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THE STRENGTH OF BILATERAL DEVELOPMENT FINANCE INSTITUTIONS

COFIDES is a member of EDFI, the Association of European Development Finance Institutions. EDFI is a group of sixteen bilateral European development finance institutions, whose members provide long term finance for private sector enterprises in developing and reforming economies.

At the end of 2008, the total investment portfolio of EDFI members was €17 billion. DFIs continue to be engaged during crises, therefore being capable of sustaining private sector activities critical to development.

Bilateral DFIs are best described by both their individual as well as joint activities and the ability to respond rapidly to changing market and risk environments:

1. Specialization

DFIs have a proven track record in the structuring and financing of smaller projects in poorer countries. In Africa, DFIs have been active for decades and have shown proven superior development impact on the continent across all sectors and regions.

2. Long-Term Customer Relationship

While DFIs are globally active, their origin lies in the economies of their European home countries. As a result, bilateral DFIs have firm and long-lasting relations with national SME-companies and know their needs. DFIs are therefore in the best position to structure their offers and products accordingly.

3. Flexibility

Bilateral DFIs are characterized by quick decisions and efficient approval procedures. Organizational structures can be rapidly changed to be in line with focus areas in response to market demands.

4. Innovation

Within their business models, DFIs have brought a number of innovative ideas to the market, such as specific private equity funds and local currency funds as well as new methods of monitoring and measurement of effects.

5. Cooperation

Bilateral DFIs are marked by a willingness to share knowledge and expertise among themselves and other players in the market. Spreading risk through co-financing and drawing upon the respective expertise is of additional advantage, enabling them to operate in developing countries – also during times of crisis. The cooperation among them goes as far as having joint financing facilities (e.g. European Financing Partners / EFP) and strategic targets for co-financings – also to enable the engagement in the financing of larger undertakings.

6. Harmonization

Over time, project appraisals, monitoring and the assessment of social and environmental standards have been harmonized within EDFI, resulting in improvements in cost-efficiency with a correspondent reduction of related costs for their customers. The measurement of developmental impact and standards of cooperation thus offer the clients of bilateral DFIs streamlined financial products and standards.