Cape Town, February 2025: The Finance in Common Summit (FiCS) brought together (among others) public development banks (PDBs), governments, the private sector, philanthropy, civil society, and academia to answer the question “how do we fund the future we want?” In the context of global development finance cuts and shrinking civil society space, we need to once again ask “which future are we funding, and for whom?”
Summits like FiC could provide important opportunities to present solutions to some of the coexisting challenges we face, such as climate change, poverty, and the debt crisis. To date, proposed solutions and accompanying funding to address these crises have been insufficient. PDBs have now announced that “with relatively small public funding, [they] can have a substantial contribution to the development goals.” How? Creating the enabling financial and regulatory environment required to attract private investment: De-risking opportunities, guaranteeing returns, equities, leveraging, investing in the future “we” want.
The Civil Society Declaration for the FiC Summit
For this future to be one that benefits both people and planet, civil society groups identified some requirements for PDBs and the greater International Financial Architecture, outlined in the Civil Society Declaration. It warns that in the context of increasing private finance mobilisation for sustainable development and the just transition, limited attention is being given to the quality of the finance, which is essential to ensure that it does not exacerbate the coexisting crises, further reserve power and decision-making to the wealthy elite, or hinder the ability of governments to protect their people and the planet.
While the Summit did provide a resounding acknowledgement that we need more serious climate action - we need to move from commitment to implementation, as well as reform the global financial architecture and deal with the debt crisis - the suggestions for dealing with these issues were not so clear. FiCS provided a platform to elevate only those voices that supported private sector ‘solutions’ for these coexisting public and environmental crises, and almost none of the 90 minute sessions apportioned any time for questions or commentary to share alternative perspectives.
The Debt Crisis
According to the Banks, to service existing debt, we need more growth. For more growth, we need more investment (from the private sector). To avoid more debt creation through the growth process, we need to de-risk projects, to reduce their overall financing costs, giving them a fighting chance to pay-off the cost of the investment through the project proceeds (i.e. the goal is for the project to pay for itself). This is not a new approach. This is actually the existing approach that has landed us in the debt crisis to begin with.
According to the CSO Declaration, the PDBs must address the unfair debt trap through the promotion of real solutions so that Global South countries do not have to borrow for a climate crisis they contributed the least to creating. Large scale debt cancellation and/or restructuring is required, as well as scaled up grant-based climate finance.
Part, but not all, of the problem is that the debt repayment rate is generally (a lot) worse for the Global South than the Global North and that development is often dependent on international finance in foreign currencies.
Country Platforms
Country platforms have been introduced as a solution to these problems - an opportunity for countries to draw on the technical details of their NDCs to define their own development needs, develop projects to meet those needs, and secure funding for these projects in their own currency.
But, instead of these platforms being an opportunity for countries to design and own their individual development pathways, the conversation turned quickly to questions around ‘quick policy fixes’ that would allow for private sector engagement; strengthening country platform - private sector feedback loops; and asking “what needs to be done in terms of risks and guarantees?” According to Ben Weisman of GFANZ, country platforms are about growing a pipeline of projects ready for investment. More ‘bankable’ projects in the pipeline shows how serious the country is about attracting investment.
It sounds like the initial aim is securing private financing, with a secondary goal of meeting local development needs.
The Role of the Private Sector
Finance through private actors comes with less transparency, less regulation, and less accountability and favours short term investments with high returns. According to Jiujun Xu, from the International Commission of Experts on Financing for Development, the private sector takes a quantity over quality approach when it comes to finance and, in practice, the private sector may prove to be an ineffective financier of the sustainable development goals, achieving only the privatisation of benefits and the socialisation of risks.
Bringing the private sector in to finance nature, social development, adaptation, resilience. The conversation has become about “selling shares of the Amazon’s development”, producing ‘green copper’ in the DRC, and about needing climate-resilient debt clauses and catastrophe insurance policies to make sure that we remember to prioritise crisis survivors over debt repayment.
According to the CSO Declaration, PDBs must promote sustainable finance practices which support long-term social and environmental transformation, as well as promote transparent reporting and accountability standards, through the adoption of standardised and comprehensive reporting frameworks.
Energy Transition
In terms of transitioning to renewables, without clear safeguards in place to prevent the funding of more short-term and (seemingly) profitable dangerous distractions, such as fossil gas, nuclear energy, CCS technologies, and carbon markets, incentives to ‘unlock’ private finances may not be strong enough to drive a transition to renewables, as opposed to a transition to false solutions. The private sector also lacks the mandate to prioritise people over profits, or provide mechanisms to remedy harm, or to do anything that is not profit-driven.
This is not just transition. This is a deeply skewed and flawed system in which capital is valued to a far greater extent than society and the planet - where the resilience of climate finance is more important than the resilience of people.
The CSO Declaration outlined that PDBs must commit to a full phase-out of fossil fuels (including gas) through both direct and indirect financial flows and shift funding toward projects in line with a just transition to renewable energy.
Conclusion
According to Enoch Godongwana, the Minister of Finance for South Africa at the FiCS opening ceremony: “All of you combined in this room represent about 26% of the GDP of the aggregated G20 countries, so you are quite a sizable group of people with good chequebooks.”
On the road to Belem, with a stop along the way at the fourth Financing for Development Conference in Seville, it has become even more important that we show up very prepared to counter the narrative being pushed by those with the biggest chequebooks.
Two commendations that must be made are to the voices that used this platform to try and further a climate justice narrative, and to those who organised and worked at the Summit: the venue was immaculate and the food was outstanding.