Following Sevilla: A Banking Perspective

The Sevilla Commitment, agreed at the recent Financing for Development conference in Spain, pledged to unlock $4 trillion in finance for development.

The UN described the agreement as a “rallying call to overhaul a system that is failing billions of people and pushing global goals further out of reach”.

But in these constrained and politically sensitive times, how do you overhaul the world’s flawed financial systems so that countries and communities can access the funds they need to achieve their development goals?

Here’s our take on what needs to happen to realise the ambitions of the Sevilla Commitment.

Tackle derisking

Derisking is when financial institutions decide not to provide their services to a customer due to the risks associated with that customer. These risks might relate to money laundering, terrorism or the possibility of defaulting.

Derisking hits fragile states hard. It is understandable from a financial perspective, but it often leaves NGOs and local businesses stranded without reliable banking. In previous roles as a development sector practitioner, I’ve worked in places where you suddenly can’t transfer funds because correspondent banks have pulled the plug.

In Sevilla, there were murmurs about creating incentives or guarantees to counter derisking, but it’s an uphill battle. Many big banks choose to avoid the hassle and label entire regions or sectors as “too risky.”

But there is another way. Financial institutions can operate in complex places if they invest in compliance, such as rigorous anti-money laundering and ‘Know your customer’ systems, backed with real local expertise and partnerships.

It’s an approach we lean into at Crown Agents Bank (CAB), where we have compliance systems specifically designed for the development and humanitarian sector. Our work in this area has shown us that strong regulation doesn’t have to mean saying “no” – done right, it can let us say “yes” in a safe, controlled way. And it’s how projects can be supported with minimised exposure. (If you want to learn more about derisking, join CAB’s webinar in October.)

Make last-mile delivery a priority

For all the big financing pledges made in Sevilla, getting funds to the last mile remains a stubborn challenge for financial institutions. We still hit the same old issues – lack of IDs or legal documents, no local banks or ATMs, poor internet in rural areas. I’ve seen emergency humanitarian projects delayed due to something as basic as verifying participants’ identities. Unless we crack this, no matter how many billions are pledged, many communities will still get left behind. It is encouraging to see many organisations finding new ways to support a range of payout modalities for development, from card-free solutions to mobile wallets, but core information issues remain.

At the conference, public development banks were clearly being called to step up. The Sevilla Commitment finally recognised their unique role in connecting global goals to community needs and channeling finance to ensure impact on the ground. This makes a lot of sense. These institutions have local knowledge and reach, so they can step in where commercial banks or donors often can’t.

Be honest about blended finance

Blended finance (mixing public aid with private investment) has long been highlighted as possible silver bullet to unlock financial flows into vulnerable economies. But in practice, it can be tricky, especially around issues of transparency and accountability. In 2015 when the SDGs were announced, trillions were committed to blended-finance solutions, but delivery at scale has proved elusive in practice.  That said, there have been real glimmers of light, especially in the space of trade finance. The Compromiso de Sevilla identifies the SME trade financing gap (that is the gap between requests and approvals for financing to support imports and exports) as a critical barrier to reaching the SDGs.

The most recent development on this front was the establishment of the TF COP (Trade Finance Conference of Parties), which brings together public sector (trade bodies, associations, development banks) and private sector (banks, insurance companies, funds, fintech, service providers etc.) in a joint effort to eliminate the trade finance gap by 2040. A core component of this is centred in the recognition that the gap is a hindrance to the UN SDGs, with the aim of attracting funding pools dedicated to finance sustainable development. One task force is launching an incubator that will incorporate sandboxes where members will test ideas such as development bank-underwritten first loss funds.

Simplify debt-for-development swaps

Debt was the conference’s hot topic, and there was lots of chatter about debt-for-development swaps, debt pauses, climate debt clauses and the like. In theory, these initiatives let countries swap debt relief for investments in climate or social programmes – a win-win. The Sevilla Commitment even calls for debt swaps for climate and nature to be scaled up. But currently, these mechanisms are too complex and lengthy. We need to simplify them so they can respond to countries’ needs before they’re in full-blown crisis.

Adapt to the new era of development finance

Times have changed, and the countries that are providing development finance has diversified. Gulf countries are investing in Africa, for example, and increasingly African and Asian development banks are working together. Financial institutions need to respond to this so that funds can flow as smoothly as possible. At CAB, we’re constantly adapting to this changing landscape. We are in 100+ markets now and always adding in new local currency corridors. Our team are always excited to find new ways to retain value in-region, providing an ever increasing set of global south to global south currency pairs, helping regional organisations avoid costly additional G10 FX legs.   

The role of commercial banks

Many in the development sector are skeptical about commercial banks. But not all commercial banks are the same. CAB sits in a unique spot in this ecosystem. We’re a fully UK-regulated bank, but we’re also a certified B Corporation, which means we’re committed to social and environmental goals, not just profit.

Last year alone, CAB moved about £9.3 billion into lower-income markets, including £3.1 billion in development aid funds. This means we can see which corridors are clogged, which currencies are a pain to source, and where money keeps getting stuck due to local bottlenecks. We can spot patterns and advise partners on how to route funds more effectively so that value lands where it’s supposed to.

These things matter. Finding the right bank to work with can be the difference between a project flourishing or faltering entirely. More awareness is needed to ensure NGOs are fully aware of the range of financial institutions in existence and understand the key things to consider ensuring the maximum amount of financing can be unlocked.