The Role of Development Finance Institutions in Enabling the Technology Revolution (2024)

The Issue

The fourth industrial revolution is fast disrupting the global economic, political, and social norms and institutions. Developing countries, who are also undergoing a massive demographic disruption, will feel this revolution's impact the most. Without the right human capital and adequate financial investments, developing countries will likely miss out on the promises and potential offered by this revolution.
By strategically recalibrating their focus, development finance institutions (DFIs) can position themselves as critical players. DFIs can help channel private investments into new technologies and help emerging markets accelerate their efforts to achieve the sustainable development goals.

Introduction

New technologies offer enormous possibilities for change. Technological change affects all aspects of social and political life. Through social protections and investments in education, people can feel that they have the possibility to be a part of this change and benefit from it. DFIs and development corporations have a key role to play in facilitating this.
– Peter Eriksson, Swedish Minister for International Development Cooperation, at the Washington, D.C. roundtable held in April 2019.

The current technological revolution, more commonly referred to as “Industry 4.0” or “The Fourth Industrial Revolution – (4IR),” is rapidly disrupting and transforming economic institutions, social norms, and political systems.¹ Globally, the interaction of different technologies such as automation, robotics, artificial intelligence, and others (Figure 1) can have a profound disruption in terms of the “velocity, scope, and systems impact.”² The developing world has a unique opportunity to harness the potential of these transformations and increase global prosperity, efficiency, and quality of life.

Figure 1. What are the Technologies of the 4IR? (infographic)

Source: Compiled by CSIS Project on Prosperity and Development

However, the 4IR can quickly turn into a missed opportunity if nations fail to make the necessary investments in critical infrastructure and good governance frameworks. Technology can institutionalize discrimination and inequality in developing countries that have underdeveloped markets and private sectors.³ If less developed countries continue to underperform economically and fail to create jobs, they further risk alienating youth.⁴ At the same time, a lack of investment (either public or private) that will develop a set of basic digital skills in the workforce can leave many economies unequipped to compete in the global markets, given the rapidly evolving nature of the businesses that are looking to use technology to become more efficient.⁵ This, in turn, will limit the middle class’s ability to enjoy the gains of the fourth industrial revolution.⁶ Moreover, with only half the world on the Internet and one out of every six persons on the planet lacking access to electricity (prerequisites to adapt many of the new technologies discussed in Figure 1), significant portions of the developing world are underprepared for the forces of the fourth industrial revolution, leaving many behind.

The global population is expected to reach 8.5 billion by 2030, with developing countries driving much of that growth.⁷ Yet, few have the institutional capacity, the education and skills, and the infrastructure to harness the potential of the fourth industrial revolution to meet their economic development goals. Absent the right institutional, educational, regulatory, and infrastructure support, such changes can quickly undermine the developing world’s capacity to achieve sustainable growth and development, with societies struggling to adjust and assimilate to new technologies.

We need to internalize technology and leverage innovative technologies to advance the SDGs and improve the lives of the marginalized. Outsiders to the field of development finance need to embrace that role. At the same time, we must also talk about the disruptive effects they have on the existing norms on ethics, privacy, and security in our lives.– Paul Lamontagne, Managing Director, FinDev Canada

With significant support from the donor community, the developing world needs to realign the public policy framework to prepare its societies for a changing technological landscape. Given the current global economic forces at work, countries can make their workforce and businesses most resilient when they switch to a knowledge-based ecosystem that is centered on science, technology, and innovation.⁸ This will include increased emphasis on digital skills, development of local financial institutions and capital markets, decentralization and building capacity of sub-sovereign governments, and fostering an enabling environment for innovation-led economic growth.

In this regard, technology can be transformational for achieving the sustainable development goals (SDGs). In 2015, more than 193 countries adopted 17 SDGs.⁹ These goals range from ending extreme poverty, ensuring energy sustainability, and securing gender equality on a global scale. While many countries have already undertaken significant investments and policy changes that put them on the right path to achieving the SDGs, the advent of new technologies can help further accelerate that pursuit.

Factsheet on Technology in the World

Source: Compiled by CSIS Project on Prosperity and Development

Multilateral institutions have recognized the seismic impact that new technologies, with the help of private capital, can have on development efforts. This is exemplified in the 2015 Financing for Development Agenda, adopted at the Third International Conference in Addis Ababa, which made it clear that the task of mobilizing trillions of dollars for investments in SDGs could not be achieved without private sector participation that will pursue innovative financing solutions.¹⁰ In September 2018, the secretary-general of the United Nations issued a strategy on leveraging new technologies to support the ongoing global efforts to achieve the SDGs.¹¹ The document emphasized on a set of principles that aims to protect and promote the shared global values encompassed in the UN charter. Further, the strategy calls for deeper partnerships with actors in governments, markets, and the broader civil society space.

Technologies Bring Challenges and Opportunities for Achieving the SDGs

The evolved technological landscape opens new avenues that the development community can pursue to achieve the SDGs. Digital technology, in particular, has had a profound impact. Likewise, there is a myriad of other technologies that are changing every facet of the political economy and society. A broad range of new technologies like 3-dimensional printing, artificial intelligence, autonomous machines, big data analytics, blockchain, next-generation wireless communication systems, and robotics are some of the technologies that are revolutionizing our endeavors to approach the SDGs (Figure 2). Big data analytics and digital technology have a significant role in shaping urban planning and the development of smart cities.¹² Artificial intelligence, partial (or full) automation of manufacturing, and 3-D printing technologies can help tackle the challenges to scaling essential services like housing and post-disaster reconstruction services.¹³ Blockchain technology and the Internet of Things (IoT) have already demonstrated their value by helping urban communities without adequate governance capacity establish a credible and secure system for conducting transactions in the power and utility sector.¹⁴ Over the past few years, smart technologies and electronic devices have helped forge new and ground-breaking digital platforms that have embedded themselves into the everyday lifestyle and are fast modernizing the elements of the global economy.¹⁵

Figure 2. Infographic Displaying New Technologies and their Impact on SDGs

However, the sheer complexity of contemporary geopolitics, varied objectives of the SDGs, diversity in institutional setups, and demographic changes makes it difficult for a single technology—or even a group of technologies—to serve as a silver bullet that can solve the challenges to achieving global development goals. Technology is a catalytic tool that can help stakeholders fast-track their attempts to achieve the goals. In specific cultural and political contexts, technology can help democratize the citizens’ ability to access information and make more optimum economic decisions. However, technology itself cannot be a substitute for strong partnerships between the state and the civil society—a precondition for good governance. Countries also need to create an enabling environment for science, technology, and innovation to take root in order for a twenty-first century knowledge-based economy to develop.

The Unique Role of Development Finance Institutions (DFIs)

Meeting the SDGs by 2030 is not impossible but it will require over US$11.5 trillion in investments, according to United Nations estimates.¹⁶Donors and aid agencies have been playing an indispensable role in helping low- and middle-income countries achieve these goals. Development finance institutions (DFIs) have emerged as one of the fastest growing agencies¹⁷ pursuing innovative financial solutions to support development efforts worldwide. DFIs' investments now equal half of all official development assistance (ODA), outpacing other forms of foreign aid in terms of annual growth. They are much sought after in the developing world and also carry the reputation of being a trusted partner of private capital (Box 1).

Box 1: A Short History of DFIs

DFIs have been around for over half a century, with the first one (the UK’s CDC Group) established in 1948.¹⁸ DFIs are specialized development finance institutions that aim to foster the private sector in developing countries. However, for much of the twentieth century, their ability to finance development was severely limited. Until the mid-1980s, many developing countries relied heavily upon centralized state economic planning and foreign aid. The financial crises of the 1980s and 1990s that began with Mexico¹⁹ and other economies like Argentina²⁰, India²¹, and Poland²² pushed countries to open up their markets and liberalize their economies from state control. Private sector activity began to grow and, subsequently, so did the relevance of DFIs.

The twenty-first century saw the footprint of DFIs expand²³. The diverse portfolio ranged from investments in the mobile telephony industry in Africa to renewable energy projects in South Asia. A study undertaken by the CSIS Project on Prosperity and Development²⁴ reveals that the annual investments of DFIs have witnessed a seven-time increase, going from US$12 billion in 2000 to US$87 billion in 2017. By comparison, official development assistance (or foreign aid) only tripled, going from US$54 billion to US$146 billion during the same period.

Nearly two decades after DFIs took flight, they find themselves charged with the authority to make higher levels of investments and leverage more than one form of financing instruments. Donor countries, through various legislations²⁵, have either established or expanded the functions of their DFIs²⁶, thereby significantly enhancing the soft-power toolkit to help meet sustainable economic development. Today, shareholders of some of the world’s largest DFIs are also asking them to make greater investments in countries hit by conflict and fragility²⁷. Businesses and ventures in these tough places have a high-risk profile, making it near-impossible to attract quality investments. This creates a vicious cycle where fragility deters private investments that stunt economic growth, ultimately sustaining poverty levels. The prevalence of a technology sector that is eager to expand its product coverage, and a DFI capable of partnering and financing this sector can help the world get closer to achieving the sustainable development goals.

Today, emerging markets once again approach a new inflection point and are bracing for new technologies to either decimate their growth models or help them transition into a new age of accelerated and sustainable economic development. The role of DFIs—as development finance institutions making impact investments for sustainable development, generating profits—allow them to be a catalytic intermediary between private capital and the markets in the developing world. DFIs can once again take center stage and use their resources to mitigate the risks posed by new technologies while creating an enabling environment that will foster innovations that can spur long-term economic development.

DFIs were transformational for many countries in their digital revolution (Box 2) and they can continue to play an important role as developing countries undergo the fourth industrial revolution. DFIs can help finance the expansion of new technologies in the emerging markets that will bring us closer to achieving the sustainable development goals. By making targeted investments to fund innovative ventures, they can leverage many additional billions of dollars and turn the hopes and aspirations of the developing world into real opportunities.

Box 2: DFIs and the Digital Revolution

At the start of the twenty-first century, virtually no mobile phone users existed in the African continent. There were more fixed-line telephone subscriptions in Manhattan (population 1.5 million) than in all of sub-Saharan Africa (population 645 million).²⁸ By 2017, there were more than 444 million unique mobile phone subscribers in the region, representing nearly 45 percent of the population in sub-Saharan Africa and one-tenth of the global mobile subscribers.²⁹ The protagonists in this story of development are DFIs. The British CDC Group, in particular, is credited with the explosion of cell phone subscriptions in emerging markets as it invested in Dr. Mo Ibrahim’s Celtel mobile network in Africa.³⁰ Other regions are witnessing this explosion of the mobile telephony sector as a result of the role played by DFIs. Afghanistan, Bangladesh, India, and many other countries in Asia have experienced similar growth in mobile penetration in the last two decades.³¹ Developing countries made the right bets and are now economically more competitive, inclusive, and vibrant than ever before.³²

Digital technologies have started to transform emerging markets. For instance, smartphone and mobile phone penetration range from 64 percent in India to 93 percent in South Africa, with an average of 78 percent across the emerging markets. Significant portions of the emerging markets now have access to the Internet with over 71 percent of Latin American, 46 percent Asian, and 30 percent of African populations actively logged on to the Internet. With these numbers expected to rise exponentially in the next few years, and with digital technological forces capturing virtually every economic function, there is no doubt that digital literacy will become an indispensable skill set that will be required for investments in modern enterprises to lift off.

DFIs Can Accelerate Technological Adoption in Developing Countries

The global DFI community is quite diverse, with some DFIsmore risk averse than others conditionaluponthe specific mandate andgoals set bytheir stakeholders. However,the conventional modus operandi for the plurality of DFIs involves the use of direct loans, various types of loan guarantees, equity investments, and support for investment funds in developing countries to achieve market rates of return and earn profits in a short period of time.³³

For the development finance community to help countries harness the potential of new technologies, it must depart from its current practices. There are five sets of actions that DFIs can take to help bridge the gap between the developing world and the technology and innovation hubs in the West:

Action #1: Resetting DFI’s Vision and Strategy in the Technology Space

To meet contemporary challenges and fully realize the opportunities, DFIs will need to better orient their strategy and vision to emphasize investments in early-stage innovation in low-income countries. Such investments will be inherently riskier and will require a longer gestation period to fully mature. Some bilateral DFIs are already adopting this new approach to make riskier investments.³⁴ The UK’s CDC Group, for example, shifted its strategy to lower its financial returns from an annual average of 10.6 percent and instead is committing 20 percent of its investment portfolio to address specific market failures that undermine economic development. With adequate investments in countries’ fundamentals, this game-changing strategy will help propel the lowest of the developing countries into the modern economy that is powered by digital and technological platforms offered by the fourth industrial revolution.

Additionally, DFIs can further promote their focus on building lasting partnerships between private capital investors and innovation hubs in developing countries. This, in part, can be done by facilitating the creation of an enabling environment in countries that can help scale up and expand early stage investments in innovations.

Action #2: Helping Countries Invest in the Fundamentals: Building Regulatory Frameworks, Strengthening Government Capacity, and Developing Capital Markets

Every investment, both in the developed and the developing world, is subject to a diverse set of risks. These risks are shaped and modeled by different institutions that govern the investment ecosystem. Risks can arise out of undertrained human capital, weak courts and justice systems, inadequate legal frameworks covering contracts and anti-trust issues, complicated tax codes, underdeveloped financial markets, inept central banking systems, pervasive corruption, and others. Low-income countries and countries grappling with conflict and fragility have the greatest SDGs funding gaps. Unfortunately, these are also the same countries where fractures and fault lines exist within the political economy that can pose risks to investments and deter their prospects of achieving sustainable development.³⁵

DFIs, which are constantly improving their well-developed risk-investment framework to strengthen their business strategy, are best positioned to both assess and mitigate the risk posed by less-developed countries. Some of these fault lines can be addressed by using mechanisms that address political risk while pushing for reforms that can help revamp the regulatory architecture, encourage the development of human and financial capital markets, bring in investments into basic infrastructure, increase the public’s access to information, and build local capacity.³⁶ But a vital pre-requisite that underlies any reform effort is the willingness of a country’s political leadership to commit to the reforms faithfully.

Money alone will not fix weak fundamentals of political and economic governance. Developing countries must make their regulatory frameworks more transparent and less ambiguous to create an enabling environment for investments and innovation to grow. To that end, the technical expertise available at the multilateral development banks, bilateral aid agencies, and the DFIs is unique. There are three areas where these institutions can play a significant role.

First, reforms are needed in essential legal frameworks that govern bankruptcy, contracts, land-acquisition, auctioning of natural resources, and insurance laws. Investors are more likely to park their capital in markets that are transparent and predictable. An ambiguous regulatory environment leaves much of the rules to speculation and political whims. Moreover, countries should undertake serious measures to ensure the independence of their central banks while also strengthening their judicial systems by providing greater access to fiscal resources.

Second, efforts must be directed towards building local government capacity. Today, 54 percent of the world lives in an urban setting. By 2050, urbanization is expected to reach 66 percent globally.³⁷ An overwhelming majority of the global urban population will be in Africa and Asia. Many of these countries continue to make their development goals contingent upon decisions taken by bureaucracies in the national capital. National governments need to decentralize and devolve their development functions to officials in local municipal bodies and subnational governments to ensure a higher and more targeted impact on its population. Such devolution of powers must be accompanied by investments in training and capacity-building modules for such public officials who, often, are inept at performing critical but modern bureaucratic functions like a life-cycle cost analysis before infrastructure procurement.³⁸

Finally, many developing countries are unable to harness the full potential of their local capital and finance due to the lack of infrastructure and enabling institutional design. In 2018, Indian and South African pension funds each had an asset value of over US$130 billion.³⁹ Meanwhile, economies in the Indo-Pacific have capital worth over US$800 billion that remains untapped due to the lack of deep capital markets.⁴⁰ These snapshots are indicative of the fact that vast pools of local capital, valued at several trillion dollars, exist in emerging markets in the form of pension funds, national savings, assets, bonds, and bank deposits. Local capital helps finance major development projects at a lower cost due to the reduced dependency on foreign debt. It also helps protect its economies from experiencing a large-scale exodus of foreign capital that may be triggered by the actions (or inaction) of the political class of countries with autocratic regimes or young democracies that have elected leaders with no clear mandate (as is often the case).

DFIs must take the lead in developing local capital markets and financial institutions and convene networking platforms for local entrepreneurs. The development finance community, thus, has an opportunity to help countries set up local capital markets and local financial institutions. Supplementing such efforts, DFIs can also develop networks of local entrepreneurs by convening networking opportunities at the local or regional level. Developing such networks consolidates the efforts of individual entrepreneurs and makes them more efficient and targeted. It also accentuates success stories for the benefit of other investors and entrepreneurs.

Action #3: Supporting Local Efforts That Can Bring Solutions to Scale

The challenges faced by the developing world are complex and diverse. Consequently, development solutions need to respond to the needs of local communities. While holding fast to that principle, DFIs should scale up their ongoing strategies that are demand-driven in approach. By facilitating a partnership between the investor, project stakeholders and managers, local government officials, and the extended civil society, this demand-driven approach increases the chance for the investment to be successful.

The development finance community should back business models that use new technologies to help solve local problems more effectively. A quintessential example of this phenomena is the M-Pesa system, developed due to the instrumental role played by DFIs.⁴¹ Launched in 2007, this platform was built to enable mobile phone users to conduct basic banking functions without having to access the physical banks itself. Mobile telephony in Africa, as outlined above, is pervasive and this technology has only helped democratize the formal banking sector in a continent where the goal of financial inclusion was mostly unrealized.⁴² M-Pesa’s success in using the best technology at the time to organically solve a prevalent socioeconomic challenge is not unique. Similar game-changing technologies, which rely on grassroots partnerships at a local level, are impacting health care challenges and food security concerns across the developing world.⁴³

Such small-scale solutions, driven by individuals and communities on the ground who co-opt new technologies with a digital platform, have proven to be indispensable and are emerging as a key player in the broader consolidation efforts (Box 3).⁴⁴ DFIs can not only back such early-stage technological solutions in small and local contexts but should also be prepared to scale such innovations globally.

Pursuing a demand-driven development is a strong strategy for several reasons.⁴⁵ First, by making this tactical shift, the development finance sector will make the deployment of its resources more prudent. Second, it allows DFIs to assume the role of seed funders in the developing world, particularly since early-stage funders for untested technological solutions are hard to come across. Third, it empowers local communities (and the developing world at-large) to be in control of how they prioritize competing policy options. Finally, it gives greater stakeholders of a given development investment greater ownership of the project and better control to respond to ground realities promptly.

Box 3: Blockchain Addresses Energy Access Issues

Blockchain technology can be described as a cloud-based network of distributed digital ledgers that is universally accessible and virtually tamperproof.⁴⁶ Originally featured in the fintech world, blockchains are now being used by various economic sectors, public institutions, and the broader international development community, delivering on the promise to offer people a secure, transparent, and low-cost platform for transactions.⁴⁷

The energy sector, in particular, has used blockchain technology most effectively in addressing the challenges of developing a feasible business model in smaller markets while addressing the broader risks of operating commercially. Startups and small-scale enterprises in the power and utility sector are providing low-cost renewable energy to consumers using a “pay-as-you-go” model.⁴⁸ These players use a blockchain-enabled accounting system that provides a secure and transparent platform for accounting and financial transaction between the consumer and the service provider.⁴⁹ Rural and sparsely populated towns in the developing world that are often left out of the gains of large national power grids are the biggest benefactors of this model. Scaling up these players and replicating their models will get the developing world much closer to achieving global energy access goals.

Action #4: Engaging with Venture Capital and Impact Investors

As DFIs reorient themselves to increase their investments in innovations and ideas—all the way to the scale stage—they should continue to work effectively with the investment community. By their very design, venture capitalists and impact investors are agile and flexible.⁵⁰ They are structured to make fast decisions and judge the profitability and investment risks using very individualized terms. A partnership between a DFI and the venture capital/impact investment institutions must emphasize increasing the scale of investments in innovation and ideas while focusing on sustainable business solutions.

While supplementing all of the efforts and investments mentioned above, it is worthwhile to note that blended finance can also be used as a tool to mobilize private capital investment. Blended finance can be broadly defined as an approach where international donors mix concessional terms with private investment to reduce or mitigate risk, adjust risk-reward profiles, and attract needed private investment into certain regions or countries.⁵¹ There remains no question that investments in certain countries are riskier than others. Countries that have been plagued by prolonged periods of conflicts, violent extremism, and weak state capacity inherently pose higher risks to any innovation-financing and investment than even a lower-middle income country. Even so, such countries are not exempt from the broader pursuit of lasting and sustainable economic development, peace, and prosperity.⁵² To that end, blended finance can be used to accept lower-than-market-rate financial returns willingly, mitigate the risks to mobilizing much-needed private capital, and finance innovations in tougher countries and offering them a real chance at peace and prosperity.⁵³

Action #5: Filling the “Early Growth” Funding Gap for Innovative Businesses

Within the product or service business cycle, any innovative idea that aims to be commercially successful follows five stages: 1) startup, 2) early-mid growth, 3) mid-late growth, 4) scale, and 5) expansion (Figure 3).⁵⁴ As the risk of investment reduces progressively with each stage, the source of finance also varies for each stage. For instance, the startup stage is riskier than other stages as the product idea is still not fully tested for commercial viability. Consequently, the most pliable way has been to seek crowdfunding and angel investments. Alternatively, businesses that are at the scale stage (where the product has become market-ready and is expected to boost sales and increase profits) find it easier to get funding from traditional financial institutions such as multilateral development banks and venture capitalists.

Innovative ideas that are in the startup stage have some access to capital from angel networks, incubators, and crowdfunding institutions. To a greater extent, innovative ideas that do reach the scale and expansion stage can also secure funding from MDBs, DFIs, and venture capitalists, who seek to monetize on the product’s potential. The real challenge is the lack of credible funding mechanisms in the critical early-middle growth stages of innovative ideas (often the stage when untested ideas turn into profit-making businesses) that hinders the development of an innovation led-economic model.

Figure 3. Infographic on the Five Stages of Innovation

Source: Neil C. Churchill and Virginia L. Lewis, “The Five States of Small Business Growth.”

This missing link in the innovation pipeline can be an opportunity for DFIs to create investment vehicles for the early-middle growth stage innovations. Structurally, bilateral development finance agencies are government-sponsored institutions that facilitate private investments into commercially sustainable private-sector projects in the developing world. However, since these institutions draw their funds from the public exchequers of donor countries, they remain accountable to vigilant national legislatures and their portfolio of investments are put through intense scrutiny. Some DFIs are incentivized to prioritize low-risk and high-yield investments in relatively better-developed sectors in upper-middle income countries. Overcoming the funding gap will require DFIs to reconsider its strategy of engagement in low-income and lower-middle income countries and demonstrate the willingness to finance riskier innovations. This can be done through new partnerships with investors operating in the mid-late growth stage and align efforts to focus on crowding in more private capital.

Conclusion

DFIs are uniquely placed to provide financial assistance and technical expertise in ways that can attract private capital investments in emerging markets. Through such investments, DFIs can help unlock the full potential of new technologies and accelerate the international community’s ongoing efforts to achieve the SDGs. To help DFIs be more instrumental in this phenomenon, this paper proposes a series of five critical actions that can be undertaken:

reorienting the vision and strategy of DFIs to better channel the potential of the technology sector;
helping countries invest in solutions that address the fundamental problems that impede full economic growth, including clearer regulatory frameworks, increased state capacity, and deeper capital markets;
supporting successful local technology-driven solutions and scaling up such efforts;
engaging with venture capital and impact investment communities to scale up the investment levels, and;
filling the “early-growth” funding gap for innovative businesses that have developmental goals

Furthermore, this is a call to action for the DFI community and beyond. There is an urgent need to further this important dialogue between (and through) the existing DFI institutional network that includes members of the Association of bilateral European Development Finance Institutions (EDFI), the DFI Alliance, the Gender Finance Collaborative, the World Economic Forum’s Global Future Council on Development Finance, and other industry forums and global economic councils.⁵⁵Through these platforms, the DFI community and the private sector must come to a consensus on how best to capitalize the disruptions posed by the fourth industrial revolution and make the economic growth models in the developing world stronger, more resilient, and sustainable.

Daniel F. Runde is a senior vice president, director of the Project on Prosperity and Development, and holds the William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies in Washington, D.C. Romina Bandura is a senior fellow for the CSIS Project on Prosperity and Development. Sundar R. Ramanujam is a research associate for the CSIS Project on Prosperity and Development.

This brief was made possible by the generous contributions made by FinDev Canada and Swedfund to the CSIS Project on Prosperity and Development.

CSIS Briefs are produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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²²Jeffrey Sachs and David Lipton, “Poland's Economic Reform”. Foreign Affairs, Summer 1990. https://www.foreignaffairs.com/articles/poland/1990-06-01/polands-economic-reform
²³“ICCF,” European Development Finance Institutions (EDFI), https://www.edfi.eu/facility/iccf/.
²⁴Daniel F. Runde, “Development Finance Institutions: Plateaued Growth, Increasing Need”, Center for Strategic and International Studies, February 13, 2019, https://www.csis.org/analysis/development-finance-institutions-plateaued-growth-increasing-need
²⁵U.S. Congress. Senate. Better Utilization of Investments Leading to Development (BUILD) Act of 2018 . S.2463. 115^th Congress, Introduced in Senate February 27, 2018, https://www.congress.gov/bill/115th-congress/senate-bill/2463
²⁶Molly Anders, “CDC kicks off new strategy with eye toward riskier investments,” Devex, October 20, 2017 https://www.devex.com/news/cdc-kicks-off-new-strategy-with-eye-toward-riskier-investments-91328.
²⁷U.S. Senate Committee on Foreign Relations,Modernizing Development Finance: Hearing before the Committee on Foreign Relations, 115th Cong., (May 10, 2018), https://www.foreign.senate.gov/imo/media/doc/051018_Runde_Testimony.pdf.
²⁸Acha Leke and Saf Yeboah-Amankwah, “Africa: A Crucible for Creativity”, Harvard Business Review, Nov-Dec 2018, https://hbr.org/2018/11/africa-a-crucible-for-creativity; “Decennial Census,” NYC Department of City Planning, https://www1.nyc.gov/site/planning/data-maps/nyc-population/census-summary-2000.page; “Sub Saharan Africa Population 2019,” World Population Review, http://worldpopulationreview.com/continents/sub-saharan-africa-population/.
²⁹GSMA Intelligence, The Mobile Economy Sub-Saharan Africa (London, GSMA Intelligence, 2018), https://www.gsmaintelligence.com/research/?file=809c442550e5487f3b1d025fdc70e23b&download.
³⁰CDC Group, CDC Group plc Annual Review 2014 (London, CDC Group, 2014), https://assets.cdcgroup.com/wp-content/uploads/2014/06/25150820/Annual-Review-2014.pdf.
³¹“Afghanistan's mobile phone sector boosts the economy,” BBC, October 24, 2012, https://www.bbc.com/news/av/business-20053031/afghanistan-s-mobile-phone-sector-boosts-the-economy; Shabi Hussain, “Bangladesh Smartphone Market Continues Double-Digit Growth in 2017, While Preparing for 4G Rollout in the Country, Says IDC,” International Data Corporation (IDC), March 13 2018, https://www.idc.com/getdoc.jsp?containerId=prAP43626118; Rayna Hollander, “India's smartphone market is set to erupt”, Business Insider, January 30, 2019, https://www.businessinsider.com/india-smartphone-market-growth-accelerating-2019-1
³²Monica Anderson and Laura Silver, “7 key findings about mobile phone and social media use in emerging economies”, Pew Research Center, March 7, 2019, https://www.pewresearch.org/fact-tank/2019/03/07/7-key-findings-about-mobile-phone-and-social-media-use-in-emerging-economies/.
³³Todd Moss, “Development finance institutions grapple with their growing role (Devex),” Center for Global Development (CGD), March 19 , 2019, https://www.cgdev.org/article/development-finance-institutions-grapple-their-growing-role-devex.
³⁴Molly Anders, “Financial returns likely to 'go down' over next 5 years, says CDC chair”, Devex, June 15, 2018, https://www.devex.com/news/financial-returns-likely-to-go-down-over-next-5-years-says-cdc-chair-92943.
³⁵Development Assistance Committee, Development Assistance and Approaches to Risk in Fragile and Conflict Affected States (Paris: Organization for Economic Cooperation and Development, 2014), https://www.oecd.org/dac/conflict-fragility-resilience/docs/2014-10-30%20Approaches%20to%20Risk%20FINAL.pdf.
³⁶Jeffrey M. Alexander et al, “Rebooting the Innovation Agenda the Need for Resilient Institutions,” Center for Strategic and International Studies (Lanham, MD: Rowman & Littlefield, 2019), https://csis-website-prod.s3.amazonaws.com/s3fs-public/publication/190308_Runde%20et%20al_InnovationAgenda_WEB_v2_0.pdf.
³⁷“68% of the world population projected to live in urban areas by 2050, says UN,” United Nations, May 2018. https://www.un.org/development/desa/en/news/population/2018-revision-of-world-urbanization-prospects.html
³⁸Daniel F. Runde and Sundar R. Ramanujam, “Financing and Implementing the Quality Infrastructure Agenda”, Center for Strategic and International Studies, September 2018, https://www.csis.org/analysis/financing-and-implementing-quality-infrastructure-agenda
³⁹Alicia McElhaney, “Emerging Markets Send Pension Assets Surging,” Institutional Investor, September 2018, https://www.institutionalinvestor.com/article/b19t9njb082s6l/Emerging-Markets-Send-Pension-Assets-Surging.
⁴⁰McKinsey Global Institute, Deepening capital markets in emerging economies (McKinsey & Company, 2017)https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Deepening%20capital%20markets%20in%20emerging%20economies/Deepening-capital-markets-in-emerging-economies.ashx.
⁴¹Kieron Monks, “M-Pesa: Kenya's mobile money success story turns 10,” CNN, February 24, 2017, https://www.cnn.com/2017/02/21/africa/mpesa-10th-anniversary/index.html.
⁴²Tina Rosenberg, “In Kenya, Phones Replace Bank Tellers,” New York Times, May 9, 2017, https://www.nytimes.com/2017/05/09/opinion/in-kenya-phones-replace-bank-tellers.html.
⁴³PTI, “WISH Foundation to raise $100 mn healthcare innovation fund”, Economic Times, November 19, 2014, https://economictimes.indiatimes.com/small-biz/startups/wish-foundation-to-raise-100-mn-healthcare-innovation-fund/articleshow/45207371.cms ; Food and Agriculture Organization, “Developing Knowledge, Skills and Talent of Youth to Further Food Security and Nutrition,” Committee on World Food Security (CFS), http://www.fao.org/fileadmin/templates/cfs/Docs1415/Events/youth/casestudies/CFS42_Youth_Africa_Farmerline.pdf.
⁴⁴Mark Jamison, “ICT essentials for rebuilding fragile states,” World Bank Blogs, October 2016, https://blogs.worldbank.org/digital-development/ict-essentials-rebuilding-fragile-states.
⁴⁵“Demand Driven Development” (CSIS Event, Washington, D.C., December 8, 2017). https://www.csis.org/events/demand-driven-development.
⁴⁶“Blockchains: The great chain of being sure about things,” The Economist, October 31, 2015, https://www.economist.com/briefing/2015/10/31/the-great-chain-of-being-sure-about-things.
⁴⁷Daniel F. Runde and Phillip Andre Meylan, “Blockchains Will Change the Way the World Votes,” Center for Strategic and International Studies, January 26, 2018, https://www.csis.org/analysis/blockchains-will-change-way-world-votes; Daniel F. Runde and Phillip Andre Meylan, “Blockchains and International Development: A Good Bet,” Center for Strategic and International Studies, August 7, 2017, https://www.csis.org/analysis/blockchains-and-international-development-good-bet.
⁴⁸“Next generation green energy procurement and trading platform,” WePower, https://wepower.network/#
⁴⁹Gavin Mooney, “Blockchain For Utilities: A Reality Check”, Digitalist Magazine, March 20, 2019, https://www.digitalistmag.com/digital-supply-networks/2019/03/20/blockchain-for-utilities-reality-check-06197205.
⁵⁰Alejandro Cremades, “How Venture Capital Works”, Forbes, August 2, 2018, https://www.forbes.com/sites/alejandrocremades/2018/08/02/how-venture-capital-works/#4f39b6361b14.
⁵¹Conor M. Savoy and Aaron N. Milner, Blended Finance and Aligning Private Investment with Global Development (Washington, D.C.: Center for Strategic and International Studies, 2018), https://csis-website-prod.s3.amazonaws.com/s3fs-public/publication/180313_Savoy_BlendedFinance_Web.pdf?oSIJoKLxku_odK1cyFix_DHeRoKunpuc.
⁵²The World Bank Group, “Fragility, Conflict and Violence,” The World Bank, February 9 2017, http://www.worldbank.org/en/research/dime/brief/fragility-conflict-and-violence.
⁵³Stephanie von Friedeburg, “Why investors must take a chance in the world's most fragile countries,” World Bank Blogs , January 29, 2018, https://blogs.worldbank.org/voices/why-investors-must-take-chance-worlds-most-fragile-countries.
⁵⁴Neil C. Churchill and Virginia L. Lewis, “The Five Stages of Small Business Growth,” Harvard Business Review, May 1983, https://hbr.org/1983/05/the-five-stages-of-small-business-growth.
⁵⁵See European Development Finance Institutions (EDFI), Investing to create jobs, boost growth, and fight poverty and climate change , https://www.edfi.eu/#; “OPIC Signs MOU Establishing DFI Alliance with Key Allies,” Overseas Private Investment Corporation (OPIC), April 11, 2019, https://www.opic.gov/press-releases/2019/opic-signs-mou-establishing-dfi-alliance-key-allies; “Development Finance Institution Gender Finance Collaborative,” CDC Group, November 2018, https://www.cdcgroup.com/en/news-insight/news/development-finance-institution-gender-finance-collaborative/.