Capital with a compass: How to unlock investments in the hardest places
The article argues that in a post-2025 global development landscape marked by a 23% contraction in aid from advanced economies, multilateral development banks (MDBs) and development finance institutions must adopt a dual strategy to attract private capital to fragile states. First, they should double down on supporting governance and institutions, which are the foundations of functional markets. Second, they should leverage their underused strategic intelligence to navigate the social and political forces that keep economies stagnant. The article notes that only 11% of private finance for development reached fragile states in 2023-2024, and that weak governance, broken social contracts, and elite capture deter investment. It warns that ignoring governance can entrench predatory power, as seen in Tunisia before the Arab Spring. The piece concludes that MDBs hold a powerful but underused asset in their strategic intelligence to close the gap between risk perception and real opportunity.
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