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Eurodad-Glopolis International Conference 2013 ‘ Can public support to the financial sector be an appropriate mechanism for development ?’. Jan Van de Poel 11.11.11 Jan.VandePoel @11.be. Agenda?. What is BIO? BIO and financial sector? Tax havens?. BIO-Invest ?.
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Eurodad-Glopolis International Conference 2013‘Can public support to the financial sector beanappropriatemechanismfordevelopment?’ Jan Van de Poel 11.11.11 Jan.VandePoel@11.be
Agenda? • What is BIO? • BIO and financial sector? • Tax havens?
BIO-Invest? • Belgianbilateral DFI (member of EDFI) • Smallplayer in Europe (€ 400 mio net commitments in 2011), but big in Belgium (8% ODA in 2009, ‘explosive’ growth) • Ownership: 50% public + 50% private, but 100% public funding • Separate lawfromdevco+ specificcontractualarrangementswith state
Public debate? • Report 11.11.11 4 challenges: • BIO as integral part of Belgiandevco • Financial vsdevelopment return • Efficiency and Transparancy • Ethicalplayer • Parliamentarydebate, ministerialstatements, official evaluation… • Expecting reform end 2013
BIO and the Financial Sector • Rationale: development (=integration in globalizedeconomy) invest in companies, ‘roads’ and ‘banks’ • BIO has a mandate to invest 70% throughintermediariestargetingSME’s and FI’s (costeffectiveness, leverage, catalyzing effect)
BIO and the Financial Sector: Issues • Financial Institutions: ‘access to finance’ forwhom? • Additionality (‘crowding out’ private sector) • Accountability(nostringsattached?) • Addedvaluefor ‘missing middle’? (factoring, leasing, …) innovation! • Investmentfunds: roguedevelopment • Accountability (lack of oversight, little ‘leverage’) • Developmentoutcomes (M&E) • Transparencytax havens • Rationale: development (=integration in globalizedeconomy) invest in companies, ‘roads’ and ‘banks’ • BIO has a mandate to invest 70% throughintermediariestargetingSME’s and FI’s (costeffectiveness, • 1. InvestmentFunds (40%, SMEs and MFIs) • 2. Financial Institutions (: • Commercial banks • Non-BankingFI’s (service providers: leasing, factoring, derivatives …) • MicroFinance (direct + throughspecializedfunds)
BIO & Tax Havens • Inherent to business model (nearly all investmentsthroughIFs pass throughtax havens, notably Mauritius, CaimanIslands, Luxemburg • ‘Their’ argument: • Technical/legalarguments • Links developingcountries to financialmarkets • Increasingtransparancy • ‘Our’ argument: • PCD • Tax issues & developmentstrategy • BIO as standard setter (comparativeadvantages)
Solutions: What 11.11.11 is advocating? • Innovativeapproachforlocalintermediaries: specific programmes managedbylocalbanks, micro-insurance, credit schemes without collateral, saving and credit cooperativesthatguaranteedevelopment impact • Focus on direct investments • Specialization and geographic and sectoralconcentration as strategyfor ‘risk mitigation’ (Harry Potter vsHaroldPinter) • Tax issues: moratorium for IF throughOFC’s, mandatory project by project reporting of profits made (& where) and taxespaid (& where) • Challenges: definition of tax haven, core of business model (goodpractices)