World Bank/IMF 2023 Annual Meeting – My Thoughts!

‘Capital’ is probably the most important word in the world of development finance. DFIs are constantly needing to attract capital to build resilience in their balance sheet to better position them to catalyze and mainstream finance for social and economic development. MSMEs require ‘capital’ to start, grow and scale, being a significant economic actor in the grand scheme of things. A recent DBN study on the “MSME Lending Market Size in Nigeria” conducted in conjunction with Ayani BV and sponsored by the World Bank put the total aggregate demand for MSME credit at a whopping ?N13 trillion?? while the aggregate supply of MSME credit as at 31st December 2022 is estimated to be around N1.6 trillion????♂? thereby leading to a MSME financing gap of N11.4 trillion??. Closing this financing gap is clearly a herculean task and require catalyzing capital at scale from DFIs, private sector and impact fund towards MSME lending.

The conversation on capital – basis for its allocation and reallocation at a global level by the Bretton Woods Institutions was one subject of discussion at the recently concluded World Bank/IMF Annual Meeting 2023. The DBN delegation led by our Managing Director @Dr Tony Okpanachi participated at the sessions and had bilateral engagements with international development institutions as we look to scale our impact on the MSME landscape in Nigeria. Over the last 5yrs, the Bank has committed c.600bn to over 400k MSMEs????, 60% of which are women owned business and 27% are youth owned businesses????. The Bank has also trained over 6k MSMEs on key skills and capabilities required to utilize financing adequately to achieve growth. As the Bank looks into the future in a bid to accelerate growth in terms of socio-economic impact, strategic partnerships with MDBs (Multilateral Development Banks) becomes imperative to attract sustainable funding.

Of the several sessions and engagements at the WB/IMF 2023 Summit, I have highlighted my favorite moments to share with you:

1.???? Session on ‘Africa: The Digital Innovation Engine’ – This session was hosted by two very important personnel in the person of Dr. Mo Ibrahim and Mr. Ajay Banga (World Bank President). Both astute and seasoned professionals argued and debated the role of the World Bank and its peers in the (re)allocation and flow of capital to Africa to drive innovation at scale. Also, the role of Rating Agencies was topical. There were calls on rating agencies to be more transparent in their methodology, rating metrics and standards as well as being more accountable to Africa especially when with an ‘ink-on-paper’ these agencies can cripple an entire economy and its ability to attract investment necessary for growth and prosperity????♂?.

?2.???? Session on "Considering Vulnerability in the Access of Concessional Finance" - MDBs (Multilateral Dev Banks) NDBs (National Dev Banks), PDBs (Public Dev Banks) largely depend on concessional finance to be able to finance socio economic development. The big question is, what should be the criteria for attracting concessional finance for development banks ??? The answer to this question will vary. However, the consensus being proposed is that 'Vulnerability Index' must be introduced as a major criterion to attract concessional finance. The other question is, how do we define Vulnerability especially in LICs and SICs (Low-income countries and Small Island Countries)?. Vulnerability will cover 3 main aspects.

·?????? Economic vulnerability - countries susceptible to external economic shocks

·?????? Environmental/Climatic vulnerability - countries susceptible to climate change impacts

·?????? Social vulnerability and Fragility - countries with low to severe social indexes such as poverty rate, unemployment, inequality etc.

The introduction of vulnerability index which considers these 3 key multidimensional factors and aligning the development finance architecture to be responsive to this index will promote equity in the allocation of concessional capital. This principle must be hardwired into the global financial architecture to ensure the use of structural vulnerability index in accessing concessional financing.

On a more personal front, I am grateful for the opportunity to have caught up with Christine Lagarde????, former President of the @IMF and current president of the European Central Bank. I was also privileged to feature on the IMF/WB Annual Daily Magazine????. Overall, a great outing and now its time to implement the big bold ideas.