Resilience Pulse Check 2025

3.1 Enhancing access to capital The survey reveals that limited access to capital is a significant barrier for companies in all regions, but is particularly acute in Africa, where capital costs are considerably higher than in other regions. This observation comes as no surprise. The cost of borrowing for developing countries is often three times as high as for developed countries.16 Changing the perception of risk requires a multifaceted response. Constraints to capital access underscore the important role that the public sector can play in supporting long-term resilience. International financial institutions (IFIs), multilateral development banks (MDBs), development finance institutions (DFIs) and regional development banks (RDBs) are key mechanisms harnessing public funds to attract private-sector investment, including to places where perceived risks crowd out private investors.17 Multistakeholder initiatives integrating the capabilities of organizations from different sectors can facilitate the application of private-sector tools in a wider range of economies. The De-risking, Inclusion, and Value Enhancement of Pastoral Economies in the Horn of Africa (DRIVE) project, implemented by organizations including the World Bank and Swiss Re, aims to facilitate livestock trade and enhance pastoralists’ access to financial services for drought risk mitigation. By providing tailored services such as savings incentives, drought index insurance, and digital bank accounts, DRIVE promotes financial inclusion and mobilizes private investment to strengthen livestock value chain resilience against the impacts of drought.18 Blended finance mechanisms – which combine public and private capital – have the potential to provide a return to investors while ensuring key development projects can be executed. Such mechanisms were a central pillar of the third Financing for Development conference 10 years ago, and will continue to play a key role in global development finance discussions at the fourth Financing for Development conference in 2025. Temasek – a Singaporean state-owned multinational investment organization – and HSBC have partnered to establish the blended debt-financing platform Pentagreen, in collaboration with the Asian Development Bank and Clifford Capital.19 The goal of this platform is to invest in sustainable infrastructure projects in Southeast Asia that are marginally bankable, exemplifying the effective application of public-private collaboration to address investment gaps in resilience-building. Governments and MDBs can further enhance access to capital by offering tailored financial instruments, such as targeted credit lines, to critical sectors that can contribute to a strong economy during times of volatility. The World Bank Group’s commitment to boosting annual guarantee issuances to $20 billion by 2030 is an important contribution to public- and private-sector resilience in emerging economies.20 In 2019, the Central Bank of Egypt launched an initiative to enhance private-sector resilience, providing EGP 100 billion (Egyptian pounds) (approximately $6.4 billion) in assurances for access to capital in key national sectors including manufacturing and agriculture.21 This support, combined with economic reforms from 2016, helped Egypt achieve positive economic growth during the COVID-19 pandemic. Access to capital for long-term resilience investments is also impacted by currency exchange risk, which can drive up the cost of capital and prevent investments. There is a need for more hedging products tailored to long-term resilience investments. Insurers can play a vital role in risk mitigation by employing advanced risk assessment tools to help both public and private sectors evaluate project viability and attract investment more effectively. Additionally, the MDBs and DFIs might consider scaling up their foreign exchange risk mitigation instruments, which could reduce currency-hedging costs and potentially unlock up to $1 trillion annually in foreign private investment for green initiatives in emerging economies by 2030.22 Programmes like The Currency Exchange Fund (TCX) can further support access to capital by mitigating currency risk for investors in developing countries and boosting financial resources available for sustainable development, allowing investors to build resilience in unpredictable landscapes.23 19 Resilience Pulse Check: Harnessing Collaboration to Navigate a Volatile World