Organisation for Economic Co-operation and Development calls for systemic reform of development banks to scale private capital mobilisation

The Organisation for Economic Co-operation and Development has published an assessment of 55 development banks and development finance institutions, finding that private capital mobilisation remains peripheral despite these institutions accounting for more than 90% of private finance mobilised through development finance. Official development finance mobilised USD 70 billion in private finance for developing countries in 2023, well below investment needs. The report identifies three priorities for reform: legal and strategic frameworks, financial models and risk management, and organisational incentives and capabilities. Many institutions lack explicit mobilisation mandates, measurable targets and implementation plans. Their operations remain concentrated in senior debt and originate-to-hold models, with debt representing about 85% to 95% of multilateral and bilateral development bank financing. The OECD recommends greater use of guarantees, equity, mezzanine finance, syndication, securitisation and originate-to-share models, supported by calibrated capital and risk frameworks. It also calls for mobilisation targets to be incorporated into corporate scorecards and staff incentives, alongside stronger capabilities in structured finance and investor engagement. Shareholders should provide clear authorisation, align institutional strategies and performance measures, and support common definitions, data and transaction standards across multilateral, bilateral, regional and national institutions. The findings will inform the OECD Development Assistance Committee’s policy roadmap for mobilising private finance, which is being developed through the end of 2026.