Is the MDB Joint Report on private capital mobilisation sliding into irrelevance? Our updated scorecard

By Paul James

The long awaited Mobilization of Private Finance by Multilateral Development Banks and Development Finance Institutions 2024 Joint Report (Joint Report) was published last month. The Joint Report compiles the private capital mobilisation (PCM) achieved by 15 Multilateral Development Banks (MDBs) and 15 Development Finance Institutions (DFIs), all members of the Association of European Development Finance Institutions (EDFI).

In March, we released a scorecard in anticipation of the latest edition of the Joint Report that focused on needed improvements both in the measurement and the disclosure of PCM. Building on recommendations from our report What Works: How to measure and disclose private capital mobilisation to increase private investment and close the SDG financing gap, the scorecard set out six improvements that we were looking for including the measurement of PCM through additional mechanisms, and the disclosure of more granular data. Fuller details of these indicators are included in our March blog.

Reforming the measurement of PCM and improving the transparency of PCM data are critical to maximising the efficiency of using private capital to address financing gaps. If methodologies for measuring PCM do not cover instruments or mechanisms that are effective at mobilising private capital, there is a risk that institutions will not be incentivised to use them. In the context of scarce resources, it is vital that the most effective mechanisms are deployed. Transparency is likewise important so that stakeholders – including policy makers, shareholders, and researchers – can assess and understand what works and in what contexts. This blog reviews the Joint Report, highlighting the key trends in PCM and updating our scorecard.

What does the 2024 Joint Report tell us?

The headlines from the 2024 Joint Report make encouraging reading. Total PCM has increased from $220.1 billion in 2023 to $278.5 billion in 2024, while PCM in middle-income countries (MICs) and low-income countries (LICs) rose from $87.9 billion to $108.7 billion in the same timeframe, an increase of approximately 24%. In a context where an additional $4 trillion a year is needed to finance the Sustainable Development Goals (SDGs), this uptick in PCM is welcome. Growth of PCM has been particularly strong in MICs, that experienced a 30% year-on-year increase.

However, the picture is less encouraging in LICs where PCM declined from $10.2 billion in 2023 to $6.6 billion, a fall of approximately 35%. Somewhat inexplicably, the Joint Report makes little mention of this decrease and does not offer any explanation for it. It is commonly accepted that PCM in LICs is challenging; perceived high risks, alongside poorly developed markets and few significant financeable projects limit the appetite of private investors. Yet, LICs are the countries where development needs are the greatest, and as public sector official development assistance (ODA) declines, increasing emphasis has been placed on the role of private capital in meeting these needs. As such, we might expect analysis of why PCM in this context is trending in the wrong direction.

Rating the 2024 Joint Report

Now focussing on the 2024 Joint Report itself, the simple fact is that almost nothing has changed relative to recent previous reports. With the exception of one new aggregation – PCM by instrument across all institutions – the 2024 joint report replicates the methodology and disclosure patterns that were already in place for previous reports. This is reflected in our updated scorecard, for which the 2024 Joint Report fails all six indicators. We look at these in more detail below.

No demonstrable progress on reforming PCM measurement

The 2024 Joint Report continues to use the MDB Task Force’s methodology that was developed in 2016. There has been growing recognition in the intervening years that PCM can occur through a broader set of mechanisms than those captured by this methodology, and that improved measurement would help to incentivise MDBs and DFIs to adopt originate to share business models. The new Joint Report notes that “the MDB Task Force on Mobilization (the “Task Force”) is in the final stages of completing a comprehensive update to its joint methodology, aimed at better capturing innovative financing products and expanding coverage. The updated joint methodology is scheduled for publication in 2026, with future reporting to reflect estimates made using this new methodology.” This is welcome news, although the hope was that these innovations would be ready in time for the current Joint Report. As such, the current Joint Report fails the three measurement indicators in our scorecard – balance sheet mobilisation, secondary mobilisation, and catalysation.

No meaningful improvement in transparency of PCM data

The 2024 Joint Report also fails our three indicators related to the disclosure of PCM data. At the lower end of ambition, there are still not aggregations of each institution’s PCM data by sector or instrument. The report does introduce an aggregation of PCM data according to sector, although this is aggregated across all reporting institutions. The Joint Report claims a win in this regard, stating “In response to calls from the G20 to enhance mobilization and improve reporting, this 2024 report introduces a more granular breakdown of data by financial instrument for the first time.” While this is true to the letter of the G20’s recommendations, it also represents the bare minimum progress towards them which is perhaps not in the spirit of the recommendations.

It isn’t clear what barriers exist to disclosing either sector or instrument PCM for each institution. As seen in the image below, similar information is already disclosed by International Finance Corporation (IFC) in its annual reports with respect to mobilisation by instrument, which would suggest that this information is not particularly sensitive. It begs the question, if IFC is able to disclose this data, why aren’t other institutions?

Given the lack of progress on better aggregations, it perhaps isn’t surprising that the Joint Report does not contain a dataset with disaggregated PCM data. Despite an increasing emphasis on the importance of mobilising private finance, stakeholders are unable to identify the investments for which this has, or has not, been successful. We understand that some types of PCM require degrees of confidentiality. For instance, insurance mobilisation is generally conducted on a silent basis that would contractually preclude its disclosure. However, these cases remain the minority. As can be seen in the table above, over a third of IFC’s PCM in FY25 was from loan syndications. Data on loan syndications from the private sector is commonly disclosed through platforms such as LSEG Loan Connector, while MDBs such as the Development Bank of Latin America and the Caribbean (CAF) and IDB Invest have begun disclosing mobilisation through syndications. As can be seen in the image below, for case studies European Bank for Reconstruction and Development (EBRD) has proven able to disclose mobilisation in syndicated loans at the project level, even including the identity of mobilised parties. It seems possible that with the right incentives, MDBs and DFIs could move towards disclosing the majority of the PCM they claim, even if a minority had to remain aggregated.

Comparing Joint Report progress to the OECD PCM Database

The lack of tangible progress on reforming measurement and disclosure of PCM through the 2024 Joint Report stands in stark contrast to changes realised and underway through the OECD DAC approach to measuring and attributing PCM. In terms of measurement, the OECD DAC approach has already incorporated technical assistance as a PCM leveraging mechanism and is running trial data collections on a range of other mechanisms. These innovations are largely in line with the expected changes to the MDB approach, although the OECD has been more publicly transparent about progress of the reforms.

With respect to transparency, the OECD has made significant strides in recent years. The launch of the new Mobilisation of private finance for development dashboard marks an uptick in the transparency of PCM data. The dashboard is a useful resource, allowing data users to explore various aggregations of PCM data. Interestingly, it is possible to view institution-level aggregations of both PCM by instrument and PCM by sector for MDBs, a level of aggregation that the 2024 Joint Report does not offer. The image below shows IDB Invest’s PCM by sector and instrument for 2024.

However, the real value of the dashboard lies in its underlying dataset that is publicly available. Comprised of almost 18000 investments since 2012, the dataset is the most comprehensive record of PCM to date. While the OECD has long maintained such a dataset, recent years have seen a notable increase in the amount of data that is available in a disaggregate format. For example, it is now possible to view and analyse a comprehensive record of the UK DFI British International Investment’s (BII) PCM data spanning the years 2012 to 2024. The dataset is not perfect – some bilateral agencies such as German agencies have redacted most fields as have most MDBs. There are also general deficiencies in what is disclosed – for example, a typology of mobilised parties would be useful for data users.

However, there are strong signifiers that the much-cited confidentiality is not set in stone. Indeed, it is likely more difficult for German agencies such as DEG, subject to national banking secrecy laws, to disclose such data than it would be for MDBs that are not subject to such restrictions. Generally, the improvement in transparency shown by BII, alongside others such as the French DFI Proparco and the Swedish DFI Swedfund should act as a signal that far more transparency is not only possible, but feasible.

In recent years much has been made of the need for improved alignment between the MDB approach and the OECD approach to calculating and disclosing PCM. The respective institutions have done meaningful work to improve alignment, particularly through new methodological reforms but also through negotiating more transparent disclosures from MDBs to the OECD. Yet, despite this work, the increasing divergence between the Joint Reports and the OECD’s reporting raises questions regarding the future utility of the Joint Report. The OECD DAC approach arguably held increased relevance already due to its focus on a much broader range of mobilising institutions, in addition to its strong focus on recipient economies. Now, as the OECD makes strides towards a more transparent and usable dataset the MDB approach and its associated Joint Reports risk sliding into irrelevance. Only corresponding efforts to matching the OECD’s commitment to transparency are likely to redeem it.

Conclusion: Joint Report reform is too little, and too late

Setting aside the notable increases in PCM, one would be forgiven for looking at the 2024 Joint Report and assuming that nothing has changed. While acknowledging ongoing development of methodological reforms in the background, this assumption would not be particularly misplaced. Despite calls from stakeholders for improved measurement and more transparency, the Joint Report offers little in terms of new insight into how private capital is mobilised. When set against the rapidly evolving OECD dashboard and dataset, the lack of progress seems especially stark.

At this point, one must question what is needed to make MDBs more transparent around their efforts to mobilise private capital. Despite clear calls from various camps, including the G20, it appears little more than lip service has been paid to making PCM data more accessible and usable. If MDBs are unwilling to voluntarily do what is needed to improve transparency, it is surely time for their shareholders to demand it. The likes of the UK, France, and Sweden have demonstrated their own transparency through drastically improved disclosures through the OECD. It is now time that they demand it of the institutions they are shareholders of.

Read the original post on Publish What You Fund’s website.