Innovative Development Finance – Stocktaking and Tool Box of Innovative Development Finance in the German Financial Development Cooperation

The overall study programme consisted of three main components:

(1) Stocktaking of innovative development finance trends, strategies, coordination mechanism and experience exchange platforms, taking into account experiences of other donors, the existing financial cooperation approaches and instruments, possible Technical Cooperation links, and international development trends, as well as the general framework conditions in different regions,

(2) Review of international and German development cooperation experiences in the field of innovative development finance, creation of a financial cooperation toolbox to mobilize private capital, strengthen local markets and maintain debt sustainability, as well as derive policy recommendations. Financial cooperation experiences refer to concrete project/program examples and context as bad and good practice, the utilized instruments and approaches, as well as lessons learnt and cost-benefit considerations.

(3) Proposals for the further development of financial cooperation approaches and instruments, which are suitable for addressing partner needs and mobilizing additional private capital, strengthening local markets as well as minimizing the risk of over-indebtedness.

The toolbox created as part of the study has been recently published on the KfW website. Its purpose is to support development finance practitioners, policy makers, and other stakeholders by providing an overview of terminology and concepts in innovative development finance, as well as a stocktaking of the most promising innovative finance approaches internationally . If you are interested to view the toolbox in detail, please follow the link: https://www.kfw-entwicklungsbank.de/PDF/Download-Center/PDF-Dokumente-Brosch%C3%BCren/2020_Innovative_Development_Finance_Toolbox.pdf

Additionally, as part of the assignment, LFS organised and moderated the Innovative Local Currency Workshop at OECD Private Finance for Sustainable Development conference in Paris (January 2020), sponsored by BMZ/KfW as well as co-organised “Innofin Lab” at the KfW headquarters, presenting innovative finance developments in Local Currency Finance.