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Development heavyweights back bigger role for DFIs in COVID-19 response (Devex)

May 4, 2020

From the article:

“…'[DFIs] need a combination of risk-sharing, capital and new flexibility to respond beyond their capacities in the current stressed situation,” the experts write. “DFIs are the European institutions in the best position to act swiftly in support of the private sector in vulnerable countries by providing emergency credit lines to client institutions before it is too late, something no other institution can do.’

Not everyone is so sure. Mikaela Gavas from the Center for Global Development think tank said it was “rather strong” to portray DFIs as the vital front line in the struggle to preserve African firms.

‘It is going to be local governments and national banks that support their private sectors best,’ Gavas told Devex. DFIs “can certainly play a role,” she said, but cautioned that any capital increases should be contingent on DFIs taking greater risk and being innovative.

The call to action comes at a sensitive time in Brussels, after the European Commission recently decided to postpone budget guarantees intended for smaller DFIs until its next 2021-2027 budget cycle…”

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Photo of Mikaela Gavas
Co-Director of Development Cooperation in Europe and Senior Policy Fellow