Development Finance Institution (DFI) is the umbrella term for a specialised bank or subsidiary which provides finance for projects in the global South that would otherwise struggle to raise capital.
They are usually majority-owned by national governments and get their capital from development funds or benefit from government guarantees. In 2016 the investment portfolio of the 15 European DFIs was €38.1bn.
Their central aim is to foster growth, reduce poverty and improve people’s lives by “promoting economically, environmentally and socially sustainable development through financing and investing in profitable private sector enterprises”. But all too often they do the opposite.
European DFIs have bankrolled projects that have driven deforestation, land grabs, and caused other social and environmental ills. European governments must ensure that the vast sums of public money invested by European DFIs in private sector enterprises in the developing world are subject to genuine accountability and transparency.