Mobilising private investment is becoming increasingly important to financing sustainable development in emerging markets, where funding needs often exceed the resources available from governments and public institutions.

Stephanie von Friedeburg of Citi has highlighted the importance of collaboration between multilateral development banks (MDBs) and financial institutions in attracting greater private capital to developing economies. Stronger partnerships could help expand financing opportunities, support investment and accelerate projects with long-term economic and social benefits.

Why Development Financing Needs More Private Capital

Emerging markets require substantial investment in infrastructure, energy, healthcare, education, transport and digital connectivity. These sectors are essential for economic growth, job creation and improved living standards, but many projects face financing constraints.

Public funding and development assistance remain important, yet they cannot meet every investment requirement on their own. Private capital can help bridge the gap by providing additional financing for commercially viable projects and supporting the expansion of businesses.

However, investors may hesitate to enter certain markets because of perceived political risks, currency volatility, regulatory uncertainty or limited access to reliable information.

How Multilateral Development Banks Can Help

Multilateral development banks can help address some of these barriers through financing, guarantees, risk-sharing arrangements and technical assistance.

By supporting project preparation and reducing selected investment risks, MDBs can help make projects more attractive to commercial lenders and institutional investors.

Their involvement can also help establish clearer standards for project development, environmental safeguards and financial accountability. These measures may improve investor confidence and make it easier for private institutions to participate in development initiatives.

The Role of Financial Institutions

Commercial banks and other financial institutions bring capital, financial expertise, global networks and experience in assessing investment opportunities.

When they collaborate with MDBs, they can help structure transactions, distribute risks and connect development projects with a wider range of investors.

Potential approaches include co-financing, credit guarantees, blended finance and risk-sharing facilities. Blended finance combines public or development-related resources with commercial financing to help projects attract investment while pursuing development objectives.

Such arrangements can be particularly relevant for infrastructure and other projects that generate significant social benefits but face financing challenges.

Turning Partnerships Into Measurable Results

Stronger cooperation alone will not eliminate the development financing gap. Effective partnerships require well-prepared projects, transparent agreements, appropriate risk allocation and clear expectations about financial returns and development outcomes.

Policymakers must also ensure that financing arrangements support debt sustainability, environmental protection and local economic priorities. Private investment should complement public resources rather than replace essential government responsibilities.

Measuring results is equally important. Indicators such as additional capital mobilised, jobs supported, infrastructure delivered and access to essential services can help assess whether partnerships are achieving their intended objectives.

A Collaborative Approach to Sustainable Development

The emphasis on cooperation between MDBs and financial institutions reflects a broader effort to expand development financing beyond traditional public funding.

By combining development expertise with private-sector capital and financial capabilities, these partnerships can create additional opportunities to invest in emerging markets.

The central challenge is to mobilise investment at scale while ensuring that financing reaches projects capable of delivering lasting economic, social and environmental benefits.