The State of Development Finance in 2025: What Ways Forward?

Описание: (Session co-organized with the French Ministry of Economy and Finances).
Development Finance at a Crossroads: Between a Fading ODA Consensus and the Unmet Trillion-Dollar Challenge

Convened at the Paris Peace Forum and co-organized with the French Ministry of Economy and Finances, this roundtable went far beyond diagnosing funding shortages. It exposed a system in structural crisis—where the post-war development finance architecture is losing legitimacy, strategic direction, and political coherence just as global needs reach historic highs. What emerged was a clear sense that the traditional donor-recipient paradigm has run its course, and that a new model grounded in co-investment, shared governance, and collective responsibility is urgently needed.



1. A Tripartite Crisis: Multilateralism, Money, and the Model

The discussion opened with a stark triptych of challenges: A political crisis of multilateralism – global cooperation forums are contested, fragmented, and increasingly bypassed ; A widening financing gap – OECD projections of a 17–20% ODA decline by 2025, following a 9% drop the previous year, signal a looming shock for the Global South ; and a model crisis – the ODA system itself, born in another era, is now misaligned with the complexity, speed, and scale of 21st-century development challenges. The message was blunt: the system isn’t just underfunded—it is outdated.



2. Blueprints for a New Architecture: From Measurement to Mobilization

Participants outlined a suite of proposals that collectively represent a shift from optimizing the old system to building a new architecture. First, it is essential to rethink measurement through the Total Official Support for Sustainable Development (TOSSD) framework, expanding beyond ODA to capture the full ecosystem of development-relevant flows—including private finance and South-South cooperation. Second, four structural levers for Africa were highlighted: moving from project-level PPPs to system-wide co-investments; developing functional domestic capital markets; positioning multilateral development banks (MDBs) as investment magnets rather than lenders of last resort; and integrating digital and green transitions directly into financing strategies. Third, it is important to use strategically scarce ODA – concentrating it on the most vulnerable states while mobilizing domestic resources, particularly household savings. Finally, MDB reform – stronger system-wide coordination, enhanced capital adequacy, and greater use of de-risking instruments to attract private capital - were outlined. These proposals reflect a shift from aid to investment, and from donor control to multi-actor ecosystems.

3. Governance and Legitimacy: The Central Fracture

The deepest fault line identified was political, not financial. Borrowing countries remain marginal in the governance of international financial institutions, sparking a legitimacy crisis that overshadows all technical debates. The discussion exposed a growing divide:
while Northern actors emphasize efficiency, capital optimization, and engineering better instruments, Southern actors argue that without redistribution of power and real voice in decision-making, reforms are cosmetic. This tension reframes the development finance debate: not as burden-sharing, but as power-sharing. Any new paradigm will stand or fall on its governance inclusivity.


4. Data-Driven Urgency and the Missing Political Lens

Hard numbers from the OECD injected an acute sense of urgency: declining ODA could severely strain Least Developed Countries and Sub-Saharan Africa. Yet the conversation revealed a blind spot. Calls for private-sector mobilization often gloss over the political economy realities that limit investment in fragile contexts—instability, weak regulation, governance risks, and the scarcity of bankable projects. “De-risking” alone cannot compensate for systemic political barriers. The debate thus remained heavy on financial engineering and light on political engineering.

Conclusion: The Core Challenge Is Political, Not Technical

The roundtable made one conclusion inescapable: Mobilizing trillions is not a technical problem—it is a political one. Without rebuilding trust and granting the Global South genuine co-ownership of the development finance system, new metrics, instruments, or capital injections will fall short. The future of global development hinges on a political reset in the governance of international financial institutions. Only then can financial innovations translate into real progress toward a sustainable and equitable global future.

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