Globally, development banks have a significant impact on how nations manage their economies, societies, and environments. These institutions have the role of providing a combination of monetary resources, know-how, and strategic guidance to promote development, particularly in regions that stagnate and struggle with poverty and unstable economies.
The International Day of Banks (December 4th) is a call to action as well as a celebration of the accomplishments of the banking industry. Established by the UN in 2019, the event pushes financial institutions to continue developing, innovating, and adjusting to the shifting demands of a world economy that is changing at a rapid pace.
The World Bank, International Monetary Fund (IMF), European Bank for Reconstruction and Development, the Asian Development Bank (ADB), the African Development Bank (AfDB) and the Inter-American Development Bank (IDB) are among the organizations that play a crucial role in international development. How exactly do these banks finance development, eradicate poverty and promote a climate-resilient agenda? Let’s find out.
The World Bank and the International Monetary Fund
Headquarters: Washington, D.C., United States
The World Bank provides an extensive suite of financial and consultancy services to help various development initiatives in emerging economies. This entails providing loans, grants, and technical support that is specifically tailored to meet the needs and overcome the challenges that developing countries encounter.
The IMF, although not strictly speaking a development bank in the conventional sense, helps countries in economic distress and makes a substantial contribution to the resilience of the global financial system.
The two organizations work with numerous member nations and, to meet a wide range of demands, they combine financial instruments, technical support, and policy guidance.
World Bank’s contribution to the UN Sustainable Development Goals
Source: Financing The Sustainable Development Goals
In 2022, the World Bank’s investment commitments reached US$91.7 billion which was allocated to 263 projects, 23% more than in the previous year.
From April 2022 to June 2023 the World Bank Group contributed a record-breaking US$171.6 billion in crisis financing. This funding came from the Group’s member institutions:
- US$53.1 billion from the International Bank for Reconstruction and Development (IBRD)
- US$51.8 billion from the International Development Association (IDA)
- US$57.6 billion from the International Finance Corporation (IFC)
- US$9.1 billion in guarantees from the Multilateral Investment Guarantee Agency (MIGA).
The commitments, disbursements, and gross insurance of the World Bank for Partner Countries are shown below:
Source: World Bank
The IMF provides assistance to nations that are facing systemic economic problems and contributes to the robustness of the global financial system. IMF’s financial statements of income for 2022 and 2021 are shown below.
Source: IMF
2022 IMF disbursements and repayments for all members*
Source: IMF
* In SDR – special drawing rights
The Asian Development Bank (ADB)
Headquarters: Manila, Philippines
The ADB seeks to advance the economic and social progress of Asian countries. Focusing on reducing poverty and promoting sustainable development, it offers grants and loans to its multiple member nations from high-income economies such as Japan to struggling states in Southeast Asia. The bank’s approach combines sustainable development, poverty alleviation, and regional collaboration to ensure that initiatives meet the unique developmental requirements of each nation.
ADB’s contribution to the SDGs
Source: Financing The Sustainable Development Goals
The majority of ADB’s funding originates from its ordinary capital resources which are provided to lower- to middle-income nations at terms close to market and, from 2017, at extremely low interest rates to lower-income nations.
According to ADB’s 2022 financial report:
- ADB’s commitments: US$20.5 billion (US$22.8 billion – 2021)
- ADB’s disbursements: US$19.7 billion (US$18.2 billion – 2021).
Net income from ordinary capital resources: US$2,169 million (US$730 million – 2021).
Allocable net income: US$1,099 million (US$1,161 million – 2021).
The table below shows ADB’s financial results for 2022 and 2021.
Overall financial results for the year ending 31 December, (US$ million)
Source: ADB
The African Development Bank (AfDB)
Headquarters: Abidjan, Côte d’Ivoire
The African Development Bank, or AfDB, works to promote the social and economic advancement of African countries. It offers grants, loans, and technical support for projects related to development. The organization focuses on resolving the various issues that African nations face, including poor infrastructure, poverty, and unstable economies.
AfDB’s contribution to the SDGs
Source: Financing The Sustainable Development Goals
In 2022, the bank’s net income reached 175.28 million of Units of Account (UA), a common currency of the Economic Community of West African States, which is four times higher than the 2021 figure of UA 41.55 million.
The AfDB is comprised of three units: the African Development Bank (ADB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).
AfDB financial results for the year 2022 and 2021
Source: AfDB
According to the AfDB 2022 report:
- AfDB approvals: 6,156 million UA
- AfDB disbursements: 3,529 million UA
Source: AfDB
The European Bank for Reconstruction and Development (EBRD)
Headquarters: London, UK
The EBRD provides a wide range of financial solutions in addition to a variety of services such as policy and business consulting for SMEs. With operations in almost 40 economies across three continents, the EBRD has benefited numerous regional industries, private enterprises, and sustainable infrastructure. Its objective is to transform into a majority green bank by 2025 by making significant investments in climate mitigation and response.
EBRD’s contribution to the SDGs
Source: Financing The Sustainable Development Goals
In 2022, the EBRD made investments in 35 nations, with its annual bank investment reaching a record €13.1 billion. Its investment operations portfolio hit €53.5 billion which is over 3 billion more than the previous year.
EBRD’s latest financial results compared to previous years are shown below:
Source: EBRD
The Inter-American Development Bank (IDB)
Headquarters: Washington, D.C., United States of America.
IDB’s contribution to SDGs
Source: Financing The Sustainable Development Goals
In 2022, the organization financed and mobilized US$14.8 billion, and its portfolio included 611 development projects.
IDB’s latest financial data
Source: IADB
Final word
International development banks are essential in determining how the world develops as they balance environmental sustainability with economic progress and address issues such as financial crises, climate change, and geopolitical tensions. While facing various issues in a fast-paced international setting, these institutions manage to boost economic growth, improve infrastructure, and reduce poverty in numerous countries.
