Scaling up private capital mobilisation requires more than incremental innovation: it calls for systemic transformation of development banks and development finance institutions (DFIs) to ensure that every dollar of development finance delivers greater impact. Mobilisation must become a core institutional function, supported by shareholder direction, financial frameworks and organisational incentives to expand the resources available. This chapter outlines policy options for a breakthrough in private finance mobilisation. It identifies three levers for reform: (i) clarifying and strengthening mandates, strategies and key performance indicators (KPIs) to anchor mobilisation as a core purpose; (ii) enabling financial frameworks and management that balance prudence with catalytic ambition; and (iii) aligning incentives and building the skills needed to deliver mobilisation. The chapter highlights that shareholder engagement and co-ordination across multilateral, bilateral, regional and national development banks are essential to achieve a system-wide change. By aligning mandates, KPIs, financial frameworks and operational capabilities, development banks and DFIs can move from isolated efforts to a coherent, collective mobilisation agenda – unlocking private investment at the scale required.
Mobilising Private Capital for Growth, Resilience and Prosperity
6. Policy options for a breakthrough in private finance mobilisation
Copy link to 6. Policy options for a breakthrough in private finance mobilisationAbstract
Scaling up private capital mobilisation requires more than new instruments or pilot initiatives. It demands system-wide transformation of development banks and development finance institutions (DFIs), underpinned by clear shareholder direction and support. Development banks and DFIs need to be enabled and guided by their shareholders, who shape formal mandates, strategic frameworks and resource envelopes. At present, several key persistent barriers internal to development banks and DFIs are holding back progress to increase private finance mobilisation and impact: (i) mandates, strategies and key performance indicators (KPIs) that insufficiently prioritise mobilisation; (ii) conservative financial frameworks focused on senior debt and originate-to-hold models; (iii) legacy metrics and staff incentives that discourage mobilisation; and (iv) fragmentation across institutions that discourage mobilisation.
Shareholders are essential to resolving competing priorities, inconsistent guidance and trade-offs. It is a key dimension of their governance function to steer development banks and DFIs towards a more catalytic role in support of global and local development goals, including by strengthening accountability for mobilisation outcomes and ensuring that enhanced mobilisation efforts are consistent with strong support for the poorest and most vulnerable countries. This includes providing sufficient financial resources and systematically equipping, mandating and incentivising development banks and DFIs.
Three levers for development banks, DFIs and their shareholders to promote change emerge:
1. Clarify and strengthen mandates and strategic direction: Building on important advances from the G20-endorsed Comprehensive Roadmap for multilateral development banks (MDBs) shareholders and boards can move beyond general reference to private capital mobilisation and formally anchor it as a core function – not just for MDBs, but also for bilateral and national development banks and DFIs. Concrete steps include:
Mandate anchoring: Issuing a shareholder resolution or interpretive statement that recognises direct and indirect mobilisation as well as catalysation as a core function alongside sovereign lending and direct finance.
Strategy operationalisation: Requesting strategies to include an instrument roadmap (use of guarantees, equity, mezzanine, securitisation-like structures), originate-to-share policies (risk-retention, distribution, fee model), and time-bound targets at portfolio and country levels.
Scorecard accountability and transparency: Adopting board-approved, weighted corporate scorecard metrics (e.g. mobilisation floors, distribution targets, portfolio-risk transfer volumes) that cascade to departmental and senior-management incentives and publish an annual mobilisation plan and results report against the scorecard.
For bilateral DFIs, this may take the form of updated shareholder expectations letters, revised founding legislation or strategic framework agreements between the DFI and its government shareholder.
2. Enable financial models and risk frameworks that support catalytic mobilisation: Mobilising private finance at scale requires development banks and DFIs ensure they operate close to the efficient risk frontier of their creditworthiness and financial model, moving beyond a narrow focus on senior debt and originate-to-hold models. While protecting financial sustainability and robustness, maximising mobilisation requires that institutions optimise risk management and use of balance sheet space, as well as systematic deployment of risk-transfer and distribution tools. Concrete steps include:
Efficient risk management and balance sheet use: Ensuring pricing and capital adequacy frameworks reflect evolving evidence of risk performance and incidence, including by drawing on tools such as Global Emerging Markets (GEMs) Risk Database and stress-testing. This helps avoid systematic overpricing of developing country risk and enables institutions to use untapped balance sheet headroom consistent with strong credit ratings.
Scaling risk-transfer and recycling tools: Authorising and expanding the use of guarantees, securitisation, and portfolio risk-sharing and building on existing pilots to demonstrate their performance in freeing up headroom. Greater standardisation and systematic use will be essential for further scaling.
Originate-to-share business models: Evolving from exclusive originate-to-hold to more originate-to-share approaches, embedding distribution policies, investor relations capacity, and risk-retention rules into core treasury and business operations.
3. Build mobilisation skills and align incentives: Scaling up private capital mobilisation requires development banks and DFIs to retool their organisational culture. Concrete steps include:
Specialised skills and capabilities: Investing in staff with expertise in structuring complex blended and risk-sharing transactions, investor engagement, and local capital market instruments. This requires dedicated training, recruitment and partnerships to supplement in-house capabilities.
Aligned incentives and accountability: Cascading mobilisation objectives into corporate scorecards, departmental targets and individual performance frameworks. This means rewarding staff for mobilised volumes and catalytic outcomes, not just direct commitments or disbursements.
Country/sector integration: Embedding mobilisation pathways directly into country and sector strategies, including programmatic and portfolio approaches, pipeline development platforms, and local currency solutions. Linking these strategies to enabling environment and project-preparation resources ensures a holistic approach to increase private capital mobilisation efforts and impact. Improved data disclosure and transparency, with standards suited to capital market investors, will also be critical to reduce information asymmetries and build confidence. Initiatives such as the Hamburg Data Alliance point to emerging ways forward. For bilateral DFIs in particular, collaboration on shared mobilisation platforms, pooled vehicles and common documentation – as envisaged under the DAC policy roadmap – can help overcome the scale constraints that limit individual institutions’ ability to mobilise institutional investors.
While these levers apply across the development banking landscape, they carry particular urgency for bilateral DFIs, where the DAC’s policy roadmap provides a direct mechanism for shareholders to drive reform (Box 6.1).
Acting on these levers is essential to equip development banks and DFIs to facilitate a systematic breakthrough in private capital mobilisation. These levers can enhance ongoing commitments by the MDBs themselves, who in June 2025 jointly agreed to accelerate reforms under the G20 Roadmap, including enhanced use of innovative capital, engagement with credit rating agencies, reviews of callable capital, and stronger collaboration to scale private capital mobilisation (CEB, 2025[1]).
The resulting shifts in development banking would help address key persistent constraints to private capital mobilisation. Strengthened mandates and strategies provide the foundation, while more versatile financial frameworks and management expand the use of risk-sharing instruments and help lower financing costs for developing countries, and enhanced staff capabilities and incentives enable upstream engagement to help develop domestic capital markets and improve enabling environments. A necessary precondition for a breakthrough is that development banks and DFIs, together with developing countries and donors, significantly scale up and accelerate the preparation of bankable projects and programs; without this, mobilised private capital will struggle to find sufficient investment opportunities in developing countries.
Box 6.1. Contributing to the DAC Policy Roadmap on mobilising private finance
Copy link to Box 6.1. Contributing to the DAC Policy Roadmap on mobilising private financeAt the 2025 High-Level Meeting, DAC members committed to implementing a harmonised, systemic approach to mobilising private finance (OECD DAC, 2025[2]). To operationalise this commitment, the DAC is developing a policy roadmap to work as an efficient system in mobilising private finance structured around three action areas: increased collaboration and shared mobilisation instruments; greater data and transparency on developing-country investments and private finance mobilisation; and product and process standardisation to increase efficiency and create compelling offers to the private sector.
The analysis in this report provides an evidence base to inform the development of the roadmap across all three action areas. On collaboration, the report's findings on the reinforcing cycle between mandates, financial frameworks and organisational incentives highlight why coordination across the development banking landscape – including between bilateral donors, their DFIs and MDBs – is necessary to move from isolated reform efforts to systemic change. On transparency, the report underscores the role of improved risk data disclosure, including through the GEMs consortium and the Hamburg Data Alliance, in addressing the credit risk perception gaps that constrain mobilisation in higher-risk markets. On standardisation, the report identifies the shift toward originate-to-share models, securitisation and portfolio-level risk transfer as requiring precisely the kind of standardised documentation, common credit risk methodologies and replicable transaction structures that the roadmap seeks to advance.
The roadmap is being developed until end-2026. The institutional levers identified in this report – and the policy options set out in this chapter – are intended to contribute to this process, providing evidence and recommendations that can be drawn upon as the roadmap moves toward implementation.
The more such action is pursued through system-wide collaboration, the greater the impact that can be expected on mobilisation outcomes. Mobilisation efforts often remain fragmented, with multilateral, bilateral, regional and national development banks and DFIs pursuing separate approaches. Strengthened shareholder and bank leadership co-ordination across the development banking system – to align strategies, standards, share investment pipelines, pool risk where appropriate and develop joint platforms – is central in determining collective outcomes of reform efforts by individual development banks and DFIs. Similarly, harmonised definitions, measurement and reporting standards, and regular publication and joint evaluation platforms would enhance accountability and trust while helping generate market scale and reduce transaction costs for private capital. Current differences between OECD and MDB approaches to defining and measuring mobilisation illustrate the importance of such harmonisation. A more collaborative approach is important for amplifying impact and ensuring mobilisation contributes to shared goals. For bilateral providers specifically, the DAC policy roadmap offers a framework to advance collaboration, transparency and standardisation in ways that can complement and reinforce the broader MDB reform agenda.
Achieving evolving policy objectives means that development banks and DFIs must be organised to deliver on them. Mobilisation is increasingly recognised as a core function to meet the investment needs of developing countries. Yet most development banks and DFIs are still insufficiently aligned with this objective. At the same time, providing affordable finance remains a core mandate, requiring a careful balance with mobilisation goals. Evidence shows that scaling mobilisation is possible without compromising financial soundness – and that doing so is essential to making efficient use of scarce development finance and supporting countries to expand their financing options. What is needed is decisive, collective follow-through by shareholders and institutions to equip development banks and DFIs for this expanded role.
References
[1] CEB (2025), Heads of Multilateral Development Banks commit to strong joint action on development priorities, https://coebank.org/en/news-and-publications/news/heads-of-multilateral-development-banks-commit-to-strong-joint-action-on-development-priorities/.
[2] OECD DAC (2025), DAC High Level Meeting 2025: Chair’s Statement, OECD Development Assistance Committee, https://www.oecd.org/en/about/committees/development-assistance-committee/dac-high-level-meetings.html.