Policy Brief
Restoring Purpose, Instilling Inclusivity: Reforming Multilateral Development Banks (MDBs) for Infrastructure Resilience
Shuva Raha, Tulika Gupta, Nicole Pinko. David Passarelli, Muznah Siddiqui
September 2024 | International Cooperation
Raha, Shuva, Tulika Gupta, Nicole Pinko, David Passarelli, and Maznah Siddiqui. 2024. Restoring Purpose, Instilling Inclusivity: Reforming Multilateral Development Banks (MDBs) for Infrastructure Resilience. Think20 Brasil G20 Presidency.
Overview
Resilience is at the heart of sustainable infrastructure. Sustainable infrastructure is planned, designed, built, operated, and decommissioned to ensure economic, social, environmental and institutional sustainability through its life cycle. This can help avoid extreme, widespread, and cascading impacts of disaster-related losses.
Infrastructure is central to 90% of the Sustainable Development Goals (SDGs), but much of the developing world’s infrastructure is yet to be built, while existing infrastructure is ageing and unable to keep pace with demand. Building and maintaining infrastructure is resource intensive, consuming over half the world’s material resources, and contributing to 79% of global greenhouse gas emissions.
Established to mobilise capital for post-war reconstruction and development, Multilateral Development Banks (MDB) now face an infrastructure development, resilience, and sustainability trilemma. This trilemma presents a unique challenge for MDBs, but is also an opportunity to catalyse finance for well-planned, resilient, and sustainable infrastructure for all households, cities, and countries.
Key Challenges
- MDBs need to create a unified understanding of the term “infrastructure” by reconciling disparate definitions that mask its developmental significance, incorporating resilience and sustainability as key tenets.
- The current project-by-project financing approach of MDBs is detrimental to linking their repository of data, capital, and capacity for integrated planning with countries’ unique development and sustainability needs.
- MDBs’ lending criteria can overlook countries’ challenges, state capacity constraints, and local contexts, which when combined with their low risk appetite, makes finance inaccessible to countries that need it most.
Key Recommendations
- Develop standard definitions for resilient and sustainable infrastructure
- Map infrastructure needs and risk profiles.
- Map and bridge the gap between perceived and real risks
- Map infrastructure needs, including via feasibility studies and project planning
- Leverage and overlay infrastructure and physical climate risk modelling tools
- Factor resilience and sustainability into MDB capital outflow
- Create a Disaster Risk Resilience Insurance Pool.
- Prioritise fiscal and power equity in MDB structures for greater capital flows.
"The intensifying calls for MDB reforms with respect to green development offer the G20, a broad and consensus-led strategic coalition, the opportunity to integrate infrastructure resilience and sustainability into an inclusive and future-ready global economy."
