Banking on Development : Private Banks and Aid Donors in Developing Countries

This paper highlights the pivotal role private banks and other private financial operators can play in the economic development of developing countries. Drawing from a survey and case studies on the field, it aims to identify the scope, map synergies and identify areas for improvement in public private partnerships. Over the past decade, donors have developed an interest in the private sector. Private banks have created corporate social responsibility programs, sustainable lending and microfinance programs. The dialogue between private banks and aid donors has intensified, opening new avenues for collaboration. Challenges include the increasing proliferation of actors involved in development issues, banks focus on specific regions or countries and restrictions imposed by new rules such as Basel II. In order to aid the process of partnerships between private banks and donors, the paper recommends:

• Mapping cross-border banking operations between emerging countries and developing economies;
• Stepping up collaboration with private banks in order to alleviate the impact of new banking rules;
• Creating a prize that would reward best practices of public and private partnerships in development finance.