Covid-19 is a truly global pandemic: a virus that will leave no country untouched by its direct and indirect effects on health systems, societies and economies. While the world is still in the midst of the crisis, it is clear that these effects will not be felt equally. Advanced economies are much better placed to weather the health and economic storm than developing countries, where the economic, social and health effects will be most profound and long-lasting. From past crises we can expect a large exit of external capital from developing countries, eroding already fragile fiscal and balance of payment positions with further devastating consequences for development and growth. Development Finance Institutions (DFIs) can play an important role in countering this outflow of capital and provide much-needed investment to kick-start economic growth.
With DFI proponents calling for significant capital injection or funding and increased DFI investment to accelerate growth and ‘build back better’, and with much of this likely to be counted as official development assistance (ODA), it is timely to pause, take stock and reflect on the future role of DFIs.
This briefing note seeks to stimulate and inform debate around how, by changing their own risk–return profiles, DFIs can take advantage of their unique capacities to help strengthen health markets, and in doing so enhance the resilience of developing countries to health shocks and support the formation of human capital.
This publication is part of ODI’s series on coronavirus. It showcases emerging ideas and rapid initial analysis from ODI experts.