The Current Column

Implementing the 2030 Agenda for Sustainable Development

What can development partners do to help national development banks?

Sommer, Christoph / Priscilla Toto / Yabibal M. Walle
The Current Column (2026)

Bonn: German Institute of Development and Sustainability (IDOS), The Current Column of 12 October 2026

Bonn, 12 October 2026. As official development assistance declines, development partners must boost financing and capacity building for national development banks, while strengthening independence.

The Annual Meetings of the International Monetary Fund and the World Bank open in Bangkok today, at a time when financing sustainable development faces mounting pressure from geopolitical tensions, worsening debt crises, and declining official development assistance. With developing countries facing an estimated annual financing gap of $4 trillion to achieve the Sustainable Development Goals, stronger cooperation between multilateral and national development banks is more critical than ever.

The Compromiso de Sevilla, adopted at the 4^th International Conference on Financing for Development in Sevilla in 2025, underscored the importance of national development banks (banks) in promoting sustainable development, for example by channelling long-term and affordable financing to renewable energy, high-value priority sectors or small and medium enterprises, and called on development partners (partners) to increase their support for the banks. The question is then how partners, including multilateral development banks such as the World Bank, can best respond to that call. 

Our recent research takes up that question by looking at the Development Bank Ghana (DBG) and the Development Bank of Nigeria (DBN), two relatively new African development banks established with substantial support from partners, including the World Bank, KfW, the European Investment Bank, Agence Française de Développement, and the African Development Bank. We found that partners can reinforce the banks’ capacity by providing financing and technical assistance while strengthening institutional independence (the ability to pursue operations and their mandate free from political interference) and respecting national ownership (locally determined development priorities). We would like to highlight three main findings that stand out.    

First, partners provide the banks with long-term, affordable capital, allowing them to invest in national sustainable development. Just as important, reputable international partners can also lend credibility, giving other stakeholders the confidence to invest in or lend to the banks. Partners can also support domestic resource mobilisation efforts, such as bond issuance, through guarantees and technical assistance, reducing the banks’ reliance on external financing. In this way, partners help the banks diversify their funding sources and strengthen their financial autonomy.  

Second, engagement with partners can also improve the banks’ institutional independence. For DBG and DBN, partners helped embed mandates for wholesale lending and provisions for institutional independence from the start. Channelling funds to final beneficiaries through local commercial financial institutions, so-called participating financial institutions, shields lending decisions from political interference, safeguarding the banks’ institutional independence. The experience of both banks also highlights the importance of selective alignment, where engagement with partners is based on their ability to advance nationally owned development priorities. This approach serves as a safeguard against subservience, which previous research has flagged as a risk to collaboration between multilateral and national development banks. 

Third, technical assistance and capacity building are core elements of an impactful partnership.  Both banks have received technical support in areas including risk management, environmental, social, and governance practices, green finance, and lending that advances gender equality.  This support is particularly valuable for relatively new institutions that draw staff from commercial banks, as it helps them adapt to a development banking mandate and build the institutional mindset and capacity needed to balance financial sustainability with development impact.

These lessons – investing in institutional capacity building alongside financing, while aligning assistance with national priorities – offer practical ways for partners to respond to the call to support national development banks in reaching their full potential. Partners need to do more than provide financing to effectively support the banks in advancing the Sustainable Development Goals. They also need to provide support that builds strong and independent national institutions that can mobilise additional funds from capital markets (including domestic savings) to scale up their activities. Our findings suggest that successful partnerships should be measured by both the financial and institutional capacity of the banks to invest in sustainable development at scale. This week’s Annual Meetings should explore ways to advance international cooperation that ensures national development banks are better capitalised and capable of implementing nationally owned development priorities with greater independence and at a larger scale.