By Wasim Tahir
On a cold Thursday in early December, the most important development conversation at Harvard wasn’t about a new policy or a new treaty. It was about who puts money at risk, in what currency, and on whose terms. On December 4, 2025, the Harvard Center for International Development, the Mossavar-Rahmani Center for Business and Government, and Harvard Business School convened their first Development Finance Symposium, bringing together development finance institutions (DFIs), multilateral development banks (MDBs), other ecosystem actors, and students to wrestle with what it means to finance development in a far more constrained world.
The backdrop is a system in flux. As traditional aid budgets shrink, development finance has moved from the margins to the center of how the world finances growth and climate action. The architecture now stretches well beyond the traditional Bretton Woods system: regional development banks, national development banks, and official development assistance (ODA)-funded bilateral development finance institutions sit alongside the large multilaterals as core actors shaping how development finance is deployed.
For students, this more multipolar ecosystem shapes both the opportunities they will pursue and the skills they need. The symposium was designed as a one-day immersion into this world: fast-paced panels and presentations, a career expo, and, at both ends of the day, the informal conversations over coffee and drinks that mattered just as much as the sessions themselves.
From how much we lend to how much we mobilize
A recurring theme of the day was that volume is no longer enough. In his keynote on the future of development finance, Nick O’Donohoe, Senior Fellow at the Mossavar-Rahmani Center for Business and Government and former CEO of British International Investment, described an uncomfortable paradox: the track record of development investment is stronger than its politics. We have seen significant gains in poverty reduction, health, and education – yet political support for traditional aid has weakened in many donor countries.
That reality pushes DFIs and MDBs into a new role. They are no longer just lenders of last resort; they are architects of markets. What matters is less how much they disburse from their own balance sheets and more how effectively they mobilize private capital, particularly in climate-critical sectors. Michael Kurdyla of the IFC commented that this is about “putting mobilization at the center of our strategy in a way that we hadn’t before.”
Concessional dollars are becoming scarcer, and the expectation is that they will be used surgically – to take early risk, build pipelines, and crowd in others, not merely to make already bankable projects marginally cheaper.
Doing development in other people’s currency
A second central theme was who ultimately holds currency risk. In the session “Escaping Original Sin: Financing Development in Local Currency,” Ricardo Hausmann of the Growth Lab joined practitioners from TCX, Africa Finance Corporation, and the Center for Development Finance Studies to revisit a long-standing problem: many emerging economies still cannot borrow abroad in their own currencies.
The panel argued that this “original sin” is not simply an unavoidable macro condition; it is reinforced by the way development finance is structured. When DFIs make hard-currency loans to borrowers whose revenues are entirely in local currency, they shift the full foreign-exchange risk onto the very businesses, utilities, and municipalities they aim to support. As Raul Flores explained, facilities like TCX offer a different approach: pooling and managing FX risk across a diversified book of currencies so borrowers can service their obligations in local currency while investors still receive hard-currency returns.
As Thomas Venon of the Center for Development Finance Studies put it, if the development system “heals with one hand and harms with the other” by loading FX risk onto the poorest borrowers, something fundamental needs to change. The challenge now is to bring hedging and local-currency solutions out of specialized corners of the system and into the mainstream of how development finance is designed.
Regional champions, Africa pioneers
Two “MDB Spotlight” sessions – Regional Champions and Africa Pioneers – highlighted the growing influence of regional institutions in development finance.
In the Regional Champions discussion, FONPLATA Development Bank and the Black Sea Trade and Development Bank focused on what proximity enables: a clear view of regional priorities, the ability to respond quickly to political and commercial shifts, and a mandate tied directly to cross-border integration and investment. Their message was simple: regional institutions can often act faster and with greater contextual understanding than global multilaterals.
In the Africa Pioneers session, Africa Finance Corporation (AFC) and the Arab Bank for Economic Development in Africa (BADEA) offered two distinct models of African-focused development banking. AFC underscored its role as a project developer and investor, taking early-stage risk in complex infrastructure and industrial projects before bringing in partners once bankability is established. BADEA, funded by Arab shareholders but lending exclusively in Sub-Saharan Africa, presented its mandate as a long-standing Arab–Africa economic partnership, built on continuity and long-term commitment.
Financing through shocks
Crisis response added a further dimension to the role of DFIs and multilateral development banks (MDB). In “Financing Through Shocks: Lessons from Ukraine, COVID and Beyond,” British International Investment, the European Bank for Reconstruction and Development, and the Black Sea Trade and Development Bank described how their role changes in a shock: from scaling impact to sustaining function – keeping credit flowing, preventing viable firms from failing for lack of liquidity, and keeping critical infrastructure and trade functioning when private capital retreats.
The ability of an MDB to act counter-cyclically depends not only on mandate and risk appetite, but on continued access to capital markets. Panos Gavras of the Black Sea Trade and Development Bank pointed out that "Russia is a 16% shareholder. Ukraine is a 13% shareholder." Shareholder composition can affect how markets perceive an institution, shaping funding costs and, in extreme cases, constraining the very balance-sheet flexibility needed to respond in a crisis.
The climate test and the scale problem
If development finance is now central to global policy, climate finance is the crucible in which its credibility will be tested. In “Channeling Climate Finance into Africa,” speakers described a stubborn disconnect: globally, there is no shortage of capital seeking green assets, yet African climate and energy projects still struggle to achieve financial close.
Part of the problem is the pipeline: early-stage project preparation is underfunded and fragmented. Part of it is policy: tariff regimes, off-take contracts, and regulatory frameworks can change faster than infrastructure can be built. And part of it is product design: risk and return are too often packaged in ways that institutional investors cannot easily hold.
The closing panel on “Challenges and Innovations in Private Capital Mobilization” zoomed out further. With global climate and development needs measured in the trillions of dollars annually, panellists were blunt: no combination of public budgets and DFI balance sheets can close the gap. What is needed is a move from deal-by-deal syndication to portfolio-level structures; from clever, bespoke innovations to standardized, repeatable products; and from a narrow focus on private deals to a renewed use of public markets as channels for development-oriented investment. Oscar Ardilla remarked: "Maybe this is the time to reevaluate the power of the public markets as a developmental tool."
A one-day crash course, and a starting point
An invite-only breakfast at HBS’s Spangler Center created space for institutional representatives to connect with Harvard faculty, fellows, and staff. The breakfast included a Cost of Capital workshop led by Ely Sandler, Fellow with the Belfer Center for Science and International Affairs, focused on a new research project to map the cost of capital for infrastructure across developing countries.
Later in the morning, the focus shifted to students. Through panel discussions and the afternoon Career Expo, students engaged directly with DFIs, MDBs, and other ecosystem actors to learn how development finance operates in practice and where career pathways lie. The day concluded informally at local Harvard Square restaurant Charlie’s Kitchen, where conversations continued beyond the formal program.
For CID and its partners, the Symposium is best seen as the beginning of deeper engagement between academia and the development finance community. As Colin Buckley of British International Investment noted, over the past few years, he has found himself "speaking with a lot of different governments who are either setting up new DFIs or thinking about setting up DFIs." If development finance has indeed moved from the margins to the center of the development agenda, universities like Harvard can help train the people who will navigate this complex system – across ministries of finance, central banks, DFIs, MDBs, and the private sector.
The conversations on December 4th made one thing very clear: the future of development will be decided not only in negotiating rooms and ballot boxes, but also in term sheets, risk committees, and investment mandates. The question now is who will be at those tables, and how well prepared they will be to lead in a new era of development.
Wasim Tahir
