,KoreaEximBank,ExportDevelopmentCanada(EDC),USTradeandDevelopmentAgency(USTDA),andAvinaFoundation,amongothers.
6.3JICA(Japan)
TheJapanInternationalCooperationAgency(JICA)hasbeenengagedinTriangularCooperationforover30years,andhasdevelopedmanysuccessfulpracticesinthisfield.Forexample,JICAhasbroughttogethertheZambianInvestmentandTradePromotionAgencywiththeMalaysianInvestmentDevelopmentAuthorityandtheMalaysianTradePromotionAuthoritytoexchangelessonslearntinandideasfromMalaysiathroughtechnicaltransfertoZambia.
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AsecondexampleisthecollaborationwithJICA,BrazilandMozambiqueintheagriculturalsectorthroughtheJapan-BrazilPartnershipProgram(JBPP),whereJICAhasfacilitatedthetransferofBrazil’sexpertiseinagriculturetoaLusophoneAfricancountrywithagrowingagriculturalsector.JICAis,infact,aleaderinSSCandTC(seelinksbelow)andhasproducedanumberofresearchpapersonthetopicinadditiontoimplementationofSSCandTCprogrammesontheground.15
In2009, theAfricanDevelopmentBank,JICAand theExport-ImportBankofKoreaagreed toco-finance theconstructionof350kmofroadandrelatedactivitiesinMozambiquefromNampulatoCuambatotalling5.978billionyen.Theprojectwasalsothefirstco-financedJapan-KoreaODAproject.16
6.4CDGGroup(Morocco)
TheCaissedeDépôtetdeGestion(CDG)Groupisafinancialinstitutionmanaginglong-termsavingsinMorocco.Theirinstitutionalexperiencewithcooperationhaspredominantlybeenonabilateralbasisforknowledgesharing;institutionalcapacitybuilding;jointventuresforskillstransfer;andcooperationinindustrialinitiatives.CDGhasalsoconcentratedtheirworkinfrancophoneAfrica,whichcapitalisesonasharedlanguageandsimilarculturesandknowledgesystemscommonamongtheirclients.
6.5EIB,KfWandAFD(MutualRelianceInitiative)
OneexistingexampleoffinancialcollaborationwithintheIDFCistheMutualRelianceInitiative(MRI)establishedbytheEuropeanInvestmentBank(EIB),KfWBankengruppe(KfW)andAgenceFrançaisedeDéveloppement(AFD).
Theinstitutionsaresimilarinframeworkandoperatefromthesameregionalbase,namelyEurope.TheirinterestsconvergeintheirAfricastrategies, whichmake it easier for the identification of common interests, agreement on project criteria, monitoring and evaluationresponsibilitiesandotherareasofcooperationthatdonotrequirecase-by-caseboardapproval.TheEIBalsoworksacross28memberstates,whiletheAFDandKfWbelongtothetwobiggestEuropeanUnion(EU)memberstates.TheagreementwasfashionedaftertheParisDeclarationcalledfortheharmonizationandstreamliningofaid.
Theconsortiumhasregularmeetingstoshareexperiencesandbestpractice.Practicalneedsoftheprojectgovernthekindsofinstitutionalarrangementsintowhichthemembersenter,forexample,whotheleaderoftheprojectis,whowillfinanceandoverseeduediligenceandfeasibilitystudies,etcetera.
AconcreteexampleoftheoperationsoftheMRIisevidentintheInfrastructureInvestmentProgrammeforSouthAfrica(IIPSA)wheretheDBSAmanagesthefundprovidedthroughtheirrelationshipwiththeEuropeanUnionforthedevelopmentofinfrastructureinSouthAfricaandtherestofAfrica.TheDBSAhasbeenappointedasmanageroftheIIPSAduetoitsextensiveexpertiseinprogrammemanagementparticularlythemanagementofpartnerfunds.
6.6BNDES(Brazil)
InadditiontoBrazil’striangularcooperationwithJICA,thecountryhastriangularrelationsinthebiofuelsectorwithIndiaandSouthAfricaasmembersofIBSA;withMercosurmembersinanagreementtocooperateinthebiofuelssectorandproductiontechnologies;withtheAsiaPacificEconomicCooperationBiofuelsTaskforce;UNIDOandtheAfricanUnion;and,theEUandAfricaonAgriculture.Brazil’sexperiencehasbeenintechnicalandknowledgetransfer,institutionalcapacityandbuildingasoneoftheleadersinthebiofuelsector.TheEUandtheUnitedStatesofAmericahavebeenbroughtintofacilitatetriangularcooperationwiththeassistanceofBrazil.
6.7TSKB(Turkey)
The Industrial Development Bank of Turkey and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) haveenteredintoatriangularrelationshiptopromotedevelopmenteffectiveness,partnershipsandfoster‘South-Southcooperation,regionaldevelopment,dialogueandnetworking’17.TheDeutscheGesellschaftfürInternationaleZusammenarbeit(GIZ)establishedanofficeinAnkarato initiate cooperationprojects and to advise TİKAon instruments andmethodsof development cooperation. Todate, the relationshiphasyettoidentifyprojectsforco-financing.GermanyhasselectedTurkeyasaTCpartnerbecauseofthelatter’sstatusasanemergingdevelopmentpartneroran‘anchorcountry’18.Throughthisbilateralrelationship,GermanyandTurkeycouldexpandtheirrelationshipintotheAdriaticregionorintootherdevelopingcountrieselsewhere.ThisrelationshipisevidenceofthepotentialofdevelopinganexistingbilateralrelationshipintoTC.
15http://jica-ri.jica.go.jp/publication/booksandreports/japans_triangular_cooperation_mechanism_with_a_focus_on_jicas_activities.htmlandhttp://jica-ri.jica.go.jp/publication/booksandreports/tackling_global_challenges_through_triangular_cooperationachieving_sustainable_development_and_eradi.html
16http://www.jica.go.jp/english/news/press/2009/100311_01.html 17http://www.die-gdi.de/uploads/media/DP_14.2014.pdf(p.41) 18http://www.die-gdi.de/uploads/media/DP_14.2014.pdf(p.43)
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TSKBisnotadeposittakinginstitutionthereforereliesmainlyonfundsprovidedbyDFIs.Theshareoffundsprovidedbysuchmultilateralfundingagreementsconsistsofapproximately72%ofthetotal(outstanding)financingoftheBankasoftoday.Amongthe10fundproviderDFIs,twoareIDFCmembers.TSKBhasawell-establishedrelationshipwithKfWandAFD.TheBankhassignedninecreditlineswithKfWsince2002andfourcreditlineswithAFDsince2005.Additionally,TSKBandChinaDevelopmentBank(CDB)aredevelopingtheirbilateralrelationsinrespectofanewcreditline.
Inrecentyears,TSKBhasreceivedtechnicalassistance(TA)fromDFIsontopicssuchasindustrialpollutionabatement,energyefficiency,renewable energy andetcetera. TheBankestablished its EnvironmentalManagement System (EMS) as anoutcomeof a TAprogrammeprovidedbyKfW.
TSKBandKfWhavestartedaconcurrentstaffexchangeprogrammethisyear.TSKBwillbeattendingtheGuestObserverCoursehostedbytheKoreanDevelopmentBank.
TheBankparticipatedintheBRICSSCOFinancialForumandtheSt.PetersburgEconomicForum,bothhostedbyVnesheconombank(VEB).
TSKBisalsoamemberoftheLong-termInvestorsClub.19
6.8DBSA(SouthAfrica)
TheDBSAhaspursuedcooperationthrough‘smartpartnerships’asastrategicthrustofitsbusiness.ThistypeoftriangularcooperationhasbeenappliedinthepursuitofintermediariesandlocalpartnersincountrieswheretheDBSAhassignificantoperations.SuchtriangularcooperationaimstobuildthecapacityoflocalDFIswithintheregionfundingdeploymentofexpertiseandtransferofskillstoDFIstoensuresustainabilityofthe interventions.FundsfromtheKfWcredit linewereusedtofinanceaprogrammewithinSADCDevelopmentFinanceResourceCentre(DFRC),which,inturn,wasusedtofinancecapacitybuildingwithinnationalDFIs,suchastheTanzanianInvestmentBank(TIB).
6.9CDB(China)
TheChinaDevelopmentBank(CDB)hasnotbeeninlinewithanypolicyspecificallydesignedforpromotingSSC,buthasbeenbroadeningitscollaborationwithforeigngovernments,enterprisesandfinancialinstitutionsinkeyareasofinfrastructure,agriculture,socialsectorsandenergy.20CDBhasbeenbroadening itscollaborationwith foreigngovernment,enterprisesandfinancial institutions inkeyareasofinfrastructure,agriculture,socialsectorsandenergy.Duringtherecentyears,CDBhasmadesignificantprogressintheimplementationofmeasures under themultilateral financial cooperation frameworks of the Shanghai Cooperation Organization Interbank Association,China-ASEAN Interbank Association and BRICS Interbank Cooperation Mechanism. It also promoted the China-Portugal Fund and theChina-AfricaDevelopmentFundasoverseasinvestmentplatform.Asoftheendof2013,thebankhadoutstandingforeigncurrencyloansofUS$250.5billion.
6.10NAFIN(Mexico)
NacionalFinancieraS.N.C., I.B.D. (NAFIN)cooperateswith IDFCandnon-IDFCmembers.The lattergroup includes the IADB,WorldBank,Climate Funds (GEF,CTF), bilateral banks, amongothers by (i) receiving loans and technical cooperation forfinancingpriority projects(renewableenergyandenergyefficiency)and,(ii)sharingknowledge,experienceandbestpractice.
Currently NAFIN has a close relationshipwith KfW, CAF, SIDBI, BNDES, Bancóldex, BCIE and COFIDE. In addition, NAFIN is developing arelationshipwiththeAFDforcollaborationindifferentareas.
InadditiontoIDFC,NAFINisamemberofotherassociationsthatworkontopicsinvolvingSmallandMediumEnterprises(SMEs).NAFINisalsoamemberoftheLatinAmericanAssociationofDevelopmentFinanceInstitutions(ALIDE),InstituteofInternationalFinance(IIF),APECFinancialInstitutionsDealingwithSMEs,andGroupofMontreal.
7.WHITHERTRIANGULARCOOPERATION?7.1UNStrategicPlan2014-2017
TheUNOSSC’sevaluationofSSCandTC,inpreparationfortheir2014–2017StrategicPlancalledforthefollowing:
•theneedtotranslateshort-term,immediatebenefitsintolong-termsustainableresultsbasedoninnovationfromSouthernstakeholders;
•greatervoiceandparticipationonthepartofparticipantsthroughspecifictoolsandoperationalguidance;
19http://www.ltic.org20http://cdb.com.cn
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•strongerandmorerobustfinancingcommitmentsonthepartofrelevantstakeholdersandpartners;and,
•astrongerreportingframeworkandmechanismstosupportSSCandtriangularcooperationattheregionalandcountrylevels.
The2014–2017StrategicPlanOutcome3outlinestheendresultwhere‘innovativeSouth-South,triangularandpublic-privatepartnershipsandfundingmodalitiesmarshalfinancialandin-kindresourcesthatsupportthescalingupofthedevelopmentimpactofSouthernsolutionsinmeetingtheinternationallyagreeddevelopmentgoals,includingtheMillenniumDevelopmentGoals’.21
TheIDFCshouldgobeyondknowledgesharing,capacitybuildingandinstitutionalsupportandbegintoengageonsupportingthefinancingofprojectsthroughDFIinstrumentsthatareatthedisposaloftheIDFCmembers.OftheexamplesofIDFCTCofferedabove,theMRIistheonlyrelationshipthatprovidesco-financingforprojectimplementation.
InordertomovebeyondtheconventionalconceptionsofTC,newsystemswillneedtobedeveloped,newwaysofevaluatingandselectingprojectsandmoreespecially,newwaysofworkingtogetherasmembersoftheIDFCwillneedtobedetermined.Ratherthanconcentrateonprovidingassistancetothe‘host’countryoftheproject,waysofmeasuringsuccessandchallengesshouldbedevelopedtoensurethattheTCinIDFCcanbereplicatedamongthemembersanddeepenedthroughsuccesses.
7.2Guardingagainstpaternalism
Countriesand institutionsenter into relationships forvarious reasons that range fromself-interest tomutualbenefit. Indefining theircollaboration, members will need to remember the power dynamics that exist within the development financing world, as well as ingeographicandculturalspacesthathaveevolvedovertime.JohnGaventa’s‘powercube’distinguishesbetween:
•Places:global,nationalandlocal;
•Typesofspaces:closed,invited,created;and
•Threefacesofpower:visiblepower,hiddenpowerandinvisiblepower.22
Gaventa’slenswillassistinbringingtogetherverydifferentpartners,inhelpingthemtoidentifymodesofcooperationanddetermineareasofcooperationthroughavaluesystem.Itwillalsobegintoprovidethe‘recipient’or‘host’countrywithagencyinafinancialrelationship.
Theglobal,nationalandlocalspacesoffervaryingopportunitiestoengagewithideasandpractices.Inreferencetothedevelopmentsector,thegloballevelwillofferlessopportunitytoengagebutholdmoreinfluenceatthatlevelratherthanatalocalorevennationallevel.Thedifferentiallevelsofpowerinthelocal,nationalandgloballevelspresentdifferentopportunityspacesforengagementandinfluence.
TheIDFCcomprisesarangeofinstitutionsandcountriesthathaveselectedtocooperateondevelopmentissues.Thiswouldbeanopportunemomenttomovedevelopmentcooperationtobeyondthegeographyofcountriesandthestatusoftheireconomies(traditional/emerging/recipient)toasystemofsharedvalues,mutualbenefitandcleardevelopmentobjectives.
InordertodevelopanIDFCframeworkforCooperationforDevelopment,thisDiscussionPaperunpacksGaventa’slensinthecontextoftheClub.ByrequestingresearchthatmovesbeyondTCandSSC,theIDFChasattemptedtomovebeyondtheglobal,nationalandlocaltolocateitselfwithinapracticeframeworkthatlooksatvaluesratherthangeographicallocation.Theunderstandingisthateachmember’sexperiencecouldcontributetoalargerunderstandingandanewmodelforcooperationamongIDFCmembers.
Secondly,thetypesofspacesGaventareferstoareclosed,invitedorcreatedspaces.Participantsareinvitedintoclosedspaceswherethepowerisconcentratedwithinagroupofmembers.Ifthespaceisconstitutedonthebasisofinvitations,thereisanunderstandingthatsomeoneoragroupholdsthepowertoextendthose invitations.Finallycreatedorclaimedspacesemergethroughtheagencyof lesspowerfulactors.Thesearedynamicandorganicandmemberscomeorleaveandgroupaccordingtotheissueunderdiscussion.
Gaventa’s lens provides the foundation for the partnerships as IDFCmembers deepen their inter-Club cooperation but also invite newmembersintothesharedspacewithintheClub.Theengagementscouldresultinanewsharedspaceinwhichglobalpowerrelationsareshiftedandchanged;wheretheoldtermsofSouthSouthorTriangularCooperation,whichstillinfergeographiclocationandcarrywiththemnotionsof‘developed’and‘developing’or‘emerging’areshiftedbyequalrelationsandsharedlearningsandexperiences.IDFC’snewspacesofcooperationwouldthendemandanewtermanddefinitiontoframewhattheydo,whytheydoitandhowtheydoitwithinthecontextofdeepeningdevelopmentcooperation.
21http://ssc.undp.org/content/dam/ssc/documents/Key%20Policy%20Documents/N1362177.pdf22Gaventa,J.(2006).‘Findingthespacesforchange:Apoweranalysis.’IDSBulletin37(6):23–33citedonhttp://www.capacity.org/capacity/opencms/en/
topics/context_systems-thinking/the-power-of-understanding-power.html
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Finally,Gaventa’sthreefacesofpoweridentifyvisible,hiddenandinvisibleexpressionsofpowerwithinagroup.Visiblepoweristransparentandworkswiththeunderstandingthatthereisaframeworkfordecisionmakingandengagementbetweenmembers.Hiddenpowerassumesthatthereisacabalwithsufficientpowertosettheagendaforthegroup,whileinvisiblepowershapesthepsychologicalandideologicalboundariesofparticipation.
TheIDFC’sframeworkoperatesateachgeographiclevel(local,nationalandglobal)tomaximizethedevelopmentimpactoftheirwork.Through collaborationwith other partners, two institutions or countries could share information and experience that impact the localconditionsdirectly.TheglobalnatureoftheIDFCsetsthesceneforchangetooccuratagloballevelbyintroducingnewmodesofcollaborationfordevelopmentpartners.
ThroughtheIDFC’sframework,theformalrulesandstructuresforengagementwithintheclubarebeingdefinedthroughthisengagementwitheachother.Theprocessisvisible,inclusiveandaddressesthe‘who,howandwhat’ofcooperation.ItwouldbecorrecttoarguethatthehiddenpowerandinvisiblepowerhavelesscredencewithintheClubbecauseofthetransparentprocessthatisbeingdevelopedtodeepenCooperationforDevelopment.
Inearlierdiscussions,IDFCmemberswereconcernedabouttheterminologyusedtodescribetheircollaboration.ThisDiscussionPapergoesalongwaytodemystifyingexistingcooperationbetweenIDFCmembersandhowitisbeingpracticed.
8.ANALYSISToreiterate,theexistingcollaborationwithintheIDFChassupportedtechnology,skillsandknowledgetransferandhasnotbeenevidentinco-financing,beyondafewexamples,includingAFD,KfW,JICA,CAFandBancóldex,amongothers.Thecooperationhasbeenforknowledgesharing,capacitybuildingandtechnologicalassistance.
8.1Modalitiesofcooperation
Inordertodeepenexistingmodelsofcooperation,thereareafewlessonspartnershavehighlighted:
•Bilateralinitiatives:Muchoftheirbilateralortriangularcooperationhasbeenonademandbasiswheretheyareapproachedbypartnersorothercountriestoshareinformationandskillsbasedontheirexpertiseinparticularareasofstudyorbusiness.Throughthesebilateralinitiativestheprogrammesaretailoredtomatchthepartners’needs.Sharingmaybereciprocalaccordingtothecountryandinstitution’slevelsofdevelopment.Themodesofsharinginformationalsovarybasedonthelevelofdetailandcontacttimeneeded,forexample,theinformationcouldbesharedelectronically,throughteleconferencesorlongerin-housetrainingprogrammes.
•Governmentalrequests:requestsforassistanceorcooperationmaycomefromgovernmentsormultilateralbodiesthatrequiretheexpertiseofanIDFCmember.EntitiesmayaskIDFCmemberstohelpthemwithinformationoninstitutionalprocesses,productsandservices,financingmechanisms,developmentprogrammesfordifferentsectorsofthemarket(financialinclusion,entrepreneurship,industrial development, etcetera). Thesedemandscouldbeonceor twiceayearandusually includevisits to theotherpartners’countriesandinstitutions.
•Institutionalrequests:institutionalpartnersrequestforcollaborationorassistancemoreoftenthangovernments.Institutionswhohavedonebusinesswitheachotherinthepastofreachouttothosepartnerstodeepencollaboration.Theinstitution’spriorknowledgeofthestrengthsandexpertiseofthepartnerfacilitatestheformer’srequestforassistanceandinformation.
•Multilateralrequests:multilateralbodieswhohaveworkedcloselywithIDFCmembersandknowtheir institutionalcapabilitiesandoperational levelswilloftenapproachspecificinstitutionsforassistancewithnon-IDFCmembers.Thisshowsthebenefitsofbeinglinked tomultilateral institutionswithin regionsandglobally asexisting relationships candrive the formationof newanddeeperrelations.
8.2Capacitybuilding
Intheareasofcapacitybuildinganumberofmodelshavebeendeveloped.In2006,theUnitedNationsEnvironmentProgramme(UNEP)producedadocumentthat lookedat‘WaystoIncreasetheEffectivenessofCapacityBuildingforSustainableDevelopment’.Theydefinecapacitybuildingas‘initiatingandsustainingaprocessofindividualandorganisationalchangethatcanequallyrefertochangewithinastate,civilsocietyortheprivatesector,aswellasachangeinprocessesthatenhancecooperationbetweendifferentgroupsofsociety’.Thedefinitionlooksatcapacitybuildingasthecatalystforaprocessofchangeandtheimportanceofbuildinginstitutionalcapacity.23
23UNEP,2006.‘WaystoIncreaseEffectivenessofCapacityBuildingforSustainableDevelopment’.DiscussionpaperpresentedattheConcurrentSession18.1TheMarrakechActionPlanandFollow-up,2006IAIAAnnualConference,Stavanger,Norway.http://www.unpei.org/sites/default/files/PDF/institutioncapacity/Ways-to-increase-effectiveness-SD.pdf
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TheUNEPmodelhighlightsthefollowing:
•Identifyingneedsandbuildingonexistingcapacities;
•Beingclearabouttheobjectives;
•Usingawiderangeofcapacitybuildingapproaches;
•Targetingtherightpeopletobuildacriticalmass;
•Makingthetrainingoftrainersapproachwork;and,
•Institutionalisingcapacitybuildingprogrammes.
TheIDFCmemberswhohavedevelopedcapacitybuildingasanexpertisewillhavevariousmanifestationsofeachofthesefactors.BancóldexandJICAhavesignificantexpertise inbuildingcapacityandcouldcontributeto informationsharingwithinthe IDFContheirrespectivemodels.
8.3Knowledgesharing
ThebulkofcollaborationbetweenIDFCmemberstakesplace intherealmofknowledgesharing.Memberswithinthegrouphaveavastexperienceofsharinginformationandexpertise,somemorethanothers.AmodelcouldbedevelopedwithintheIDFCtomakethemostoflessonslearntbyexperiencedmembersandtheneedsmatrixofmemberswhorequireknowledgesharingtodriveinstitutionalexcellence.
AguidethatcouldprovetobeusefulisonedevelopedbytheWorldBankInstitutetitled,‘TheArtofKnowledgeExchange–AResults-focusedPlanningGuideforDevelopmentPractitioners’24,whichassistspartnersto:
•Identifyandassesscapacitydevelopmentneeds
Partnersshould identify thedevelopmentgoalandhow itcouldbeachieved; identify the institutionalcapacitygapsandconsiderthecapacity-developmentobjectives.Carefulidentificationoftheobjectivesoftheexchangewoulddeterminetheframeworkoftheengagement.
•Definetheknowledgeexchange
This activity would identify the ideal participants, consider the capacity outcomes and identify themost appropriate knowledgeproviders.WithintheIDFC,anumberofpartnershavespecificexpertise,whichcouldbeidentifiedthroughtheprocessofdevelopingthetriangularcooperationmodel.
•Designanddevelopanappropriateknowledgeexchangeinitiativethatrespondstothoseneeds
Theknowledgeexchangeinstrumentswouldvaryaccordingtotheknowledgethatisbeingdevelopedorshared,forexample,CommunityofPractice,conferencesandfora,peerconsultation,dialogues,expertvisits,studytoursandtwinningarrangements.Theselectionandsequencingofactivitiescouldoccurthroughactionplanning,brainstorming,e-discussion,groupdiscussion,presentationandsurvey,amongothers.
•Implementtheknowledgeexchangeinitiative
Aftergoingthroughthefirstthreestagesinknowledgeexchange,theinitiativewillhavetobepilotedthroughasharedproject.ThisimplementationcouldoccuronexistingideasfordeepeningknowledgeexchangeandCfDaswellasonnewareasofcollaborationidentifiedbytheIDFCmembers.TheimplementationofideasisimportantasitisthroughthepracticalapplicationofthesestagesthattheIDFCmemberswillidentifygapsandtailortheWorldBank’smodeltosuittheirownmodesofcooperationmoreeffectivelyandefficiently.
•Measureandreporttheresults
Finally,resultsshouldbereportedtomembersoftheIDFCtoshareinformationandtocreateknowledgefortheClubasawhole.AmatrixofmeasurementforresultsbasedcooperationshouldbedevelopedintheCooperationforDevelopmentworkstreamforfutureusebymembers.
8.4Deepenexistingcooperation
TodeepencooperationwithintheIDFC,membershaveapprovedaframeworkforcollaboration.Adatabaseisbeingdevelopedtocapturethefollow,interalia:
•Theexactdetailofcollaborationbetweenmembers;
•Thepartnersinvolvedineachincidentofcollaboration;
•Theareasofexpertiseandexperienceofeachmember;
•Theareasinwhichtheyarewillingtocollaborate;and,
24http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/drupal-acquia/wbi/The_Art_of_Knowledge_Exchange_revised.pdf
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•Thepossibleareasinwhichtheyneedothermembers’assistance.AnadditionalareaofinformationcouldbearoundtheparticularSustainableDevelopmentGoalssupportedbyeachIDFCmember,asperAfD’sinputataworkshopwiththeDBSAinFebruary2016.
TheproposeddatabaseandframeworkwillbepresentedtothefirstCEO’sSteeringCommitteeMeetingin2016.
Additionalareasofcollaborationcouldincludebutnotbelimitedtothefollowingactivities:
•CompilealistofallmodelsofengagementwithintheIDFCandwiththeirpartners;
•ImproveanddeepenexistingCfDarrangementsintheIDFCacrossthefivestrategicpillars;
•Identifyopportunitiesforadditionalcollaboration;
•Establishanoperationalframeworkthatcouldbetailoredtoeachpartner’sneeds;
•IdentifytherolesandresponsibilitiesofeachmemberinaCfDarrangement;
•Developanevaluationframeworkforpost-implementationassessments;
•Strengtheningownershipoftheprojectbythebeneficiarycountry;
•Determinehowtooperatewithinandacrossdifferentlegalandregulatoryframeworksorfindcommongroundonthoseissues;
•Identifybestpracticeandquickwinstoensurethatthereisimmediateevidenceofsuccesstodrivetheinitiative;
•IdentifyskillsgapswithintheIDFCandwithpartnersandaddressthosegaps;and
•IdentifythesharedvaluesindevelopmentworkacrosstheIDFCandtranslatethoseintoanoperationalframeworkforco-financingthroughCfD.
What should be noted is that there is significant planning that needs to take place before knowledge exchange and capacity buildingprogrammes take place. The IDFC couldmainstream and institutionalise knowledge sharing and capacity building through its pillars ofengagementforeachannualprogramme,forexample,intheareaofsustainabledevelopmentorrenewableenergy.
9.CONCLUSIONThisDiscussionDocumentpresentsafewoptionsfortheIDFCmemberstodeepentheircollaborationparticularlyaroundCooperationforDevelopmentandinnovativefinancingmodalities.Theproposalspresentedareneitherexhaustivenorprescriptive,butprovidememberswithsomegristfortheirthoughtmillsduringtheupcomingmeetinginLima.Itshouldbenotedthatonlyafewmembersrespondedtothequestionnaireinformingthispaper.AfewmembersrespondedbyexplainingthattheydonotengageinSSCoranyformofTCbutinsteadpromoteregionalcooperationintheirareasofactivity.
Finaldefinitionalpoints:theBSTDBexplainedthattheirmembersareallessentiallyemergingmarketsandnotinthegeographicSouthnorcantheyberegardedassuchusingtheolddevelopmenttheoryframework.Also,HBORadvisedthattheycurrentlydonothaveprogramsrelatedtooraimedatSouth-South/TriangularCooperationactivities.
InordertomarktheuniqueIDFCprocess,theClubmembershavemovedawayfromthecommonly-usedtermsofTriangularCooperationandSouthSouthCooperation,towardsanIDFC-specificterm,CooperationforDevelopment,thatcomeswithoutthepriorpoliticalframeworksofdevelopmentfinance,thegeo-politicalpointersinferredintheterm‘SouthSouth’orthenumericalindicatorsinTriangularCooperation.CooperationforDevelopmentaffordstheIDFCanopportunitytodeveloptheirownframeworks,measurementsandmonitoringandevaluationofthecollectivedevelopmentimpactofthegroup.TheIDFCwillcontinuetodevelopthecooperationframeworktocreateanidealplatformonwhichtoportraythedifferentkindsofcooperationwithintheClub.
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10.ANNEXUREA–CURRENTAREASOFCOOPERATION
Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
CAF
AFD,CDB,JBIC,KfW,NIB,SEK
Long-termloans Providesfinancetolendon to other clients
Areasofmutualbenefit
KfW Creditfacilities CAFandKfWhaveworkedtowardthedevelopmentoftheLACregionformorethan30years.ThiscooperationhashelpedfinanceprojectsinPeru,Panama,Uruguay,Ecuador,Brazil,Venezuela,DominicanRepublic,Mexico,Colombia,Bolivia
Infrastructure,energy,climatechange,transportandwaterandsanitation
AFD Creditfacility CAFreceiveditsfirstcreditfacilityfromtheAFDin2011andcurrentlyisclosingasecondcreditfacility.
Urbantransportenergy,water,wastewaterprojectsClimatechangeUrbandevelopment,massive/urbantransport,waterandsanitationprojects
AFD,CaixadoBrasil,EuropeanCommission-LAIF,FrenchGovernment,OFIDFund,SpanishAgencyforInternationalDevelopment(AECID)
Grants Managinggrantsforprogrammes
Areasofmutualbenefit
AfreximBank,AsianDevelopmentBank,AvinaFoundation,IESingapore,MinistryofForeignAffairsandTrade(RepofKorea),GovernmentoftheUK
Knowledgesharingprogrammes
Collaborateonknowledgesharingplatforms
Areasofmutualinterest
CDG FrancophoneAfricanpartners
Bilateralmainly Jointventuresforskillstransfer,knowledgesharing
Cooperationinindustrialinitiatives
JICA
KfW,AFD,CAF,DBSA,PTA BilateralMOUswithinstitutions
BilateralMOUswithinstitutions to deepen andfocuscollaboration
Commonareasofinterest
AFD,WorldBank,KoreanEXIMBank,ChinaEXIMBank
Knowledgesharing Bilateralannualconsultationsforknowledgesharinginareasofcommoninterestandtoexplorefuturecollaboration
Commonareasofinterest
KfW,ADB,WB,AFD,KoreanEDCF
Coordinationmechanism Thesixdevelopmentbanks(JICA,KfW,AFD,WB,ADB,KoreanEDCF)hascreatedacoordinationplatformcalled“SixBanksInitiative”inVietnamformaximizingdevelopmentimpactsandseekingopportunitiesforco-financeprojects.
Commonareasofinterest
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Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
JICA
IDFCmembers(KfW,AFD,CAF)andNon-IDFCmembers(MDBs,DFIs,etc.)
Co-finance JICAco-financevariousprojectswithotherfinancialinstitutionsincludingIDFCmembers.
Examples:•ProjectindevelopinggeothermalenergyinOlkaria,KenyawithKfWandAFD
VarioussectorssuchasTransport,Energy,Environment,andClimateChange
SIDBI,COFIDE ODAloan(TwoStepLoan) JICAprovides,throughODAloantorespectivegovernments,fundswithotherfinancialinstitutionsfortheirlocalfinancinginspecificareas.
Examples:•Micro,SmallandMediumEnterprisesEnergySavingProjectwithSIDBI
•EnergyRenovationInfrastructureAssistanceProgramwithCOFIDE
VarioussectorssuchasEnergyefficiency
Non-IDFCmembers Triangularcooperation JICAimplementsTriangularcooperationprojectsforfacilitatingknowledgesharingamongdevelopingcountriesaswellasformakingagreaterdevelopmentimpactusing with Southern knowledge&experience.
Example:•Agricultural
Development in MozambiqueunderpartnershipwithBrazil
•IndustrialDevelopmentinZambiathroughknowledgesharingandtechnicaladvicefromMalaysia
Varioussectors(Agriculture,EconomicDevelopment,Health,Education,etc.)
Bancóldex
Inter-AmericanDevelopmentBank(IDB)members
Technicalassistance,knowledgetransfer
ThroughtheIntraregionaltechnicalcooperation(CT/INTRA),IADBborrowingcountriesprovidetechnicalassistancetoanothercountrytoshareinformationandtechnology.
Commonareasofinterest
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Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
Bancóldex
BNDES Knowledgesharing Toidentifyopportunitiesforfinancialcooperation,informationaboutBancóldexoperationsandprocesses
Relatedtoforeigntrade,tradeoperatingroutines,productsandservices.
KoreanSharingProgramme(KSP)
Knowledgesharingandskillsdevelopment
TheKSPhasledtothreeoutcomes:developmentofastrategicpapertoguideBancóldex’sstrategyprocess;shareinformationandskillsdevelopment to support business
StrategicinputsNon-financialsupportmodels Instruments to support businesscompetitiveness
ForumforEastAsia-LatinAmericaCooperation(FEALAC)
Knowledgesharing Bancóldex-iNNpulsaColombiaareorganisingaFinancingInnovationandDynamicEntrepreneurshipForumtosharebi-regionalexperiences
FinancinginnovationandentrepreneurshipDevelopnetworksandconnectionstomaximisecollaborationCreatespacetoidentificationofcooperationandbusinessopportunitiesaroundinnovationandhighimpactentrepreneurship
FederalMinistryofEducationandResearchofGermany
Knowledgesharing Two institutions signed ajointdeclarationinApril2015togenerateknowledgeexchangebetweenpublicandprivateinstitutionsrelatedtoinnovation
BusinessgrowthCompetitivenessInnovation
WorldBank Capacitybuilding WorldBankcontributedtoBancóldexwithcapacitybuildingtosharebestpracticesandknowledge
Impactevaluationmethodologies
JICA Knowledgesharing NominatedBancóldexstafftoparticipateinKnowledgecocreationprogrammesdevelopedinJapantoaddressspecificissues.
CurrentprogrammeisdesignedtoshareexperiencesonExportandInvestmentPromotion.
BNDESIBSA,Mercosur,APEC,UNIDO,EU
Knowledgesharingandskillsdevelopment
LessonslearntinBrazilproduction technologies
Oilandgas,biofuels,agriculture
TSKB
AFD,KfW Creditlines/financingproducts
TSKBhassigned9creditlineswithKfWsince2002and4creditlineswithAFDsince2005.
EnvironmentClimateprotectionHydroandwindpowerplantsMunicipalinfrastructureRenewableenergy,energyefficiencyIndustrialresourceefficiency,sustainabletourism,innovativerenewableenergy
CDB Credit lines Discussionsunderwaytodevelopbilateralrelationsrenewcreditline
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Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
TSKB
KfW Trainingandcapacitybuilding
TSKBandKfWstartedaconcurrentstaffexchangeprogrammein2015.
Skillsdevelopmentandknowledgesharinginareasofmutualbenefit
KoreaDevelopmentBank TSKBwillattendtheGuestObserverCoursehostedbytheKoreanDevelopmentBank
BRICSandShanghaiCooperationOrganisation
Knowledgesharingandregionalintegration
AttendedBRICSandSCOsummitsinUFA–exchangeofknowledgeandeconomicdevelopmentstrategies
Economicblocsandskillsdevelopment
KfW Technicalcooperation TSKBdevelopeditsEnvironmentalManagementSystemincollaborationwithKfW.
Environment
OtherDFIs Cooperatedinareassuchasindustrialpollutionabatement,energyefficiency,renewableenergy
AFD
KfW Co-financing MutualRelianceInitiativetoco-financekeyareasofmutualinterest
Climatechange(waterandsanitation,energy,renewableenergyandtransmission)
JICA Knowledgesharing Provideresearchsupportinareasofmutualinterest
Sustainableurbandevelopment,climatechangeadaptationinsmallislandstates,ruraldevelopmentandfoodsecurity
DBSA AfricaProjectPreparationandStudyFacilityFund(PPSF)
Infrastructure(transport)
CAF Lineofcredit,StudyFacilityFundestablishedandstaffexchange,co-financiers
Sustainableurbandevelopment,waterresourcesmanagementanddecentralisation
KfWandEIB Sharingprojectduediligenceresponsibilities
Mutualrecognitionofotherpartners’procedures;Delegationofmosttaskstothe‘leadfinancier’;Activepartnershipandreciprocity;Decisionmakingandfinance;andContractrestswitheachfinancier.
Co-financingandprojectvalue-chain
OtherIDFCmembers AFDhasrecentlyissuedclimatebonds.ManyIDFCmembersrequestedinformationaboutgreenandclimatebonds.InitialmeetingsbetweentechnicalteamsofAFDandBNDES(forexample).
Climatebonds
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Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
NAFIN
Bancóldex Knowledgesharing NAFINvisitedBancóldextolearnaboutproductsandprocesses
LearnabouttheColombianguaranteeprogramme
SIDBIandCFE(Ecuador) SDBIandCFEvisitedNAFINtolearnaboutproductsandprocesses
Electronicfactoringplatform
BCIE BCIEvisitedNAFINtolearnaboutproductsandprocesses
Factoring,guaranteesandqualityprocessmanagementsystem
COFIDE Meetingheldtoshareexpertiseonproductsandprocesses
Operationoffund-of-fundsandcapitalseedprogrammeandentrepreneurialprogrammework
DevelopmentBankofJamaicaLimited
DBJLvisitedNAFINtolearnaboutprocessesandproducts
Microfinanceandfinancialintermediaries,CreditGuaranteeSystemProgramme,riskmanagement,factoring,amongothers
HongKongMortgageCorporationLimited
NAFINstaffvisitedHKtolearnmoreabouttheirprocesses
Guaranteesandrisks
MexicanSecretariatofEnergy
Co-hostedconference ‘EconomicGrowth,EnergyandSustainableDevelopment’
ALIDE Capacitybuilding Co-hostedworkshop CreditandOperationalRisk
BANDESAL Managerofloans Financepriorityprojects Renewableenergyandenergyefficiency
CAFandIADB Loans DisbursementpartnerforIADBandCAF
Capacitybuildingandresearchonsustainabledevelopmentprojects
KfW Newloansbeingnegotiatedforgeothermal,cogenerationandenergyefficiencyprojects
Renewableandenergyefficiencyprojects
UKDepartmentofEnergyandClimateChange
Financeforsecondphaseofproject
Energyefficiencyproject
DBSA
AFD ProjectPreparationandFeasibilityStudyFund(PPFS)
ProjectpreparationfundforNEPADRegionalIntegrationInfrastructureProgramme
Transport,energy,ICT,waterandsanitation,andPPPpromotion
EIB ProjectDevelopmentandSupportFacility(PDSF)
Preparationofinfrastructureprojects/programmesineastandsouthernAfrica
Transport,energy,ICT,waterandsanitation
EU,AFD,EIB,SouthAfricanNationalTreasury
InfrastructureInvestmentProgrammeforSouthAfrica(IIPSA)
Promotionofessentialinfrastructureinvestments in South AfricaandSADC
Energy,transport,waterandenvironment,ICT,socialservices
SADCSecretariat,EURegionalOfficeandKfW
ProjectPreparationandDevelopmentFacility(PPDF)
PreparationofapprovedprojectsintheSADCInfrastructureMasterPlan
Transport,energy,ICT,waterandsanitation(andtourism)
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Areasofcollaboration
Membersinvolved Collaboration Highleveldetails IDFCpartnersectorfocus
DBSA
BRICS Co-financing,knowledgesharing,staffexchange,newproductdevelopment
ExplorewaystodeepenBRICSInterbankCooperationMechanism
Mandatedsectorsofmutualbenefit(transport,ICTs,energy,waterandsanitation)inSouthAfricaandAfrica
JBIC,EIB,AFD,AfDB,KfW Credit lines ToprovidefinancingthroughtheDBSAforinfrastructurefinanceinareasofmutualinterest
Renewableenergy
AFD(phaseI)andAFDB(phaseII)
PanAfricanCapacityBuildingProgramme
CapacitybuildinginAfrica
Infrastructuremanagementanddevelopmentcapacity
KfW,SADCDFRC Capacitybuilding,technicalassistance
Builton‘smartpartnerships’
DFIdevelopmentinSADC
Vnesheconombank Knowledgesharing WeeklongseminarwithVEBtoshareinformationonbusinessandoperationsprocesses,keysectorsandotherareasofinterestwithnon-IDFCpartners(SMEdevelopment)
SMEdevelopmentProcessesandproducts
CDB
SCO,bilateralpartners,BRICS,China-ASEANInterbankAssociation,PortugalandAfrica
Co-financing,skillsdevelopment,knowledgesharing
Providesloansforkeyprojectsdirectlywithpartner,developsfinancialandeconomicmultilateralstructures
infrastructure,agriculture,socialsectorsandenergy
11.ANNEXURE2:NEWAREASFORCFDTheIDFChasidentifiedfivepillarsfortheshort-term:
•Sustainableinfrastructure(CAF)
•Sustainableurbandevelopment(CAF/JICA/AFD)
•Socialandeconomicinclusion
•Energyefficiency
•Renewableenergy
•TriangularCooperation(cross-cuttingissue–DBSA/CDG/Bancóldex)
Inadditiontotheseareas,IDFCmembersarewillingtocollaborateinadditionalareas:
IDFCmember FocusareaTSKB APEXbankingandfinancingofrenewableenergyandenergyefficiencyprojects
AFD Climatechangeandgreenbonds(includingthefivepillars)
NAFIN TriangularcooperationSocialandeconomicinclusion(includinggenderandyouth)
DBSA GreenbondsSyndicationSkillstransferEnergyTransportWaterandsanitationKnowledgesharing
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IDFCmember FocusareaBSTDB Promoteregionalcooperationinmandatedareaofactivitywithmemberswhoareallessentiallyemerging
markets(lessonsforotheremergingmarketpartners?)
Bancóldex InternationalfinancialtradeMSMEssupport(financialandnon-financial)GreenenergyImpactevaluationInnovationandentrepreneurship
JICA ClimatechangeGeothermalplantdevelopmentSustainableurbandevelopmentSupporttofragilecountries
CAF TransportWater&sanitationEnergy(traditionalandrenewables)MSMEsICTsInnovationTradeFinanceHealthEducationPovertyreductionFinancialinclusionUrbandevelopmentRegionalintegrationInstitutionalreformandgovernanceEnvironmentandclimatechangeClimatefinancetrackingharmonisation(withAFD)
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