Private capital mobilization is one of the white whales of development finance. It's the concept animating the concept of "billions of trillions," the idea that public finance can and should be deployed to catalyze multiple times its amount in private funding to help narrow the staggering funding gap associated with the Sustainable Development Goals (SDGs). The urgency and magnitude of the climate agenda has only amplified the drumbeat.
Nearly a decade after the idea emerged in the 2015 Addis Ababa Action Agenda, those trillions have failed to materialize. Yet for many, the concept remains a North Star in development finance, as official finance alone is such a small fraction of what is needed to fund the SDGs. The World Bank, newly led by Ajay Banga, recently announced the creation of the Private Sector Investment Lab to come up with new approaches.
A fundamental question underpins the debate on private capital mobilization: Is success just a matter of finding the right technical fix—developing new instruments, changing institutional incentive structures, creating higher MDB risk tolerances? Or is there a fundamental flaw with the “billions to trillions” paradigm?
To explore these questions, CGD recently launched the MDB Reform Accelerator, a hub for evidence-based analysis and strategic outreach around MDB reform. And as part of that initiative, we're hosting a set of conversations around private capital mobilization on the CGD Podcast with experts in both private and public funding to find out: What's worked? What needs to change? And where can we go from here?
Our first conversation is with Stephanie von Friedeburg, an expert on both sides of the public-private equation. In January she became the Managing Director of Citi's Banking and Capital Markets division, but before that she was the Chief Operating Officer and Interim CEO of the International Finance Corporation, and before that, the World Bank's Chief Information Officer.
Stephanie joined the podcast to chat with us about how to balance risk and impact in investment, why blended finance needs a rethink, and what mechanisms offer the most promising solutions to the development finance problem.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.