OPEC Fund Quarterly - 2024 Q3

DEVELOPMENT FORUM

SMEs and financial inclusion

Gender equality

“Our investments must have a positive development impact: contribute to the creation of jobs and national income, and improve access to affordable clean energy.” Sabine Gaber, Member of the Executive Board, the Austrian Development Bank

Photo: Tint Media/Shutterstock

Photo: Odua Images/Shutterstock

excellent AAA and in line with the rating of the Republic of Austria and this works well for OeEB. OFQ : What kind of projects do you support, what are the criteria, what are your focus areas and are there things you do not do? SG: In its strategy OeEB positions itself as a thematically focused development bank with four main business areas: 1. Green finance, 2. Micro, small and medium-sized enterprises and financial inclusion, 3. Private infrastructure and industry, and 4. Gender equality. We operate exclusively in developing countries according to the OECD Development Assistance Committee list and our aim is to achieve a broad, geographically balanced diversification of our committed portfolio and to strengthen our commitment in Africa and the Least Developed Countries. We are also committed to the United Nations Sustainable Development Goal 13 – Climate Action and the Paris Alignment at project and portfolio level. Alongside our European DFI partners, we have an exclusion list which defines sectors that we do not finance. OFQ : Please explain your governance structure and decision-making process. SG: OeEB AG is a wholly-owned subsidiary of OeKB and our parent company supports us based on a service level agreement. OeKB and OeEB operate with a public mandate from the Republic of Austria. Before signing a loan agreement or private equity investment, project applications

successfully set up a third-party fund as a pilot together with an Austrian private bank in 2019 which mobilized €75 million from private investors for impactful investments in developing countries. Another third-party fund is being set up together with an Austrian partner in 2024 which will focus on climate investments. For scaling up the mobilized capital the use of blended finance (concessional finance along with DFI investment and commercial investment) has become an important solution to meet the “Billions to Trillions” agenda. In case of blended finance, it is important how to mobilize commercially sustainable investments and to use only a minimum of concessionality. To keep investments flowing, certain elements of the EU’s regulatory requirements should be broadened, e.g. recognizing existing international standards, promoting the compatibility between the EU taxonomy and other national green taxonomies. It is important to enable European DFIs and private impact investors to fully contribute to the mobilization of capital especially in the Least Developed Countries and Low- and Middle-Income Countries where investments are most urgently needed. OFQ : On the one hand we need to earn money to satisfy our shareholders and investors. On the other hand we have distinct development mandates. Often this would mean taking more risk or even a hit. How can we reconcile these two conflicting demands?

go through multiple internal and external approval committees, including representatives of several ministries. The approval committees assess the expected development impact, economic sustainability and the fulfilment of environment and social standards. OFQ : The challenges in development finance are enormous. Where can we find the billions and trillions that are needed and what role can small actors like OeEB or the OPEC Fund play? How

can we scale up our impact? SG: While donor countries have

maintained public funding at a steady or reduced level, development finance for private sector projects provided by DFIs has grown significantly in recent years. Donors and DFIs share the goal to mobilize more private capital for development finance. OeEB has

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