(Ecofin Agency) - During the fifth "Finance in Common" forum held in Cape Town, Ecofin Agency spoke with Rémy Rioux, CEO of the French Development Agency (AFD). At a time of growing geopolitical tensions, skepticism about multilateralism, and budget cuts in major economies, this summit brought together public development banks from around the world to rethink financing models and strengthen cooperation between the Global North and South.

With rising economic nationalism in some Western countries, budget constraints in France, and challenges related to climate financing and social inclusion, development banks must rethink their strategies. In this interview, Rémy Rioux shares the key takeaways from the forum and explains why financial institutions must adapt to new development challenges.

Ecofin Agency: The fifth "Finance in Common" forum has just concluded. What are the key lessons and main themes that emerged?

Rémy Rioux: Thank you to Ecofin for your interest in this year’s Finance in Common (FiCS) forum. This initiative, launched in 2020, is still young and evolving, but this edition marked a significant step forward.

"I’m fully on board with this shift from public aid to a more cooperative investment approach."

This year, the Development Bank of Southern Africa (DBSA) hosted the forum, with support from the Asian Infrastructure Investment Bank (AIIB) and, of course, AFD. Attendance doubled compared to last year, with representatives from 115 countries, 200 public and private banks, and 350 speakers.

The forum provided an opportunity for intense networking and meaningful exchanges among development finance actors. We also published a final statement summarizing key announcements and agreements. But beyond concrete outcomes, one major highlight was our close coordination with the G20 finance ministers and central bank governors' meeting.

Discussions highlighted current geopolitical tensions and uncertainties, with concerns about isolationism and a potential breakdown in international cooperation. "Finance in Common" aims to counter these trends by promoting inclusive and constructive dialogue.

Ecofin Agency: In your opening and closing remarks, you said that the old model of public development aid is disappearing and must be replaced by sustainable and inclusive investment. Can you elaborate on this?

Rémy Rioux: International solidarity and cooperation remain essential, but the concept of "aid" belongs to the past. This is what I hear from our partners worldwide. The word carries historical baggage that can sometimes be problematic.

Even in donor countries, development aid is often questioned. This debate isn’t new, but the reality is that more and more stakeholders, from all over the World, agree that we need to rethink the model.

We must create a new framework focused on concrete and effective action. Development financing is undergoing a major transformation. Recent budget cuts in the U.S., the UK, and Europe illustrate this shift.

The challenge now is to build a more resilient and efficient model, one that mobilizes sustainable resources to tackle the critical issues of the 21st century.

Ecofin Agency: What does this transition to a sustainable and inclusive investment model look like in practice?

Rémy Rioux: It means rethinking financial flows. Both public investments from institutions like AFD and the World Bank and private capital must be ambitious and high quality.

These investments should not only drive growth and job creation but also address key challenges like inequality, social justice, and climate change. No country can ignore these issues, and we must prepare for them collectively.

Investment isn’t just about international institutions. Governments must also take responsibility by mobilizing their own budgets and national development banks. No country can develop another each nation must take charge of its own progress, relying on its institutions and setting its strategic priorities.

Investment has another advantage: it’s built for the long term. It creates lasting partnerships, allows us to track tangible impacts, and demonstrates returns on investment. This approach is far more effective and convincing than traditional public aid.

Ecofin Agency: Multilateral banks face uncertainty with Donald Trump’s return to the political stage. The U.S. has already cut parts of its foreign aid through USAID and is reviewing its support for multilateral development banks. There are concerns that Washington might withdraw from institutions like the World Bank, with which you co-finance several projects. How do you see these developments?

Rémy Rioux: The World Bank doesn’t belong to the United States. It’s important to remember that 85% of its shareholders are not American. The U.S. has its own policies and is free to reconsider its role in global cooperation, but it isn’t the only player.

" France is not stepping back from its international role."

Let’s look at the numbers: U.S. development aid is about $60 billion, while Europe contributes $150 billion. That means Europe’s support is three times larger than America’s.

If we add up the contributions from European countries, as well as African, Asian, and Latin American shareholders, it’s clear that these institutions remain strong.

Through Finance in Common, we’re working to strengthen the legitimacy and financial power of national and regional banks, which are directly owned by their respective countries. In France, we have Caisse des Dépôts, and on a global scale, we rely on a solid financial ecosystem. This system will remain strong and continue to fulfill its role.

Ecofin Agency: How do you respond to recent criticism of multilateral development banks, particularly in France, where the far-right is gaining ground? How could these political shifts impact your work in Africa?

Rémy Rioux: I think we shouldn’t overestimate these criticisms. As you pointed out, they come from a specific political group that is growing but does not represent the entire political landscape.

My response is what we did here in Cape Town: bringing together 2,500 participants around a common goal solidarity-driven investment. We strengthened global ties, with a particular focus on Africa, and set ambitious goals.

Throughout the week, I was joined by French Finance Minister Éric Lombard, Minister for Francophonie and International Partnerships Thani Mohamed Soilihi, and Bank of France Governor François Villeroy de Galhau. All of them took part in Finance in Common and reaffirmed France’s commitment to international cooperation, multilateralism, gender equality, climate action, and investment in Africa.

As AFD’s CEO, serving the French government and Parliament, I feel fully supported in my mission. France is not stepping back from its international role. Since 2017, President Macron has worked to renew the global agenda and strengthen financial architecture worldwide. I’m fully on board with this shift from public aid to a more cooperative, solidarity-based investment approach. This is not just my vision it is France’s official stance, strongly reaffirmed here in Cape Town.

Ecofin Agency: Budget constraints in France have led to reduced direct government support for AFD. Will this affect your funding levels?

Rémy Rioux: No impact. The French government has given me a clear mandate: keep AFD’s activity at €12 billion this year, just as in 2024 and previous years. We are not scaling back.

You are right, though we must achieve this with slightly less direct budget support. But AFD is primarily a public development bank. Most of our funding, €10 billion out of €12 billion, comes from borrowing on financial markets, just like the West African Development Bank (BOAD), the World Bank, or DBSA.

We reinvest this money into projects under favorable terms compared to what our partners could secure within their own financial systems. While we’ll have to rely on fewer direct subsidies, our banking capacity remains intact for 2025.

As for subsidies, we’re going to work on mobilizing more from other sources. For example, AFD is the leading agency managing funds for the European Union. Next Wednesday, I’ll be in Brussels to discuss with the European Commission how to expand this initiative. We’re also very active in climate financing, particularly through the Green Climate Fund.

Last year, we invested €5.5 billion in Africa, a 15% increase from 2023. Far from slowing down, we are accelerating. Maintaining this ambition is crucial for strengthening ties between Europe and Africa.

Ecofin Agency: You mention 530 development banks worldwide, with only 19% of them based in Africa. However, they represent just 2% of global assets in the sector. This lack of capacity limits their ability to finance development effectively. After five editions of the Finance in Common forum, what concrete steps have you taken to better direct resources where they are most needed?

Rémy Rioux: You’re absolutely right to highlight this gap. I’d like to acknowledge the quality of African public development banks. Notably, the Deposits and Management Fund in Morocco, led by Khalid Safir, the West African Development Bank (BOAD), chaired by Serge Ekué, the TDB, led by Admassu Tadesse, as well as the African Development Bank (AfDB), under the leadership of Akinwumi Adesina, and the Development Bank of Southern Africa (DBSA), led by Boitumelo Mosako, who is hosting us today.

These institutions play a key role, but they remain too small. We need to help them grow so they can have a more substantial presence in Africa's financial systems. This is exactly the goal of Finance in Common (FiCs): to help African public development banks expand, secure more ambitious mandates from their governments, and gain greater institutional autonomy.

Since 2020, we’ve made significant progress. For instance, look at the recent recapitalization of the BOAD. Notice the many credit lines these institutions now manage on behalf of AFD. Our strategy focuses on two main areas: directing more resources to the ground through local, national, and regional banks, and enhancing their ability to structure projects and mobilize international funding.

There’s still work to do, but we’ve gained a lot of momentum here in Cape Town. The commitment is clear: strengthen African banks’ ability to finance their own development.

Ecofin Agency: The effectiveness of funded projects is often questioned. This is not just a critique of AFD, but of development banks in general. Some argue that funding is driven more by ideological factors than by tangible results. How do you respond to this, and how does AFD measure the impact of its interventions?

Rémy Rioux: I haven’t come across any specific or in-depth critiques on the impact of our projects. We are fully transparent about our actions and ready to provide all the necessary data.

In fact, I challenge anyone to find institutions more committed to impact measurement than public development banks. Unlike commercial banks, we don’t just measure the amount of financing we provide; we also assess the real-world impacts we achieve for the communities we aim to help.

Each project follows a strict process: it’s analyzed beforehand with clear objectives, and then evaluated afterward to see if it achieved the desired outcomes. These evaluations are conducted by independent experts to ensure fairness.

If the results don’t meet expectations, we adjust our strategies. The goal is to maximize the effectiveness of our funding and report on our actions in a transparent way.

Now, if fighting climate change, promoting gender equality, or improving women’s access to the job market are not seen as priorities, then there might be a difference of opinion.

But these are mandates set by the French Parliament and government, confirmed by a law passed unanimously on August 4, 2021. This is a mission we fully embrace—coherent, legitimate, and crucial for our objectives.

Interview by Fiacre Kakpo

Translated from French by Firmine AIZAN