Development finance is opaque, but transparency is improving


On January 25, 2023, Brookings and Publish What You Fund launched the first global DFI Transparency Index. Publish What You Fund’s work was the product of over three years of research, collaboration among a range of stakeholders—including multilateral and bilateral Development Finance Institutions (DFIs)—and painstaking efforts to define transparency in a granular way that is consistent with the complex nature of DFIs. This included understanding their business models and the often-competing nature of their missions and stakeholders’ interests.


The end product of this exercise, the DFI Transparency Index, was an assessment of the state of transparency among 30 leading DFI portfolios, with rankings based on 47 indicators.

While no DFI can be considered to have an acceptable grade, sovereign DFIs (working with government guarantees mostly in the public sector) scored higher than non-sovereign DFIs (primarily financing private sector investments). The top scoring sovereign DFI was the Asian Development Bank (AsDB) at 75.9, followed by the African Development Bank (AfDB) at 73, and the African Development Bank (IDB) at 69.9.

Figure 1. Sovereign DFIs

sov dfi

Among non-sovereign DFIs, the IFC was the top scorer (54.4), following by the AfDB (51.4) and the AsDB (46.4). The U.S. International Development Finance Corporation (DFC) was the top scoring bilateral DFI at 38.2.

Figure 2. Non-sovereign DFIs

non sov dfi

What is especially encouraging is that transparency improved during the course of developing the Index because of the team’s ongoing engagement with the DFIs. For instance, DFC assessed its disclosure process to have increased the amount of information available by 70 percent. A number of DFIs, such as EBRD and Finnfund, have created bulk download files for their project databases, allowing data users to export and manipulate the data, which was not possible previously.

The DFI Index is the first ever comprehensive effort to assess the transparency of development finance. The detailed assessment and recommendations for each DFI’s transparency is found on the website version of the tables (by clicking on the bar for a DFI).  A shortcoming of the Index is it is a measurement of transparency with time-bound limitations. It is possible that disclosure has changed in the time since the assessment. Also, by setting a limit of fifteen minutes for researchers to finding a specific piece of data, that does not mean the data may not be available somewhere, just that it is too hard to find.

The launch of the DFI Transparency Index included a strong call for transparency by keynote speaker Deputy Assistant Secretary of the U.S. Treasury Margaret Kuhlow, followed by a panel representing DFIs, DFI shareholders, civil society, and an expert in mobilization.

The bottom line? Transparency levels are unacceptably low, especially on critical issues such as development impact, mobilization of private resources, and assurances of disclosure of environmental and social risks to affected communities. The silver lining? Many DFIs now recognize the need for greater transparency—especially if they want to make a case for more resources—and have begun to make improvements in the collection and public availability of data.

Why transparency—why now?

The magnitude and complexity of the intersection of global challenges—climate change, pandemic disruptions, and its unequal impacts on the most vulnerable, historic levels of displaced persons and food insecurity, and the Ukraine war—are unprecedented. Policymakers must deal with not only how to address this unprecedented confluence of issues but how to pay for them. In the middle of this global discussion is the role of DFIs as critical players in the solutions to these global challenges.

What is the role of transparency? It is essential for accountability, provides important information for market decisions on what and how to finance, and informs the case for additional financial support for DFIs.

How do we know, therefore, whether the resources being spent are working? How can we measure success if there is no information on results? How do we know if DFIs are crowding in essential private capital and not crowding out the private sector?

At the outset, as the DFI Index demonstrates, critical information has simply not been disclosed. How do we know, therefore, whether the resources being spent are working? How can we measure success if there is no information on results? How do we know if DFIs are crowding in essential private capital and not crowding out the private sector? As Sam Attridge, senior research fellow at the Overseas Development Institute (ODI), put it—we don’t know how, who, and where money is being mobilized and we don’t even know what a good leverage ratio is.

The demand for transparency is not just an exercise to have more transparency. The end game, as so clearly stated by Nadia Daar at Oxfam International, is transparency for the sake of better development outcomes, for maximizing positive impact for people and communities, and for minimizing risk to these same populations.

Making change

There were no illusions that tackling the transparency issues with DFIs was going to be easy.  Publish What You Fund’s approach to making change was deliberate—it needed to be a multi-stakeholder effort, taking the time to research and understand different perspectives, to listen, and then to work collaboratively to finding a consensus on the way forward. From this we have seen change start to happen.

The panel discussion underscored the value of this approach:

  • The collaborative process, with everyone in the same room, was truly “unique,” working together in a respectful way about what was possible. That is how change happens.
  • Those that received some of the highest rankings approached the DFI Index from a whole-of-organization approach. The AfDB, the second ranking multilateral DFI, made “transparency the business of the whole bank.” DFC, the highest ranking bilateral DFI, put together a cross-departmental working group and increased the amount of information available by 70 percent.
  • Appreciate the value of external pressure by both civil society and shareholders and find internal champions who will work with you.
  • Making change of this scope requires a change in culture.
  • Indexes, when well-constructed, are valuable global public goods and invite healthy competition.

What is the change so far—and next?

  • Just in the course of the project, data on almost 2,000 new investments were published by IDB Invest, the AfDB, and the AsDB, representing information on more than $50 billion.
  • The blanket use of commercial confidentiality as a reason not to disclose has begun to be lifted. Much of this information is already available behind third party paywalls, so it exists—but not enough is publicly available.
  • DFC has developed a new capital mobilization measurement system which will enable it to change the culture from getting money out of the door to driving capital where most needed. It has also refined its development impact system and will be making specific results and information available immediately.
  • AfDB plans to utilize the lessons and practices on disclosure of results from the sovereign side to the non-sovereign side.
  • U.S. shareholders will press for the IFC’s (already the most transparent DFI) and World Bank’s results data to be made available to the public.

This first DFI Transparency Index has set the baseline to measure further progress. Especially as DFIs, policymakers, shareholders, and other stakeholders grapple with how best to use the DFIs to confront the global issues of today, we now have a tool to measure the transparency building blocks that are essential for effective use of capital to meet our global needs.