THE PRIVATE SECTOR DEVELOPMENT
Further investment
APPETITE FOR ACTION ADB ON THE RECORD How building trust makes a di ff erence on the ground By Howard Hudson, OPEC Fund
I n times of crisis – be it climate emergency or global pandemic – development finance institutions (DFIs) play a pivotal role in mitigating risks and mobilizing resources. DFIs tip the scales from lofty commitments to actual impact by injecting liquidity into the sectors most a ff ected in troubled regions. Fast-track finance helps maintain critical services, while stabilizing economies and preventing societal collapse, as vividly seen for healthcare in 2020 and food security in 2022. Nonetheless, development is the bread and butter of DFIs, as they historically fund more longer-term projects. Across the Global South, DFI investments in renewable energy, sustainable infrastructure and climate resilience are building economies that are better equipped to withstand future shocks. These investments tackle immediate energy needs while also cutting carbon emissions – a win- win for people and planet. Risk appetite in private markets is where things get tricky and where DFIs can really bridge the gap.
During or after crises, private investors often retreat in the face of uncertainty. With their higher risk tolerance and worthy mandates, DFIs step in to fill this void with concessional financing, guarantees and various instruments to lower the (perceived) risk for private investors. That tends to catalyze further private sector investment and therefore amplify overall impact. The corollary then becomes: How much should DFIs step in and address market gaps? DFIs are clearly needed to stabilize economies and shore up development, but they must not crowd out private investment. Instead, they should complement private sector e ff orts by focusing on areas where private capital is insu ffi cient or unavailable. That means identifying projects that have high development impact but may be perceived as too risky by private investors. To understand how all this works in practice, we spoke with Marife Apilado, Director of the Portfolio Management Division in the Private Sector Operations Department at the Asian Development Bank (ADB).
Marife Apilado
Marife Apilado currently serves as Director, Portfolio Management Division of the Asian Development Bank (ADB) and is part of the Private Sector Operations Department Regional Management Team. The division is accountable for proactively managing all private sector projects and investments throughout a transaction’s lifecycle. She joined ADB in 2008 from Citibank N.A., where she had extensive experience in project and structured finance, corporate finance, financial institutions and global cash and trade transactions.
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