(Ecofin Agency) - Launched five years ago, Finance in Common is a coalition of 530 public development banks worldwide. Its goal is to enhance collaboration among banks of all sizes and from different regions, united by shared development objectives. Each year, the Finance in Common Summit (FICS) brings together the technical work from the year, fosters strategic alignment, showcases tangible progress, and sparks political discussions to drive international reforms.

In an exclusive interview with Ecofin Agency, Adama Mariko, Secretary-General of Finance in Common and Deputy Executive Director at the French Development Agency (AFD), responsible for mobilization, partnerships, and communication, shares his insights and perspectives on economic and financial challenges in Africa and the world.

Ecofin Agency: Finance in Common brings together key players in public financing for Africa and other developing countries. What will be the main focus of the 2025 Finance in Common Summit (FICS) in Cape Town?

Adama Mariko: I’m very excited about FICS 2025. Since our 2023 meeting in Colombia, we’ve refined an international agenda aligned with the priorities of nations through the United Nations. We’ve also actively participated in technical discussions at the G20. Despite the challenges, COP 29 showed that even technical efforts can lead to significant political outcomes.

In 2025, our main goal is to strengthen the financial capacity of public development banks (PDBs) to encourage sustainable investments. In the world, there are 530 PDBs with a combined portfolio of $23 trillion and annual investments of $2.5 trillion. However, there’s a clear allocation issue. I mean 80% of these resources are concentrated in G20 countries, while Africa—despite having 100 PDBs—accounts for just 1% of the total.

Only 10% of PDBs operate internationally, like the World Bank or the French Development Agency (AFD). The rest focus on national priorities. We’re working to align their dual mission, which is supporting domestic public policies while addressing global challenges like climate change and biodiversity.

The geographical distribution of PDBs is also worth noting. About 20% are located in Africa, Europe, and the Americas, while 25% are in Asia. However, their financial capacities are unevenly distributed. For 2025, our efforts will aim to address barriers to better resource allocation, reduce capital flow restrictions, and encourage more private investment by fostering partnerships between national and international PDBs.

This year is particularly significant as it marks the 10th anniversary of the Paris Agreement, the Sustainable Development Goals (SDGs), and the Addis Ababa Action Agenda. Our goal is to align these frameworks to improve the global financial system. FICS 2025, held alongside the G20 in South Africa, provides a unique opportunity to collaborate with finance ministers and central bank governors on critical reforms.

In 2025, under the leadership of Brazil and South Africa, the Global South will take center stage. Both nations have asked Finance in Common to contribute to international negotiations, from the G20 to COP30. We’re committed to supporting this ambitious agenda and mobilizing PDBs to meet these challenges head-on.

Ecofin Agency: You mentioned the G20, whose meeting will coincide with the FICS in South Africa, the country holding the G20 presidency in 2025. Do you have any specific expectations for this presidency, especially concerning access to finance for African countries?

Adama Mariko: This issue is more relevant than ever. The G20 acknowledges the challenges of accessing capital, whether for African countries or for other regions like Latin America and South Asia. International financing is crucial, and South Africa’s presidency continues the reforms driven by Brazil, which made significant strides in this area.

These reforms aim to strengthen the capacities of multilateral banks, not only by increasing their capital but also by streamlining their activities and revising certain regulations to free up additional resources. While these funds are limited to $200 billion per year, they focus on development, adaptation, and climate financing issues. Another significant step forward involves the use of Special Drawing Rights (SDRs). Since 2022, these resources, initially designed to meet the monetary needs of countries, can now flow through multilateral banks to boost their capital and increase their borrowing capacity. This mechanism, supported by negotiations within the G20, has already benefited institutions like the African Development Bank and the Inter-American Development Bank, allowing them to fund more of Africa’s economy through financial innovations.

The scale of these advances shows how central South Africa is as a G20 member and an African country. It also stands as an example of energy and industrial transition. Through its participation in the first Just Energy Transition Partnerships (JETP), although the results are still limited, South Africa is showing how to balance economic development, energy self-sufficiency, and transforming extractive industries into greener, more productive sectors, while also supporting workforce training to accompany these changes. Its determination and leadership in these discussions inspire other African nations and beyond.

Moreover, the South African central bank, deeply involved in G20 work, is exploring ways to strengthen interoperability between national and multilateral banks. The goal is to remove barriers that prevent international finance from benefiting national economies more effectively. The challenge is not only about the availability of resources but also the conditions under which they can be accessed. Perceptions of risk and prohibitively high financing costs often trap developing countries in a cycle of underdevelopment.

Access to capital is also heavily influenced by the role of national public banks. These institutions are key in attracting investments, as they initiate the risk-reduction process for projects, support the creation of strong national private sectors, and provide necessary guarantees for private banks. Without them, international banks hesitate to finance projects in these countries, and local financial priorities struggle to emerge.

By understanding these challenges, South Africa’s G20 presidency has made these issues a priority, especially during the discussions in Cape Town.

Ecofin Agency: The FICS takes place at a time when several reports from the IMF and the World Bank have highlighted a decline in public development aid (PDA) to Africa, along with the withdrawal of several Western banks from the continent. What are the causes of this, and what impact has it had on project development in Africa?

Adama Mariko: The issue of PDA and the withdrawal of international banks is crucial. When it comes to PDA, it’s not so much a decrease as it is a transformation. Between 2015 and 2020, international crises pushed countries to prioritize contributions to the multilateral system, which shifted focus away from bilateral PDA. Initially, two-thirds of PDA was bilateral, but in the past decade, this trend has reversed, with a stronger focus on multilateral and vertical funds like the Green Climate Fund or the Global Fund for Education. This shift raises questions about the effectiveness of these mechanisms in redistributing funds and their impact on the ground.

Countries have also had to redirect their budgets in response to crises like the COVID-19 pandemic and the war in Ukraine. These new priorities have competed with funding traditionally dedicated to classic PDA. Despite this, sustainable finance flows continue to rise, particularly in sectors aligned with the Sustainable Development Goals (SDGs) and energy transition.

As for international banks, their withdrawal is more technical than strategic. The implementation of regulations like Basel III has imposed risk-weighting constraints, making investments in areas perceived as risky less profitable. These rules penalize foreign banks investing in regions outside their jurisdiction by significantly increasing the cost of equity capital.

In response to these constraints, many international banks have sold their African subsidiaries to pan-African or national banks that are better suited to local regulations. For example, Moroccan or Ivorian institutions have taken over these positions, changing the shareholder structure without reducing financing capacity. These new shareholders, often closer to the local realities, are better able to meet the needs of domestic financing.

In conclusion, the withdrawal of Western banks is a result of regulatory constraints, not a strategic abandonment. This shift has allowed pan-African banks to play a more central role, strengthening the continent’s financial independence.

Ecofin Agency: What opportunities does Africa have in these dynamics?

Adama Mariko: A great deal of innovation is emerging in Africa. Pan-African banks, like Ecobank, some Moroccan banks, and regional consortia, are showing more boldness by investing, acquiring banks, or creating new banking networks. This represents an excellent opportunity for financing the continent.

African public banks also play a key role. For example, single windows are being created to finance entrepreneurship in underserved sectors, like micro-businesses or the informal sector. The public system provides guarantees to encourage commercial banks to finance these newly formalized businesses.

At Finance in Common, we support financial inclusion and SME financing. Public banks collaborate with networks of commercial banks to assist in the formalization of informal vendors through training, single windows, and public guarantees, making it easier for them to access banking finance.

At AFD, I worked on these issues from the start of my career in Abidjan, providing guarantees to the banking sector. This product is now widely used by public and private institutions to finance entrepreneurship and SMEs.

National structures like the ADR in Senegal, the BIPM in Côte d'Ivoire, and the Caisse des Dépôts in Benin, supported by AFD, help banks and the private sector in these efforts. This shows how the public and private sectors can cooperate effectively with the support of international cooperation. These initiatives, encouraged under the Finance in Common framework, are growing and yielding results.

Ecofin Agency: Debt is a key issue in the debate, especially for several African economies, where some countries believe they have the right to borrow to meet needs that public or multilateral aid alone cannot cover. Is the FICS considering a roadmap to balance development financing with debt sustainability?

Adama Mariko: That’s an excellent question. FICS doesn’t directly address debt sustainability, but rather the cost of capital and financing mechanisms for projects. International borrowing often involves debt between multilateral or bilateral systems, or through capital markets when countries borrow on their own. Public banks are involved in certain stages of this process, but not always. For example, when states borrow directly, no public bank is involved. Multilateral or bilateral banks can step in for financing international projects, while other debts, like internal or project debt, are handled by private or bilateral actors.

At Finance in Common, the discussion focuses on the effectiveness of investments funded by multilateral or bilateral actors, but debt itself isn’t directly addressed. In fact, 90% of the members of Finance in Common aren’t concerned by this topic because they are national banks financing projects without adding to their country's debt.

One area that states need to focus on is the use of their public banks. These banks, like AFD, have a significant investment capacity without putting pressure on public debt. However, many countries haven’t fully leveraged this capacity. African public banks represent less than 1% of global balance sheets. Sometimes, states over-borrow to provide funds to their public banks, but these banks often lack the resources to supplement this financing. So, countries must take their public banks seriously.

The stability of public banks can be undermined by political changes or predatory practices. However, examples like the Ethiopian Public Bank or the DBSA in South Africa show that with solid support, these institutions can play a major role.

The issue of debt, beyond Finance in Common, is crucial and must be addressed within the framework of the G20. Debt is not inevitable, but a matter of trust. The most indebted countries, like the United States, are an example of this. The problem lies in the perception of risk: a country with debt at 70% of GDP can be seen differently depending on whether it's Europe or Senegal, even though the ratios are the same. The real challenge is the ability of countries to generate enough fiscal resources to repay.

Africa, although experiencing growth, must also strengthen its tax base to support debt and avoid unproductive borrowing. Without serious reforms, deficit financing is done through debt, which is not sustainable if that financing does not generate productive investments.

African countries must ensure they borrow for projects that generate long-term benefits, like infrastructure. Borrowing for current comfort deficits is problematic, as it burdens future generations.

Finally, for debt management, care must be taken to ensure the proper structure of loans, with appropriate maturities and currencies. The international financial system, with mechanisms like the Paris Club, must also ensure inclusivity in debt renegotiation. African countries must actively participate in discussions on debt restructuring, as the issue goes beyond simple debt cancellation.

The G20, the United Nations, and financial institutions must address this issue inclusively, as trust in the international financial system is at stake. If climate support promises and debt management are not fulfilled, it leads to a loss of trust, a major problem in international relations.

Ecofin Agency: You’ve discussed the risk perception associated with debt. Don’t you think there’s a systemic presumption of default risk against African countries, particularly from rating agencies? This risk seems higher in Africa, but in reality, few African countries have defaulted recently, even amidst global crises. Do these agencies overestimate the actual risk of African economies?

Adama Mariko: Yes, this is the case, but it’s not just the perception of rating agencies. It’s also the perception of investors. The main issue is the cost of capital, which is directly influenced by the ratings, whether for a project or sovereign debt.

Take Europe, for example: after the financial crisis, countries like Greece, Spain, or Italy faced difficulties, yet Greece—despite having defaulted—still had better borrowing costs than some African countries that have never defaulted. This can be explained by European economic integration, which provides a kind of protection and a sense of collective support, unlike in Africa, where integration remains limited despite regional blocs like ECOWAS or WAEMU.

Ironically, Africa is often perceived as a whole, despite its fragmentation. For example, a crisis in Kenya or a coup in Niger can lead to an increase in spreads across the entire region, even when there’s no direct economic link. This phenomenon goes beyond rating agencies and reflects a biased perception from investors.

However, Africa does have strong financial instruments, such as the African Development Bank (AfDB), which holds a triple-A rating due to its supranational shareholders. This allows the AfDB to borrow at low rates to refinance African states and projects. Similarly, institutions like the West African Development Bank (BOAD) play a key role in securing financing on much better terms than member countries could on their own.

These public financial institutions are an untapped opportunity. They represent less than 1% of global banking assets, yet their potential to mobilize both national and international resources is vast. By strengthening these public banks and reducing the misperceptions about African economies, we can mitigate shocks and improve the risk perception. This is a strategic agenda that needs to be pushed forward.

Ecofin Agency: Development banks are key players in financing in Africa, but other sectors, such as the private sector, could also play a crucial role. Is the FICS considering how to better coordinate their contributions to maximize the impact on economic and social development?

Adama Mariko: Absolutely, this is a central point for FICS. We are working on two main areas: removing barriers to blended finance and improving mechanisms to mobilize private capital, particularly from wealthier countries, towards developing economies.

Increasingly, public initiatives are catalyzing private financing by finding viable economic markets. However, there is a lack of reliable intermediaries to facilitate these investments. International banks play a role, but at the national level, strong institutions like development banks are essential.

Take Morocco, for example, where the Caisse de Dépôt et de Gestion effectively mobilizes resources by collaborating with international banks. This approach builds investor confidence and attracts funds to local projects.

In Europe, institutions like the European Investment Bank (EIB) work with national banks to structure large projects. In Africa, due to the lack of solid local players, the EIB often has to handle everything itself, which increases costs and discourages the private sector. Public banks can help absorb these initial costs and make projects viable, especially in climate infrastructure.

For international investors, it remains difficult to compete with the immediate returns offered in other markets. This highlights the urgency of promoting sustainable investments and overcoming technical barriers, such as the penalty for investments in local currencies outside of their territory.

Another key issue is the African private sector. Although local savings are limited, they are often invested in short-term financial products rather than high-potential infrastructure projects. For instance, African asset management funds, including pension funds, are not sufficiently involved in these projects. If these players do not set the example, it will be hard to attract international investors.

We are working to align visions and investment frameworks, clarifying concepts like sustainability. For example, some refuse to fund roads for ecological reasons, but accept supporting electric buses that use these roads, which is contradictory. Solutions need to be adapted to local realities.

Finally, positive initiatives are emerging, such as those by Meridiam, which mobilizes international resources for projects in Africa. However, it’s crucial that national institutions, like National Social Security Funds (CNPS) and local banks, become more involved in these discussions.

Ecofin Agency: In the long term, how do you see the evolution of the role of public development banks in Africa in the reform of the international financial architecture, as requested by several developing countries?

Adama Mariko: Before addressing this point, I would like to mention a key actor that is often overlooked: the capital markets. Contrary to what one might think, public banks, like AFD, do not directly rely on state budgets. For example, AFD raises its annual 12 billion euros on capital markets to finance sustainable projects at very low rates.

This model is replicable elsewhere. BADEA, which has long been funded by its own capital, recently issued a eurobond to increase its resources. In Rwanda, the BRD raised funds in local currency through sustainability bonds, even involving contributions from the diaspora. Capital markets thus allow for large-scale resource mobilization, bypassing the often lengthy and complex project-by-project approaches.

However, only about a hundred public banks today issue bonds, mostly in G20 countries. It is crucial to encourage more banks in developing countries to use this avenue, particularly to unlock projects that are sometimes delayed due to small missing amounts.

As for African public banks, their role in the international financial architecture is gaining recognition. At the preparatory meeting for FFD4 (4th International Conference on Financing for Development), UNDESA (UN Department of Economic and Social Affairs) highlighted their importance as financial instruments for funding national priorities and stimulating the economy.

The challenge now is to better integrate these banks into the international network and give them simplified access to international financing, particularly climate funds and grants. This would strengthen their ability to mobilize capital in local currencies to meet national needs.

Another priority is to connect them more with the international community. Many of these banks do not fully benefit from the advantages of a global network, which limits their influence and ability to negotiate with their shareholders.

The year 2025 will be crucial. The reform of the international financial architecture, planned for FFD4, could transform the role of African public banks. If their shareholder states support this change, these banks could become key players in economic development and occupy a central position in the global financial system.