OPEC Fund Quarterly 3/2026
TheFertilizer Crunch
How to stop nitrate supplies to the Global South from drying up
Normalization will not be immediate since there is a huge backlog and also damage to production facilities.Ruth Hill, IFPRI
Contents
In this issue
Cover story: the fertilizer crunch. What are the global risks to agriculture, markets and food systems?
Editorial
When the going gets tough
Dear Reader,
As a resolution of the crisis in the Gulf region remains a distant prospect, the consequences for the global economy are likely to be felt for a long time. Developing countries are hit especially hard with highly volatile prices for crucial commodities, severe trade disruptions and direct impact on local supplies. In this issue of the OPEC Fund Quarterly, we take a detailed look at these questions, but also at short-term responses and long-term lessons to be learned.
An expert analysis of the global fertilizer market by researchers from the International Food Policy Research Institute (IFPRI), an affiliate of the OPEC Fund partner organization CGIAR, reveals structural conditions that result in an imbalanced dependence on a handful of producers: Gulf countries account for roughly 40 percent of global urea and 23 percent of global diammonium phosphate exports, the two most widely traded fertilizer ingredients. (see p. 7)
In an interview, the IFPRI's Ruth Hill is crystal clear: "Global food production will remain vulnerable to shocks as long as it is dependent on a handful of inputs from a few countries." Changing this global vulnerability will take time and cost money: "Truly alternative solutions are in the works but require further development, testing and scaling." (see p. 10)
In the meantime, however, quick responses are critical to prevent the crisis from spreading. The OPEC Fund is leading the way with its new E-STAR facility, a US$1.5 billion initiative to help developing countries weather the current disruptions. Designed as a countercyclical instrument, E-STAR is providing support to stabilize budgets, trade finance to keep goods moving and investments to shore up supply chains. (see p. 14)
As OPEC Fund Principal Economist Angus Downie finds, small island developing states are among the countries most seriously exposed to external shocks (see p. 12). In line with his analysis, Danilo Spinola, Senior Lecturer in Economics at Birmingham City University, tells us: "The first priority should be countries which have structural external vulnerabilities." (see p. 15)
Taking the OPEC Fund's engagement to the next level, the institution launched the Vulnerability to Viability (V2V) Compact at the 2026 OPEC Fund Development Forum (see p. 33) together with the Government of Barbados and the V20, a group of developing economies that are disproportionally affected by climate change. The pact will improve access to finance and attract new investment, especially in climate resilience.
We looked at the underlying causes for the uneven progress in global development in a conversation with Annina Kaltenbrunner, Professor of Global Economics at Leeds University Business School (see p. 18). She is a leading Post-Keynesian scholar of financial subordination, a concept that emerged from observing structural asymmetries in the international economy that disadvantage and penalize developing countries. Her research and practical engagement signal a special role for institutions such as the OPEC Fund: "Multilateral development banks are extremely important because they can work against these structures, thanks to their countercyclical mandate," she said.
The high expectations of development finance institutions among partner countries and businesses have been explored in detail by the ODI Global think tank in a comprehensive new study. Our Strategic Planning Director, Adebayo Babalola, examines the findings for the OPEC Fund. His conclusion: "The future landscape will not be defined by scale alone. It will also depend on the ability to connect partners, mobilize resources, prepare projects and deliver effectively." (see p. 29)
This approach is delivered through the OPEC Fund's operations. Our new Vice President, Private Sector, Khalid Khadduri sets out his approach and priorities in an interview (see p. 22): "I feel a strong sense of stewardship to build on what has been established and deliver further." Based on the strong foundations Vice President Khadduri has inherited, he will focus on agility, innovation and mobilization as the way forward for the Private Sector Department.
What mobilization can deliver is best demonstrated on the ground. During a recent mission to Côte d'Ivoire, OPEC Fund Africa Director Mahmoud Khene and Country Manager Tarik Ladjouzi witnessed the rehabilitation of Cocody Bay, a once heavily polluted lagoon, which has improved health and living conditions for almost two million people. One resident reports: "It is a joy to see the progress." (see p. 30)
We wish you an inspiring read and an enjoyable summer.
The Hormuz shock in numbers
One strait, one-third of seaborne fertilizer trade
The Strait of Hormuz closed amid the outbreak of the Iran war on February 28, 2026. Figures from the IFPRI analysis by Arita, Wang and Glauber.
The fertilizer crunch · IFPRI blog
How fertilizer policies could exacerbate Hormuz price shocks
The closure of the Strait of Hormuz amid the outbreak of the Iran war on February 28, 2026, put roughly one-third of global seaborne fertilizer trade at risk. Suddenly, production across the broader Persian Gulf region had no clear ocean exit.
Focusing on two major types of fertilizer, urea and diammonium phosphate (DAP), the closure effectively blocked around 21 million metric tons (MMT) of annual urea export capacity across the Gulf region, including that of Iran, Qatar, and Saudi Arabia, along with another 4 MMT or so of DAP export capacity. The supply disruption drove global fertilizer prices up: through April, world urea prices approximately doubled and DAP prices rose about 35 percent.
Yet how high prices go, and for how long, depends on more than the strait closure alone. The evolving export policies of the major non-Gulf fertilizer suppliers (mainly export restrictions) and the import policies of large fertilizer importing countries (mainly producer subsidies) are also affecting global supplies and prices.
A handful of administrative decisions, often opaque and made with little or no advance notice or explanation, can move world prices by hundreds of US dollars per ton. As we saw in the grain and vegetable oil markets following Russia's invasion of Ukraine in 2022 or with the rice market in 2023, countries often resort to export restrictions to ensure sufficient supplies for domestic consumers, and further shorting global markets. Meanwhile, India and Pakistan, the world's largest fertilizer importers, along with many other countries, run subsidy schemes that insulate their farmers from shifts in world prices, limiting changes in global demand that can lower prices.
Amid the current spike, such decisions could drive fertilizer prices higher still, or help lower them. In other words, whether urea peaks at US$700 or US$900 per MT – and exactly how the shock will affect agricultural production and food security – may very well depend on the policy choices these countries make in the next several months.
Interactive explainer
US$700 or US$900? The policy levers
Flip the two levers the IFPRI modeling identifies to see which way they push the urea peak. The needle shows direction, not a model forecast.
Non-Gulf exporters
China, Russia, Egypt and Indonesia: export quotas and restrictions.
Large importers
India, Pakistan and others: subsidies that insulate farmers from world prices.
An earlier blog post by Arita and Glauber described the Hormuz disruption as a fertilizer supply shock that would likely have limited impacts on grain markets and food prices more broadly. This is a different kind of shock than the last one, triggered by the Russia-Ukraine war in 2022, which disrupted fertilizer supplies while food prices were considerably higher than today. This post further explores the nature of the current shock, employing an economic model to quantify and compare impacts of various supply- and demand-side policies across key fertilizer exporting countries beyond the Persian Gulf and major importing countries – finding that these can have significant impacts of fertilizer prices.
Restrictions on fertilizer exports across different regions
Restrictions on traffic through the Strait of Hormuz have effectively choked off supplies from the Persian Gulf, the world's largest fertilizer producing and (until recently) exporting region. Here again we focus on urea and DAP, two of the most widely traded fertilizer ingredients. The Gulf countries account for roughly 40 percent of global urea exports, with Iran the largest exporter (despite incomplete official reporting due to sanctions), followed by Qatar and Saudi Arabia, contributing approximately 21 MMT of annual export capacity collectively. The Gulf accounts for 23 percent of global DAP exports, with Saudi Arabia, led by Maaden, the largest producer, accounting for approximately 6 MMT of phosphate fertilizer production capacity. A planned expansion to 9 MMT under the Phosphate 3 project is not yet operational, with production expected to begin in 2027. As discussed in Arita, Wang, and colleagues at North Dakota State University (NDSU), sulfur, a critical input to phosphate production globally, is also heavily concentrated in Gulf production. The disruption therefore propagates through Moroccan and Chinese phosphate operations even though those producers are geographically distant from the strait.
Other key fertilizer exporters, meanwhile, maintain export restrictions. As we saw in the grain and vegetable oil markets following Russia's invasion of Ukraine in 2022 or with the rice market in 2023, countries often resort to such restrictions to ensure sufficient supplies for domestic consumers and further shorting global markets.
DAP and MAP exports, October 2019 – April 2025
China and Russia · metric tons (millions) · time frame October–April
Source: TDM
The global picture
Four exporters, one residual market
China, Russia, Egypt and Indonesia together account for roughly 35 percent of global total exports and 47 percent of non-Gulf nitrogen and phosphate exports in 2020-2021, according to data from S&P Global Trade Atlas. All four countries have implemented some form of export quotas or restrictions since then, largely taken to maintain lower domestic prices.
Their combined posture determines how much residual supply reaches world markets. Exports across these four countries from 2000 to 2025 reveal significant tightening during 2022-2024 in both nitrogen (urea and ammonium nitrate) and phosphate (MAP – monoammonium phosphate – and DAP) fertilizer markets.
Urea and ammonium nitrate exports, October 2019 – April 2025
Russia, China, Indonesia and Egypt · metric tons (millions) · time frame October–April · click a country to show or hide it
Source: TDM
Read the full essay (free) on ifpri.org →
Shawn Arita is Associate Director of the Agricultural Risk Policy Center at North Dakota State University; Ming Wang is a Junior Research Economist with the NDSU Agricultural Risk Policy Center; Joseph Glauber is a Research Fellow Emeritus with IFPRI's Director General's Office. Opinions are the authors'.
The fertilizer crunch · Interview
"Global food production will remain vulnerable to shocks as long as it is dependent on a handful of inputs from a few countries"
Global fertilizer supply is highly concentrated, with just a small group of countries controlling the vast majority of worldwide production, warns Ruth Hill, Director of Markets, Trade and Institutions at IFPRI.
Ruth Hill
Director, Markets, Trade and Institutions Unit, Food and Nutrition Policy Department, IFPRI
How long will the price shock last?
Milestones drawn from the interview and the analyses it cites — select a step
Fertilizer prices have risen dramatically since the closure of the Strait of Hormuz at the end of February 2026 and the World Bank forecasts a rise of more than 30 percent this year alone. What will be the short- and long-term impacts for the most vulnerable countries?
RHThe most vulnerable countries are those that rely heavily on fertilizer imports for domestic food production, have not yet secured fertilizer supplies for the current or forthcoming seasons and cannot cushion the impact of high prices on farmers, i.e. through subsidies.
The impact may be marginal in the current Northern Hemisphere season for countries that had already secured fertilizer supplies and in which farmers had already made planting decisions and input purchases. In forthcoming seasons, most immediately the main forthcoming Southern Hemisphere season, the impacts may be larger with farmers shifting away from crops with high fertilizer needs, reducing the area of crop planted in some cases and applying less fertilizer. Production may be lower as a result which would impact domestic food prices.
Is there a ceiling for these prices or can they rise indefinitely?
RHHigh prices are unlikely to rise indefinitely – high prices normally result in reduced demand through changing crop production decisions and reduced application of fertilizer (reducing amounts applied or changing the mix of nutrients applied). Lower demand reduces the upward pressure on prices. But it is important to add that in large fertilizer using countries such as India, where fertilizer subsidies cushion the price impacts for their farmers, this transmission towards reduced demand will not occur. Higher prices also lead to increased exports from countries that had not previously been exporting and increased production, which can help drive down prices. However, such greenfield fertilizer projects take several years to come online so there is a limit in the amount that production can increase in the short run.
The duration of the high prices will depend in the short run on how long shipments through the Strait of Hormuz are curtailed and in the medium-long term on new trade routes and increased fertilizer production elsewhere.
At what point do price increases become unsustainable for the most vulnerable countries raising fears of turbulence from famine to political turmoil?
RHHigher fertilizer prices present a significant burden to farmers, especially smallholder farmers with limited resources. If sustained over a longer period, they can lead to decreased agricultural production and contribute to a rise in food prices.
We are not at the point of famine yet: there may be increased supply from other countries (see the global picture), application rates may not reduce as much as expected (they did not reduce too much in the Ukraine crisis) and even if application rates fall, their impact on production may be marginal for major producers where use is very high and marginal reductions can be managed through greater efficiency in application or substituting with other nutrients at the margin. These are all things we need to monitor carefully.
Are there any viable short-term reactions, for instance finding alternative producers from different regions, and long-term responses? An obvious idea would be to boost capacity. But given the environmental impact, is this really a viable solution?
RHIf countries such as China and Russia relax some of their fertilizer export restrictions, prices would decrease. Some fertilizer producers have the capacity to increase production in the short run and some can expand capacity relatively swiftly. This will help reduce the upward pressure on fertilizer prices, though it is clearly not sufficient to compensate for the present supply reductions caused by the war.
New production sites require long lead times and substantial investment and are likely to remain concentrated in regions with access to low-cost natural gas or significant mineral deposits.
Are there feasible and practicable alternatives?
RHTruly alternative solutions such as crops bred to procure nitrogen from the air (in the way legumes can) or microbial fertilizers are in the works but require further development, testing and scaling. However, there is a lot that is ready to scale on improving fertilizer use efficiency by changing the mix of fertilizer and other inputs, or the way in which fertilizer is applied.
The benefits of integrated organic and mineral fertilization approaches increase as fertilizer prices increase, so there is more to be gained from altering the mix of nutrients applied than before. This is not replacing fertilizers but applying them with increased amounts of other inputs so that the same amount of crop output can be achieved for marginally lower rates of fertilizer application. Similarly, the benefits of agronomic practices such as microdosing that increase the gains from using fertilizer but can often be quite labor-intensive become more cost effective as fertilizer prices go up and provide an important means by which more can be gained from each unit of fertilizer applied.
Additionally, there is an important role of new technology in developing alternatives to current fertilizer production. "Green ammonia" powered by electrolysis from renewable energy has been technically feasible for a long time, but recent investments are moving this towards becoming cost effective. Once it is cost effective, it will importantly sever the reliance on natural gas or coal for the production of ammonia. This is hugely important because ammonia has many other applications too in other chemicals, industry and energy.
Once a cessation of hostilities is firmly in place, how long will it take for a normalization of markets?
RHFertilizer market normalization will not be immediate since there is a huge backlog of shipments, but also because the war has damaged some fertilizer production sites in the Gulf region. Analysis by Shawn Arita presented in an AMIS/IFPRI policy seminar in April showed that it would take until the end of 2026 for fertilizer prices to return to pre-war prices even if there was an immediate cessation of hostilities.
Do you expect long-term consequences and damage?
RHSome fertilizer production capacity has been damaged which means prices are projected to remain elevated even once trade normalizes. A key question is whether there will be an impact on global food production in some of the major growing seasons, but this is not yet clear and depends on factors such as how crop choice and input use decisions are impacted and whether production falls if fertilizer use falls. Also, higher fuel prices are resulting in higher consumer food prices in many countries with already immediate impacts on welfare.
Can the situation with fertilizers be compared to hydrocarbons or are the commodities completely different?
RHThey definitely share some similarities. Both oil and fertilizer production is concentrated in a few regions, which make both sectors prone to supply shocks. Both also have a huge impact on food systems. The connections between natural gas and fertilizers are even stronger since natural gas simultaneously serves as a feedstock for and powers most ammonia production around the world. Ammonia, the building block for most nitrogenous fertilizers, is one of the most widely produced industrial chemicals, and beyond fertilizers has many applications in other chemicals, industry and energy.
What lessons can we learn from the crisis?
RHGlobal food production will remain vulnerable to shocks as long as it is dependent on a handful of inputs that come from a handful of countries. Accelerated investments in technological development to reduce this vulnerability is essential, e.g. seed-based solutions to improve sustainable nitrogen provisioning and green ammonia technologies.
Today there exist strong possibilities for improving nutrient use efficiency that did not exist before. Meanwhile, the availability of location-specific AI-enabled advisories helps scale these approaches which are often site-specific. Nutrient use efficiency will be more attractive when nutrients reflect their true cost. Governments need advice on how to provide support to farmers that ensures their profitability without increasing subsidies that mask the price of inputs. The policy options are increasingly available.
"Higher fertilizer prices present a significant burden to farmers, especially smallholder farmers with limited resources."Ruth Hill, IFPRI
From quick fixes to real alternatives
The responses Ruth Hill describes, sorted by time horizon.
Relax and ramp up
If China and Russia relax export restrictions, prices would decrease. Some producers can raise output in the short run — helpful, but not enough to offset the war-driven supply loss.
Use every unit better
Integrated organic and mineral fertilization, microdosing and location-specific AI-enabled advisories all gain value as fertilizer prices rise.
Break the dependence
Crops bred to fix nitrogen from the air, microbial fertilizers and cost-effective "green ammonia" from renewable-powered electrolysis.
International Food Policy Research Institute
IFPRI provides research-based policy solutions to sustainably reduce poverty and end hunger and malnutrition in developing countries. Established in 1975, it is a Research Center of CGIAR, the world's largest agricultural innovation network, and the only CGIAR center exclusively dedicated to food policy research. It has more than 480 employees working in over 70 countries, with about half of the research staff based in developing countries.
Despite a fragile truce between Iran and the US, the war has caused global energy, fertilizer and petrochemical price shocks – driven by shipping disruptions through the Strait of Hormuz, along with damage to regional energy infrastructure. The IMF and World Bank stress that commodity-importing developing economies face the largest macroeconomic spillovers. These come in the form of higher oil, gas, fertilizer and food prices, tighter financial conditions and currency pressures. Second‑round fuel and food price effects have become the main drivers of inflation.
When we look specifically at small island developing states (SIDS), we see how these price shocks feed into domestic inflation – reflecting their high import dependence, small market size and limited scope for substitution. Sustained disruption in Hormuz could keep oil prices structurally elevated throughout 2026, even with a partial normalization of energy production and exports. That in turn raises the risks for SIDS that are still dealing with the after-effects of natural disasters, the earlier price shock from the war in Ukraine, along with the lingering disruptions of the COVID-19 pandemic.
How an external price shock travels through a small island economy
Select a channel to see how it plays out
We look at how the three main regions have fared
Almost all Caribbean SIDS are net importers of oil, gas, fertilizers and petrochemicals, with energy inputs critical for electricity generation, transport, tourism and food distribution. Higher oil prices directly widen merchandise trade deficits, while higher shipping and petrochemical costs raise import values across food and manufactured goods, weakening current accounts and overall balances of payments.
Fiscal balances deteriorate as governments expand fuel subsidies, cap electricity tariffs or increase social transfers to cushion households, repeating patterns observed during earlier commodity spikes caused by the war in Ukraine. However, while these measures help stabilize economies in the short term, over the following years the costs can become severe: primary fiscal deficits (i.e. before interest payments are factored in) can widen, debt stocks can increase and debt servicing can become more difficult. Fiscal-debt pressures are already rising in some Caribbean states.
Inflation effects are pronounced. The food and energy inflation pass‑through effect in SIDS is larger and more volatile than in other developing economies, while Caribbean consumer baskets (i.e. typical purchases) are particularly energy‑ and food‑intensive. As a result, several central banks face a delicate trade‑off between supporting post‑pandemic tourism recovery (by keeping interest rates low to support credit for rebuilding and investing) and anchoring inflation expectations (by raising rates to prevent price spirals becoming entrenched).
On balance, the impact on economic growth appears mixed but negative. Higher travel and operating costs squeeze tourism margins, just as household real incomes fall. While some energy‑exporting Caribbean economies (e.g. Trinidad & Tobago) gain from higher hydrocarbon prices, the region overall experiences weaker growth as financial resources are diverted to pay for higher fuel, food, transport and other goods – money that could rather have been invested in productive efforts. Exchange rates also tend to come under depreciation pressure in non‑pegged regimes (including Jamaica, Guyana and Suriname), particularly where foreign exchange reserve buffers are thin, reinforcing imported inflation.
Pacific SIDS face even greater exposure due to extreme remoteness (particularly Fiji, Samoa and Tonga, but all other island nations are affected too), and a heavy reliance on imported diesel for power and transport (especially vast inter-island distances – a unique characteristic of Pacific SIDS). Higher oil and shipping costs significantly raise the landed cost of all imports, amplifying the terms‑of‑trade shock.
The current account impact is severe: fuel imports often account for 10–20 percent of total imports, so price increases can rapidly widen external deficits. Grant inflows and remittances provide some offset, but these are insufficient under sustained energy price stress. Pacific SIDS experience particularly strong second‑round inflation because transport costs feed into food prices, construction materials and public services.
At the same time, fiscal pressures intensify as governments need to absorb fuel cost price rises for public utilities and inter‑island transport. Meanwhile, limited administrative capacity makes targeted support difficult, raising the risk of inefficient, broad‑based subsidies that strain budgets even more.
Overall, economic growth slows as public investment is crowded out and private activity, which is already shallow and thinly spread, weakens. Exchange rate dynamics differ by regime, but in more flexible systems higher import bills and weaker global sentiment contribute to depreciation, compounding inflationary pressures. Longer‑term, the shock strengthens the case for accelerating investment into renewable energy to reduce structural exposure.
Fuel imports as a share of total imports
Typical range for Pacific SIDS, per the article
Leaders in the transition away from imported diesel
Tokelau: nearly 100% solar · Apolima (Samoa): 100% solar · Fiji: 50–60% via large-scale hydropower
Indian Ocean SIDS (e.g. Comoros, Maldives, Mauritius and Seychelles) combine high energy import dependence with open capital accounts and tourism‑led growth models. As with other SIDS regions, higher oil prices raise electricity, water desalination and air transport costs, directly affecting tourism competitiveness and service exports.
For these economies, the balance‑of‑payments channel is two‑sided: import bills rise sharply, while tourism receipts may soften if global growth slows or travel costs rise. Prolonged high energy prices would suppress global demand, indirectly reducing arrivals and foreign exchange inflows to Indian Ocean tourism hubs such as the Maldives, Mauritius and Seychelles.
Meanwhile, inflation is accelerating due to rising fuel and food prices, with limited scope for domestic price smoothing. Central banks face credibility challenges where pass‑through is rapid and expectations are weakly anchored. Fiscal balances worsen as energy‑related subsidies expand, undermining medium‑term fiscal consolidation plans as set out in IMF lending programs.
Exchange rate regimes across the Indian Ocean SIDS are mostly pegged (either to the US dollar or a basket including the US dollar, euro and British pound) or have central banks that actively intervene in local foreign exchange markets to manage stability. While this helps smooth initial external shocks, it requires large foreign exchange reserve buffers (e.g. six months of import cover), which many countries do not have. This puts downward pressure on current accounts, as seen in SIDS that operate under floating exchange rate regimes. Without large foreign exchange reserves, the same problems arise. Growth is expected to slow, particularly where tourism‑linked investment is postponed.
Outlook: Yet more struggle
The impacts from the war in Iran are clear: high oil, gas and fertilizer prices act as a regressive external shock for most SIDS, weakening current accounts, undermining fiscal balances, depleting foreign exchange reserves, raising inflation and slowing growth. The energy, food and fertilizer shock magnifies pre‑existing structural vulnerabilities that are already known.
- Targeted social protection
- Avoidance of broad-based fuel subsidies
- Accelerated energy diversification to reduce long‑term exposure to geopolitical commodity shocks
- Immediate help – led by grants, concessional financing and further knowledge transfers to boost capacity
Trade & development · E-STAR
Putting wind in the sails of trade
A new US$1.5 billion OPEC Fund facility is helping developing countries weather a range of commodity, energy and trade disruptions. Meanwhile, experts see a reconfiguration of trade with implications for global value chains.
Economic Stability, Trade and Resilience Initiative (E-STAR), launched in April 2026 as a countercyclical instrument.
Launched by the OPEC Fund in April 2026, E-STAR is providing rapid countercyclical support to stabilize budgets; trade finance to keep goods moving; and targeted investments to shore up supply chains and infrastructure.
To understand the context and guide development effectiveness, we sought expert views from scholars working with the United Nations and various development finance institutions. First, Danilo Spinola, a Brazilian development economist, gives tailored recommendations on how to apply short-term support while galvanizing long-term growth and resilience. Second, in a standalone article originally published in The Conversation, three Italian researchers led by Prof. Carlo Pietrobelli take a deep dive through global value chains, citing "friendshoring" as a logical antidote to tariffs and protectionism.
What the two analyses have in common is a focus on long-term partnerships and local production capabilities – to keep emerging economies not only afloat, but able to catch the trade winds.
Stabilize budgets
Rapid countercyclical support for governments facing sudden commodity, energy and trade shocks.
Keep goods moving
Trade finance so essential imports — food, energy, fertilizers, medicines — keep flowing.
Shore up supply chains
Targeted investments in supply chains and infrastructure to build lasting resilience.
Trade & development · Interview
"Trade finance can play a critical role in enabling the green transition"
Interview with Danilo Spinola, Senior Lecturer in Economics, Birmingham City University, on the OPEC Fund's emergency facility E-STAR and finding the right balance between short-term fixes and fostering long-term growth.
Danilo Spinola
Senior Lecturer in Economics at Birmingham City University, UK; Senior Consultant at the Agence Française de Développement; long-term affiliate of the Inter-American Development Bank; board member of GLOBELICS. PhD, UNU-MERIT, Maastricht University.
Where should E-STAR target its support? Spinola's three priorities
1 · Countries with structural external vulnerabilities
Small island developing states, low- and middle-income countries and landlocked economies that rely heavily on imported food, energy, fertilizers and medicines.
2 · Intermediate and productive inputs
Machinery, spare parts, fuel and agricultural inputs rather than finished consumer goods — to keep domestic production running.
3 · SMEs and local financial institutions
The least resilient to shocks, yet the backbone of employment.
From a research perspective, where do you think the OPEC Fund should target this support program?
DSI would start by highlighting how short-term liquidity support can protect long-term productive capacity. In many emerging economies, the core constraint is access to foreign exchange for essential imports, especially during shocks. The first priority should be countries such as small island developing states, low- and middle-income countries and landlocked economies, which have structural external vulnerabilities and rely heavily on imported food, energy, fertilizers and medicines.
Second, it is best to focus on intermediate and productive inputs rather than finished goods for consumption. Supporting imports of machinery, spare parts, fuel and agricultural inputs helps keep domestic production systems running. If those inputs collapse, the economy risks longer-term damage that is much harder to reverse.
Third, I would target small and medium-sized enterprises and local financial institutions. SMEs account for a very large share of employment, often around 90 percent in parts of Latin America, yet they are the least resilient to shocks and the most exposed to trade disruptions. Supporting them is not just about stabilization; it is about preserving the backbone of the economy.
How should we tailor approaches and calibrate timelines?
DSI would be cautious about short-term fixes. There is always a risk that emergency trade finance creates medium-term distortions or reinforces import dependence. The design should explicitly link short-term support with longer-term resilience, for example by strengthening local supply chains, logistics, ports and storage systems.
The program could also align with broader structural transitions, especially the green transition. Many countries need to import new technologies to shift toward more sustainable production, but lack the foreign currency and financial space to do so. Trade finance can play a critical role in enabling the transition if it is directed toward technologies and sectors that support decarbonization and resilience.
Finally, I would strongly recommend grounding the program in country-specific analysis rather than a one-size-fits-all model. The evidence is clear from our research in the Global Network for the Economics of Learning, Innovation and Competence Building Systems (GLOBELICS): Policies are most effective when they are tailored to each country's economic structure, institutional capacity and social context. Supporting that kind of tailored, evidence-based approach will make the US$1.5 billion go much further in terms of impact.
Trade & development
Amid rising tensions, "friendshoring" might keep global trade alive
The current reconfiguration of global trade is crucial for developing economies. The risks are high, but as successful examples demonstrate: There are also opportunities.
Carlo PietrobelliProfessor of Economics, UNESCO Chair, UNU
Michele DeleraAffiliated Researcher, UNU-MERIT
Nicolò GeriPhD Candidate, Economics, Sapienza University of Rome
The world economy is at a crossroads. International trade is slowing, economic uncertainty is rising and trade between the US and China – the world's two largest economies – risks pulling apart. And it is not just trade: the two countries also invest less in each other than they did just a few years ago.
What is driving this reconfiguration of trade? For some large economies, including the US under President Donald Trump, a desire for greater self-reliance is central. Between 2017 and 2023, American imports fell most sharply in the very products where the US had been most reliant on China – including industrial machinery, computers and computer parts, and other electronic equipment such as monitors.
This has important implications for global value chains. GVCs are the backbone of international trade – production activities from research and product design to assembly are distributed across various locations, with "value" being added at each stage. This redistribution can take place across several countries, coordinated by multinational firms.
Two options for industrialized economies
The reconfiguration of GVCs is accelerating — compare what each path means for developing countries
For developing countries, the balance between these two strategies is crucial. If advanced economies reshore a substantial share of production, developing countries could suffer as investment and jobs are lost. And automation and digitization now make it more convenient for advanced countries to produce goods at home, making this a greater risk to these poorer countries than it was a decade ago.
For consumers though, this reshoring could mean higher prices for everyday goods, at least in the short term, because of the higher costs of manufacturing in more advanced economies. It should be said, however, that the empirical evidence for this remains limited.
Risks and opportunities
But friendshoring offers an alternative. Early signals from countries like Mexico and Viet Nam – which have recently seen an increase in investment and factory expansions from multinational firms – suggest that friendshoring can create opportunities. When paired with supportive government policies such as investment incentives or help to upgrade technology, these shifts can ensure that more production takes place domestically. This can lead to greater technology spillovers and learning.
To understand the risks and opportunities, we examined the specific products where US-China decoupling is most pronounced (that is, where trade is reducing). From this analysis, two broad clusters emerged, each with different implications for developing economies.
Cluster 1
Complex goods the US can reshore
Consumer electronics, vehicle components, chemicals and machinery. The US is both diversifying its imports quickly and already producing these goods competitively — they can easily be reshored, particularly if automation lowers costs. Semiconductors are already the focus of major US reshoring efforts. Yet the risk to current producers appears limited for now: other developing regions have not seen a similar decline.
Cluster 2
Goods the US is diversifying but can't bring home
just over 6% of finished products the US imported in 2023 — small overall, but economically significant.
Technologically complex goods (electrical equipment, computers, car parts) suit middle-income economies with strong manufacturing experience. Lower-tech goods like textiles and furniture are better suited to lower-income countries.
Who could gain?
Regions positioned to capture friendshoring opportunities — select a region
In both cases, governments need to negotiate carefully to ensure investments add value locally, support skills development and avoid social or environmental harm. For consumers worldwide, friendshoring offers a more benign outlook than reshoring or tariffs. Goods may simply be made in different countries, with prices remaining broadly stable.
The risk to these countries of large-scale reshoring remains limited for now but cannot be ignored amid shifting global trade and investment patterns. But friendshoring could offset or even exceed potential losses, offering new pathways for industrialization.
"As economic uncertainty and technology reshape global value chains, developing economies that invest in production capabilities... will be best placed to harness opportunities."
As economic uncertainty and technology reshape global value chains, developing economies that invest in production capabilities – and implement smart industrial policies – will be best placed to harness opportunities. In some cases, friendshoring may even allow them to leapfrog into more sophisticated activities faster than traditional development paths would allow.
For consumers, there are benefits too. The label on our next laptop, charger or T-shirt might change, but prices will remain broadly stable – at least before tariffs kick in. In this sense, globalization will not disappear. But it will take on a different geographical shape.
This article is republished from The Conversation under a Creative Commons license.
Interview · Alternative perspective
"We need to rethink catchup development finance and how best to mobilize funding"
After almost 100 years of development aid, around 700 million people worldwide still live in extreme poverty. In conversation with Annina Kaltenbrunner, Professor of Global Economics at Leeds University Business School, we learn about the structural causes of persisting development challenges and ways to address them.
Annina Kaltenbrunner
A Post-Keynesian macro development economist studying how global finance structurally subordinates developing countries through currency hierarchies expressed for example through volatile capital flows and foreign currency debt, all of which limit their policy space to develop. Professor of Global Economics at Leeds University Business School, UK. In December 2025 she was awarded the Kurt Rothschild Prize.The subordination cycle
Step through how foreign-currency finance transmits risk back to the borrower
Uganda: when macro risk becomes micro cost
Interest rates, percent
The central bank's policy rate is about 10 percent, but borrowing costs are much higher because rates must remain attractive to foreign capital. "The outcome is lending rates over 22 percent, which are simply not sustainable for development finance."
You are one of the leading proponents of the concept of international financial subordination, or how developing and emerging economies remain structurally disadvantaged. Can you briefly explain this concept?
AKThe concept of international financial subordination emerged from observing structural asymmetries in the international economy that disadvantage and penalize developing countries more than developed ones. These phenomena are common across many developing countries in monetary and financial terms: structurally higher interest rates, greater dependence on financial flows and the fact that these flows are often determined by conditions in international monetary and financial markets. When financial conditions change, developing countries are affected most and suffer the quickest withdrawal of capital, which then causes exchange rate volatility.
The concept tries to conceptualize and partly theorize these empirical phenomena, which, from our perspective, are fundamental constraints on catch-up development. If the macroeconomy is unstable, with volatile exchange rates, high interest rates and prohibitively expensive domestic financing, then these are binding constraints. All the micro factors can be right, but if the macro is not in order, it is just not going to happen.
It also highlights that these patterns are linked to the structure of the international monetary and financial system. In a system dominated by one key currency (the US dollar), risks are created as soon as finance crosses borders. If countries industrialize late and finance themselves in a strong foreign currency, these risks are structural. So, while domestic policy matters, improving development outcomes requires addressing these structural features. That is where international development finance institutions and multilateral development banks come in.
If these constraints are structural, where do MDBs fit in? Are they part of the problem or the solution?
AKCurrently, these structures are perpetuated because most capital going into developing countries is denominated in US dollars or euros, which shifts the currency risk to the borrower – i.e. back to the developing country. So as soon as the local currency depreciates, the debt burden increases.
MDBs are therefore extremely important because they are among the few institutions that can work against these structures, thanks to their countercyclical mandate. They can provide long-term lending and have the balance sheets to make a difference, while accessing relatively cheap funding. So, yes, they are part of the problem, but also part of the solution.
We are working on how to shift international lending from US dollar- and euro-denominated lending to local currency lending, where exchange rate risk is at least partly borne by international lenders. Only then can we begin to break these structural cycles. If we keep rolling over the risk to borrowers, we reproduce the same vulnerabilities, including exchange rate volatility and the lack of trust in local currencies.
Local currency lending does not eliminate currency risk. It simply shifts it elsewhere.
AKThat is a good point. One idea is to create intermediaries that provide temporary risk-taking capital to create space and time for domestic capital markets to develop. The international development community could provide short- to medium-term support, allowing domestic financial institutions to develop this critical lending capacity and for interest rates to come down because of lower risk.
We are also exploring risk-sharing mechanisms. For example, working with the Uganda Development Bank we are designing a scheme that spreads risk across different tranches and thresholds. Another important issue is how exchange rate risk is priced into interest rates. Our modeling suggests that a substantial premium is added based on expectations of depreciation rather than realized movements. There is some room for catalytic risk capital to help break existing structures and reduce interest rates, but the ultimate aim is for domestic financial institutions and development banks to provide lending themselves.
Would that not reduce profitability for development banks?
AKWe are aware of the constraints. MDBs need to maintain their ratings and cannot take on unlimited foreign exchange risk within their frameworks.
However, for highly impactful projects in low-income countries, where foreign exchange risk can determine whether lending happens at all, MDBs should consider taking on some of that currency risk. It is also not clear that local currency lending necessarily reduces profitability. While it introduces currency risk, it may reduce credit risk. If borrowers are not exposed to foreign exchange fluctuations, project sustainability improves and default risk may decline.
There is evidence from philanthropic capital that when currency risk is absorbed by the lender, credit risk falls and there are fewer defaults. If that is correct, the assumption of lower profitability does not necessarily hold. It may even allow the financing of projects that are otherwise profitable but constrained by macro risks.
Turning to climate finance, how can developing countries manage the energy transition given all these constraints?
AKThis is a fundamentally difficult question to answer. In some cases, the climate transition may create opportunities for catch-up development, for example in renewables or electrification, where latecomers can enter new industries. Larger economies may lead, but other countries could also integrate into these value chains – China is a massive example, but we also have Mexico and Brazil faring well. Even smaller economies like Uganda are now developing electric buses and scooters.
At the same time, many of these countries will face substantial adaptation and mitigation costs because they are also the most climate-vulnerable. Relying on mobilizing large volumes of private capital – billions or even trillions – is unrealistic, because private capital seeks profits, while many climate investments simply do not generate them. That's the bottom line.
We therefore need to rethink catch-up development finance and how best to mobilize that. Ultimately, domestic financial systems must play a central role. Banks can create credit, so the issue is not purely one of funding availability. Strengthening domestic financial institutions, including public development banks, is critical.
In the short to medium term, however, countries still face balance-of-payments constraints. They need foreign capital to finance imports required for industrialization and climate action. That capital does not have to be in US dollars, but it must be available. This is where international lenders remain essential: providing financing and helping reduce currency risk, which in turn supports domestic financial development.
Take Uganda, for example. The central bank's policy rate is about 10 percent, but borrowing costs are much higher because rates must remain attractive to foreign capital. This supports demand for the domestic currency and helps guard against financial outflows. As a result, exchange rate risk and the foreign currency composition of sovereign debt keep upward pressure on interest rates. Here the macro environment feeds directly into the micro: systemic risk translates into high borrowing costs across the economy. The outcome is lending rates over 22 percent, which are simply not sustainable for development finance.
You emphasize domestic financial systems, but many are small. Does regional integration offer a solution?
AKYes, absolutely. Regional integration is likely necessary in the medium to long term as many countries are too small to support the use of their currencies and build deep financial systems on their own. There are already promising initiatives, particularly in Africa and Asia, such as regional local-currency payment systems and proposals for reserve funds. But these efforts need to be supported by mechanisms that provide financing, ideally in local currencies. Regional development banks are therefore crucial. That said, they face challenges, especially concentration risk. Unlike global institutions, they cannot diversify across as many currencies and markets, which makes taking on foreign exchange risk more difficult.
Are we seeing the end of globalization or more of a transformation?
AKIt depends on how we define globalization. What we are likely seeing is fragmentation rather than an end per se. The rise of China and its growing trade and financial ties with many developing countries are reshaping the system. A recent Bank for International Settlements report shows that renminbi internationalization is happening through banking networks rather than trade networks.
So, we may move toward a more dual structure, with the USA remaining important, but with China continuing to rise. There are also increasing regional initiatives, although their success varies. For international financial subordination, this may not change much. Whether finance is denominated in US dollars or renminbi does not fundamentally alter the structural challenges for many developing countries. Unless regional blocs become significantly stronger, structural subordination is likely to persist.
Will that change the playing field for MDBs? Not really. New institutions and alternative sources of finance, such as the New Development Bank and Asian Infrastructure Investment Bank, have made their mark in the last few years. But given the scale of global financing needs, especially for climate and development, these are unlikely to replace existing MDBs. There is room for multiple actors.
I see the system evolving into two layers. The US dollar will remain dominant in a market‑based global system, largely driven by asset managers, global banks and capital markets. Alongside that, a more China‑centered system is emerging via bank‑based, relational and quite closed lending, especially across the Global South.
Many developing countries are already becoming more integrated into the latter system, reflected in the expansion of Chinese banking networks. In countries like Brazil, for example, we are seeing growing use of renminbi settlement and increased participation in Chinese payment systems.
Finally, what concerns you most today?
AKInequality is what upsets me the most. We live in a system where a small number of people have enormous wealth while many have very little. If we could change that, we could probably solve many of the world's biggest problems.
"Regional integration is likely necessary in the medium to long term as many countries are too small to support the use of their currencies and build deep financial systems on their own."Annina Kaltenbrunner, Professor of Global Economics, Leeds University Business School
Objection, your honor!
Two perspectives on the same system
The structuralist view (Kaltenbrunner)
Currency hierarchies and foreign-currency debt structurally subordinate developing countries. Capital flows are set by conditions in global markets; when they turn, developing countries suffer the quickest withdrawal of capital.
MDBs can work against these structures with countercyclical, long-term and local-currency lending, risk-sharing and support for domestic and regional financial systems.
The mainstream liberal view (counterpoint)
From a mainstream liberal perspective, Kaltenbrunner's analysis may overstate structural constraints and underplay the benefits of integration into global markets. Economic liberalism – from Adam Smith to modern neoclassical theory – argues that open capital markets, trade and price signals (including exchange rates) allocate resources efficiently and promote growth. Excessive focus on "subordination" risks neglecting domestic policy weaknesses (fiscal mismanagement, weak institutions and poor-quality policies).
Centrist economists stress that foreign capital and currency competition can discipline domestic policy and deepen local financial markets. Capital controls or heavily interventionist MDB strategies may reduce efficiency, deter investment and create moral hazard. From this view, MDBs should focus on governance, transparency and market‑friendly reforms – leveraging, rather than constraining, global finance.
Interview · Private sector strategy
Agility, innovation and mobilization
"The focus is shifting from individual transactions to how projects contribute to broader systems and outcomes," says Khalid Khadduri, Vice President, Private Sector, OPEC Fund.
Three priorities for the Private Sector Department
"Building on our strengths while positioning ourselves for the future"
Remain agile and a "partner of choice"
"Agility is the ability to respond quickly to evolving needs, while protecting the institution's position. We step in where markets are not functioning well, not where capital is already abundant." Examples: the Small Island Developing States initiative and the new E-STAR crisis response tool.
In practice
Being where development needs are heading · gathering partners · guiding private investment into markets where it is needed most · responding quickly to emerging challenges while reinforcing economic resilience.
The right instruments at the right time
"Innovation is not about doing something new for its own sake. It is about targeted solutions that achieve impact or deepen markets." The Digital Transformation Action Plan shows how the OPEC Fund can deliver by financing the next generation of infrastructure.
Bridging the perception gap
"Investors often view projects in emerging markets as riskier than they actually are. There is a big gap between perceived risk and actual risk, as shown by the data on default rates and recoveries across these markets." MDBs can bridge it by improving project preparation, sharing risk and building confidence.
First syndication
Connecting a bank from OPEC Fund member country the UAE to partner country Paraguay.
Can you give us a brief introduction to your background and career path?
KKMy career has long been at the crossroads of finance and development. Before joining the OPEC Fund, I spent several years in the banking sector with roles in trade finance, private wealth management and corporate banking. Here at the OPEC Fund I have the chance to apply that financial experience to a broader development purpose. This is both exciting and fulfilling.
Early on, I visited a project supported by one of our loans to a financial institution in Asia and saw what it meant for a local community to build their first supermarket. Suddenly, people had direct and convenient access to fresh products and no longer had to travel long distances for basic goods. What struck me was how something that appeared relatively small from a financing perspective could have such a big impact on people's daily lives.
Over the years, I've had the opportunity to help expand our Private Sector operations, working in various roles with outstanding colleagues, clients and partners. This has shaped my thinking on development challenges and how financing needs continue to evolve – but also how we as an institution must keep on evolving. In my new role I feel a strong sense of stewardship to build on what has been established and deliver further.
How has the OPEC Fund changed since you joined?
KKIt has changed significantly. The current leadership and the Strategic Framework 2030 have given us a clear direction. Over the last few years, we've grown into a widely respected multilateral development bank (MDB), with the infrastructure in place to extend that evolution.
Internally, this is reflected in best-practice structures, policies and tools that support sustainable growth. Externally, it is visible in our ability to bring together capital, expertise and partnerships to address increasingly complex development challenges.
How has our Private Sector Department evolved over the years – and what comes next?
KKOur Private Sector operations enjoy exceptionally strong foundations, but the global landscape is changing quickly. Financing needs are increasing, fiscal space is constrained and private capital is needed more than ever. One lesson that stands out is that institutions cannot rest on their laurels. To stay relevant, we have to keep adapting our tools and business models.
What distinguishes the OPEC Fund is our ability to adapt while remaining grounded in the experience and credibility that we have built up over our first five decades. That combination allows us to remain relevant in a rapidly changing environment while staying true to our development mandate.
What practical conclusions do you draw from that?
KKI have three priorities: i) to remain agile and a "partner of choice" for our clients; ii) to accelerate innovation, introducing the right instruments at the right time; and iii) to increase mobilization in response to growing development needs. In a nutshell: Building on our strengths while positioning ourselves for the future.
By agility, what do you mean in practice?
KKAgility is the ability to respond quickly to evolving needs, while protecting the institution's position. We step in where markets are not functioning well, not where capital is already abundant. The challenge for MDBs today is not simply to do more of what has worked in the past, but to be where development needs are heading and ensure that what we can offer evolves accordingly.
Our responsibility is not only to provide capital, but also to create opportunities – gathering partners and guiding private investment into markets where it is needed most.
We also demonstrate our agility in how we respond to crises and how quickly we implement solutions. The OPEC Fund has taken up this role through programs such as the Small Island Developing States initiative, along with crisis response tools such as the recently announced E-STAR. The latter is a great example of what agility means in practice: responding quickly to emerging challenges, while reinforcing economic resilience.
Innovation is next on your list, but what exactly does it mean for you?
KKInnovation is not about doing something new for its own sake. It is about targeted solutions that achieve impact or deepen markets. Here I would highlight the overall transformation of our Private Sector operations rather than any single tool per se. We have significantly broadened our product offering, scaled our mobilization capabilities, entered new sectors and strengthened our partnerships – from sustainability-linked financing, to local currency lending, to financial institution capital instruments.
Ultimately, innovation is about creating opportunities that would not arise through standard approaches. Our Digital Transformation Action Plan is an excellent example of how we can deliver by financing the next generation of infrastructure.
And, thirdly, mobilization. Why is it challenging under current circumstances, while also considering longer-term trends in development finance?
KKThere is no shortage of capital, but no single institution can meet global development needs alone – especially in the current geopolitical climate where uncertainty is pushing up the cost of capital and driving down investor appetite. However, it is exactly this kind of situation that increases the value of institutions like the OPEC Fund.
Investors often view projects in emerging markets as riskier than they actually are. There is a big gap between perceived risk and actual risk, as shown by the data on default rates and recoveries across these markets. Institutions like ours can help bridge the "perception gap" by improving project preparation, sharing risk and, ultimately, building confidence.
What matters most when it comes to mobilization?
KKMDBs need to give commercial investors the confidence and comfort to enter into deals. But the bigger picture is more complex, and covers structuring transactions in ways that align risk and return expectations while maintaining strong development outcomes. That means being in the top tier in terms of market expertise, due diligence and risk mitigation.
The OPEC Fund has set a good example with our first syndication, connecting a bank from one of our member countries, UAE, to our partner country Paraguay. Looking ahead, I believe our role as a catalyst will become even more important. Success will be measured not by the projects we finance directly, but by the ecosystems we help build and the investments we help unlock for future generations.
What gives you the greatest sense of optimism as you look ahead?
KKWhat gives me optimism is the extraordinary potential I see throughout our partner countries. Despite the challenges facing the global economy, I continue to see strong ambition, entrepreneurship and innovation across the markets in which we operate. I also see an OPEC Fund that is well-positioned to support those aspirations. Ultimately, the tools we use will continue to evolve – but our purpose remains constant: creating opportunities, strengthening resilience and improving lives.
Digital risk
The perfect storm is coming
and we are implicated
Experts can name many Black Swan events, from "Carrington-class" solar storms to "Kessler" space collisions. But when our obsession with digitalization is part of the problem, what then?
For decades, we have built vast digital networks undersea, overland and in orbit around the Earth, "optimizing" everything from finance to healthcare to navigation. Most transactions, consultations and journeys now start and end via a vast range of cloud-based services running on digital infrastructure. Deeper and deeper interconnections between various sectors are praised for boosting efficiency and delivering more with less. Such is the promise of synergy.
But what if this network of digital systems turns out to be our Achilles' heel? A false economy that puts activity over accountability, as we digitize every imaginable aspect of our lives? When Digital Systems Fail: An Expert Report on the Hidden Risks of Our Digital World, released by the United Nations Office for Disaster Risk Reduction (UNDRR) in May 2026 is a sobering reminder to curb our hubris, clarify our roles and maintain basic analogue fallbacks – not for the sake of Luddite alarmism, but to have functional options available when all else fails.
The 24-page report opens along three main lines covering space, terrestrial and undersea risks, using documented historical disasters to explain a range of possible scenarios measured in hours, days and weeks after a particular event. "Possible" is the operative word here, as the authors underline: "The scenarios trace plausible chains of events through tightly coupled systems. They are not exercises in forecasting. Instead, they were attempts to make explicit what is usually left implicit: the dependencies that never appear in risk registers, and the moments at which a digital system crosses, without warning, into a large digital disruption."
The authors give several specific examples, dating back to the 1859 Carrington Event, a solar storm that knocked out telegraph systems across the Northern Hemisphere, electrocuted operators and set offices on fire. According to a Lloyd's of London insurance assessment, a similar event now could cause more than US$2.5 trillion in damage. Another potential threat is the Kessler effect (or syndrome), involving a chain reaction of collisions between satellites and space debris. In a worst-case scenario, the ensuing cascade could render parts of Earth's orbit too hazardous for space operations, while disrupting satellite services for years or even decades to come.
Four interconnected infrastructure domains
Failures do not stay confined. They spread.
Select a domain to see the incident the report cites and how its failure cascades into the others.
Secondary ripple effects
of digital service disruptions caused by natural disasters result not from direct physical damage but from secondary ripple effects.
Up to ten times
"The number of people ultimately affected is estimated to be up to 10 times higher than those exposed to the initial event."
■ exposed to the initial event ■ ultimately affected
A history of cascading failures
Why the Global North will never be immune
Japan has long been one of the most advanced, disaster-resilient countries in the world, renowned for its technological prowess and its earthquake monitoring systems. But in March 2011, a tsunami hit the country and did more than flood the northeast coast and cripple a nuclear power station – it also blindsided the country's decision makers.
Waves up to 40 meters high crashed 10 km inland at speeds of up to 700 km/h, destroying the regional electricity grid and severely damaging the emergency backup systems at the Fukushima Daiichi nuclear power plant. Cooling capacity was incapacitated within minutes, overheating spiraled within hours, making a meltdown inevitable within days. But it would take several weeks to assess the full scale of the disaster because so much digital sensor data had been scrambled or delayed.
"When digital infrastructure fails, governments and other actors can quickly lose all capacity to evaluate damage, coordinate responses and broadcast guidance."
The lessons were clear: When digital infrastructure fails, governments and other actors can quickly lose all capacity to evaluate damage, coordinate responses and broadcast guidance – in ways that magnify the initial disaster. According to the authors, around 90 percent of digital service disruptions caused by natural disasters result not from direct physical damage but from secondary ripple effects.
In the days and weeks following the disaster, more than 150,000 people were evacuated from the area around the Fukushima Daiichi nuclear power station. Many were relocated multiple times, as radiation assessments and evacuation zones were repeatedly revised based on limited information. Ultimately, more than 1,000 evacuees were officially recognized as "disaster-related deaths," based on the physical and mental toll of long-term displacement.
Why the Global South struggles to prepare
If rich countries can be overwhelmed on so many levels, from emergency response to public information, how can the world's poorest countries be expected to manage similar disasters? Take Tonga, for example, a small island developing state of 100,000 people in the middle of the Pacific Ocean, whose main connection to the internet lies via a single submarine cable stretching over 800 km from "nearby" Fiji.
In January 2022, an underwater volcano erupted off the coast of the Tongan capital, Nuku'alofa – and promptly severed that cable. Satellite links provided some limited backup connectivity, but it would ultimately take five weeks for a specialist ship to travel almost 5,000 km from Papua New Guinea and complete the necessary repairs.
Case study · Tonga, January 2022
One cable, one island nation, five weeks
In some ways the world got lucky, say the authors: "Had the same cable geography applied to a major routing hub, a choke point where dozens of systems converge, the outage would not have been a footnote of a volcanic eruption. It would have been a financial and logistical crisis measured in continents." Entire cloud-based systems could have been knocked offline; multiple hospitals could have lost access to their patient data; financial clearing could have been suspended; and port operations could have slowed by more than half, according to some estimates.
Why we need to understand systemic interplay
The report goes on to highlight the links between so-called intentional and non-intentional risks. In other words, how natural disasters expose vulnerabilities that are then exploited by malicious actors; or by contrast, where cyberattacks set off cascading failures in the physical world – in nuclear power stations, for example. While each dimension demands attention in its own right, it is their interplay that presents a systemic threat. The authors note how: "A heatwave may coincide with high electricity demand. A cable cut may occur while networks are already under strain. In such situations, failures do not stay confined to one system or sector. They spread."
The report concludes with a series of recommendations, calling on governments to clarify legal definitions, establish incentives for preparedness and boost coordination on satellites, space weather, submarine cables and data centers. One key task is to reinforce analogue fallback capacity by investing in training and scenario planning in key sectors such as energy, finance, telecommunications and emergency management. The final word is a simple plea to turn these warnings into concrete "action" before the next Black Swan arrives at our shores, threatening millions of lives and trillions of dollars – perhaps on the back of the next El Niño, set for later this year.
Clarify legal definitions
Incentives for preparedness
Coordinate across domains
Satellites, space weather, submarine cables and data centers.
Analogue fallbacks
Training and scenario planning in energy, finance, telecoms and emergency management.
Interview
Partnerships, delivery and the future of development finance
Adebayo Babalola, Director, Strategic Planning, OPEC Fund, shares what client countries are asking from multilateral development banks.
The debate on multilateral development bank (MDB) reform often focuses on capital adequacy, balance sheet optimization and scaling development finance. An ODI Global report, Reforming Multilateral Development Banks: Perspectives from Client Countries, adds another dimension by bringing client country perspectives fully into view.
What client countries say about MDBs
Share of government respondents, ODI Global survey
OPEC Fund–World Bank joint co-financing
US$ millions, approximate
Rising from around US$200 million in 2023 to approximately US$800 million in 2025, supported by more structured operational engagement, frequent pipeline discussions and earlier collaboration in project preparation.
What do we learn from the ODI report?
ABThe main takeaway is that the MDB model remains relevant, but expectations are evolving. Eighty-three percent of respondents rated financing at better than market terms as very or extremely relevant to long-term development. Eighty-four percent said the same for policy advice and technical assistance, 86 percent for convening stakeholders and 76 percent for research and analysis.
That combination matters. Countries value MDBs because they bring finance, technical expertise, policy dialogue, knowledge and convening power. The strongest institutions are those that combine these functions in support of country priorities.
Why is this discussion important now?
ABThe development finance environment has become more difficult. Many countries face higher financing needs, tighter fiscal space, debt pressures and infrastructure gaps. MDBs are being asked to do more, but work differently. Scaling up financing remains essential, but quality of delivery is just as important. Countries need finance that is predictable, coordinated and linked to implementation capacity.
Coordination is increasingly central to the MDB discussion. Why?
ABThe scale of development challenges requires institutions to collaborate more effectively. Energy access, food security, climate resilience, water infrastructure and economic stability require financing packages that often involve several partners.
The ODI survey captures this: 48 percent of government respondents rated MDB coordination at country level as good or very good, while 74 percent identified co-financing as the top priority.
For the OPEC Fund, this finding is relevant. Around 70 percent of OPEC Fund operations have been co-financed with other MDBs, development finance institutions and bilateral partners. What has changed under the Strategic Framework 2030 is that partnerships have become more systematic and more closely connected to strategy implementation.
How has this been reflected in the OPEC Fund's recent work?
ABOne important example is the OPEC Fund's deeper cooperation with the World Bank. The relationship has moved toward more structured operational engagement, including frequent pipeline discussions and earlier collaboration in the project preparation process. This has supported a significant increase in joint co-financing, rising from around US$200 million in 2023 to approximately US$800 million in 2025.
The OPEC Fund has also strengthened its partnership with the African Development Bank. The amended partnership framework and our recent Partnership Day in Abidjan reflect a shared interest in scaling up joint operations, including through a co-financing envelope targeting up to US$2 billion with African Development Fund countries through 2030.
Why is project preparation at the heart of the MDB reform agenda?
ABProject preparation is one of the most important elements in development finance. If projects are not technically, financially and institutionally ready, delays emerge later in the cycle.
The ODI survey identifies support for project preparation as one of the leading recommendations for shortening the project cycle, cited by 53 percent of respondents. It also points to gaps in capacity on the ground and limited grants for project preparation as major constraints to building strong project pipelines.
This was recognized under the OPEC Fund's Strategic Framework 2030. The institution understood that scaling up development finance would require stronger operational readiness, better pipelines and closer collaboration with partner institutions.
That recognition informed the renewal of the grants window. Around 90 percent of OPEC Fund grant resources are now directed toward supporting operations, including project preparation. This allows grants to support feasibility studies, environmental and social work, technical design, procurement readiness and other activities that improve quality at entry.
The ODI report also highlights concerns around processing times. What conclusions should MDBs draw from that finding?
ABThe numbers are clear. Seventy-nine percent of respondents said short processing times are very or extremely important.
That does not mean all complexity can be removed. Many development operations, especially infrastructure projects, involve safeguards, procurement requirements, technical studies and multiple stakeholders. Some complexity is necessary to maximize development impact and protect stakeholders, including vulnerable communities.
The issue is whether the system manages complexity efficiently. Better preparation, stronger coordination among financiers and earlier alignment with government implementation arrangements can reduce delays. This is why project preparation and coordination are closely linked to operational effectiveness.
The MDB reform agenda focuses on balance sheets and capital adequacy. How does the OPEC Fund connect to that agenda?
ABCapital adequacy remains central because development financing needs are large and MDBs must have the capacity to respond. For the OPEC Fund, access to international capital markets was a major milestone. It strengthened the institution's ability to scale long-term development finance and supported the implementation of the Strategic Framework 2030, which targets US$20 billion in new financing from 2025-2030.
The reform agenda also encourages institutions to use capital more efficiently. Take the OPEC Fund's Exposure Exchange Agreement with the Inter-American Development Bank, which enables both institutions to diversify portfolio exposure and create additional lending headroom through risk sharing.
This type of instrument shows how cooperation among MDBs is evolving. Institutions are working together not only at the project level, but also through financial mechanisms that strengthen development capacity.
How do strategic initiatives fit into this partnership-based model?
ABStrategic initiatives are another way of organizing partnerships around defined development challenges. Take our Food Security Action Plan, which allowed the OPEC Fund to respond to a global crisis with a dedicated financing commitment, while working alongside other partners. Mission 300 is another example of how development goals require coordinated action. The OPEC Fund's participation supports the wider effort to expand electricity access in Sub-Saharan Africa by 2030.
These initiatives show that partnerships can also provide a framework for sustained engagement around priority themes such as food security, energy access, climate resilience and economic stability – allowing institutions to move from single operations to combined delivery platforms.
What lessons should MDBs draw from these findings?
ABOne lesson is that client countries value MDBs most when their different functions come together. A second is that visibility is built through operational relevance. A third is that partnership-based institutions can play an important role in the next phase of development finance. The future MDB landscape will not be defined by scale alone. It will also depend on the ability to connect partners, mobilize resources, prepare projects and deliver effectively.
Global
ODI Global
A global affairs think tank with offices in London, Brussels and Washington, DC. Founded in 1960 in London as the Overseas Development Institute, it researches global challenges, including the climate crisis, economic inequality, gender justice and geopolitical shifts. Read the report →
The cooperation between Côte d'Ivoire and the OPEC Fund is entering a new phase. During a recent mission, Africa Region Director Mahmoud Khene, accompanied by Country Manager Tarik Ladjouzi, met with senior government representatives to launch a strategic dialogue for the preparation of a Country Partnership Strategy covering 2026-2029. "We are looking at an envelope of up to US$500 million," he said after a meeting with Ivorian Minister of Planning and Development Souleymane Diarrassouba in early April in Abidjan.
Located on the west coast of Africa, Côte d'Ivoire is the world's largest producer of cocoa and cashews. Other significant agricultural resources include coffee, palm oil and rubber. The country also holds large mineral deposits alongside offshore oil and natural gas. According to the World Bank's latest assessment, Côte d'Ivoire has undergone a "steady and remarkable" economic transformation in recent years with one of the fastest growth rates in Sub-Saharan Africa, "reaffirming its position as a regional hub."
The OPEC Fund is part of this success story with a series of impactful projects in sectors such as energy, agriculture, finance and transport. Following the first loan in 1977, total approvals to date exceed half a billion US dollars.
Cocody Bay: nature makes a comeback
The mission also provided the OPEC Fund delegation with the opportunity to meet with the highest authorities of the Cocody Bay Rehabilitation Project, designed to carry out environmental works to improve the health and living standards of around 1.9 million inhabitants in and around Abidjan. The area was highly polluted from agricultural and industrial activities. "It killed all the fish," a local fisherman recalled. "And that was a problem."
The US$32.7 million project was co-financed by the OPEC Fund with US$11 million alongside the Arab Bank for Economic Development in Africa (BADEA). Building on the success of the first phase, the delegation was presented with ambitious plans for a second phase.
The project includes improving public health by reducing vector-borne diseases such as malaria, reducing flood risks, restoring ecosystems, upgrading infrastructure and attracting investment to develop the potential of the region as a place for recreation and tourism.
The Cocody Bay Rehabilitation Project improved the environment, health and living standards. Photo: PMU, Cocody Bay Rehabilitation Project
Cocody Bay Rehabilitation Project financing
US$32.7 million total project cost
Co-financed alongside the Arab Bank for Economic Development in Africa (BADEA)
National Development Plan (PND) 2026–2030
The goal: transform Côte d'Ivoire into an upper-middle-income nation by the end of the decade
Good progress has been made. "Since the channel opening, different species of fish have come in, even crustaceans. They coexist with the fish that were already in the lagoon. At first, some couldn't adapt because it was freshwater, so some were overwhelmed. But now they are used to it – they live together," reported a local fisherman.
In high-level meetings with the OPEC Fund delegation, the Ivorian Minister of Planning and Development Diarrassouba emphasized the importance of the cooperation: "The OPEC Fund is a strategic partner of Côte d'Ivoire. The US$500 million envelope reflects the relevance of our model. Our ambition is to improve coordination, accelerate disbursements and optimize the impact of each financing mobilized in support of our strategic plan."
Director Khene backed the authorities' plans: "We support Côte d'Ivoire in implementing high-impact projects within the framework of enhanced South-South cooperation," he said. "The OPEC Fund's primary mission is to support the socioeconomic development of partner countries, particularly through the financing of projects in key sectors such as education, health and infrastructure."
In recent years, the OPEC Fund has significantly stepped up its engagement in Côte d'Ivoire, including a visit by President Abdulhamid Alkhalifa in January 2025. The commitment is also reflected in the depth and breadth of projects, ranging from loans for on-lending to small businesses to powering key energy projects. Meanwhile, support for the vital cocoa trade is boosting traceable exports to secure the sustainable development of this key sector.
The strength of the relationship was also expressed during the latest mission, which featured a large number of high-level engagements, including meetings with ministers overseeing key sectors such as energy, health, infrastructure, water and sanitation, food crop production and education. The visit was covered widely by local media. Director Khene summarized: "We applaud the strength of the country's investment framework and the clarity of its strategic priorities. They constitute solid foundations for further progress."
Spotlight
OPEC Fund Development Forum marks 50 years of partnership and impact
Launch of Vulnerability to Viability (V2V) Compact as President Alkhalifa urges: "At a time of uncertainty, development cooperation matters most."
"Fifty years after the establishment [of the OPEC Fund] we have entered a new phase of responsibility."Abdulhamid Alkhalifa, President, OPEC Fund
The 2026 OPEC Fund Development Forum became a platform to turn the institution's Golden Jubilee into a powerful beacon for a new era of development. "Fifty years after the establishment we have entered a new phase of responsibility," President Abdulhamid Alkhalifa said in his keynote address on June 23 in Vienna, Austria. "Moments of uncertainty, as we are witnessing today, are a time when development cooperation matters most."
Turning concepts into action, the event saw the launch of the Vulnerability to Viability (V2V) Compact, developed by the OPEC Fund and the Government of Barbados, as Chair of the Climate Vulnerable Forum and its V20 Finance Ministers. The V2V Compact is designed to help climate-vulnerable economies access more affordable, predictable and long-term development finance.
The V2V Compact at a glance
Initial focus: the practical foundations of resilience — keeping essential services running before, during and after crises
Water security
"If you don't have access to water, you can't live."
Education
"If you don't have education, you remain ignorant and a victim of your circumstances of birth."
Health
"You can have many problems until you have a health problem – and then you have only one problem."
● Barbados (co-developer) ● joined ○ considering joining
The President of São Tomé and Príncipe, Carlos Manuel Vila Nova, announced his country was joining. Panama, the Democratic Republic of the Congo and the Central African Republic are considering the same, according to Prime Minister Mottley. Designed as an open platform, the Compact will continue to expand over time.
New financing signed in Vienna
New strategic partners
Collaboration in digital transformation, health financing and immunization, food and water security, climate action and sustainable investment.
Work is underway to operationalize the initiative. A white paper outlining practical implementation mechanisms is scheduled for release during the Annual Meetings of the World Bank Group and the International Monetary Fund in Bangkok in October 2026. Additional development finance institutions are invited to join the initiative and align support behind country-led priorities to increase access to affordable finance and deliver development results at scale.
Reflecting on the OPEC Fund's 50 years of expertise in development, President Alkhalifa set out his vision for the future: "The next phase of development will be to find integrated solutions. The challenges we are facing require approaches that go beyond providing finance but also must include access to systems and institutions." The Minister of Finance of Saudi Arabia, Mohammed Aljadaan, outlined three priorities for development work: Strengthening resilience, working in partnerships and respecting country ownership.
The opening session was followed by four panel discussions focused on how countries can navigate a changing development landscape while continuing to invest in growth, opportunity and essential services. Held under the theme "A Transition That Empowers Our Tomorrow," the 2026 OPEC Fund Development Forum was both a Golden Jubilee milestone and a working lab for the next chapter of development action.
Spotlight · Interview
"We need a positive circle"
Interview with Anna Bjerde, Managing Director of Operations, World Bank Group, on the Water Forward initiative and the role of partnerships in development.
The positive circle of water
Hover or tap a stage
Through the Water Forward initiative, the World Bank and partners are putting water security right at the heart of development. Why does that matter now?
ABWater is absolutely essential for humankind. We know that, but what we also are really emphasizing with Water Forward is that economic growth and the creation of jobs cannot happen without secure, clean, reliable and affordable water. The program is about water for people, water for food and water for the planet – and we're delighted to see so many partnerships coming together with us that we're going to be connecting one billion people by 2030.
How can targeted investment strengthen resilience, jobs and long-term growth?
ABWater is a resource that needs to be managed very carefully and efficiently. One feature that we have identified over the years is the need to reduce water losses. We simply cannot afford this. If water is costly at the extraction and does not reach the end-user or does not generate any revenue at delivery, it becomes an unaffordable resource nobody wants to invest in. Instead we need a positive circle of affordable extraction, good flow and cost recovery. For this we need to invest in infrastructure.
How important are partnerships between the World Bank, OPEC Fund and others for pushing this agenda at scale?
ABPartnerships are essential to everything we do. The World Bank Group is now very much focused on a number of global initiatives, so that we can respond to the most pressing development challenges. These need to be addressed at scale, because they are huge: If you're going to provide one billion people with access to clean water by 2030, we cannot do it alone. By setting these very ambitious targets, we need to work together. These partnerships are critical, and in the case of the OPEC Fund we have a very strong partnership. Today, the OPEC Fund is the seventh largest co-financier to the World Bank Group. We're delighted about this partnership. I have to really commend the speed at which the OPEC Fund has joined us in many initiatives, demonstrating the scale of impact we can have when we're working together.
Anna Bjerde
Managing Director of Operations at the World Bank, spearheading work on the world's most pressing development challenges. 30 years of expertise in international development; Master's in Business and Economics from the University of Stockholm.Spotlight · Interview
"We are not asking for charity"
Mia Mottley, Prime Minister, Barbados explains the rationale behind the Vulnerability to Viability (V2V) Compact.
Mia Mottley
Prime Minister of Barbados since 2018, having previously served as Attorney General and Minister of Economic Affairs and Development. She holds a Bachelor of Laws degree from the London School of Economics and was called to the Barbados Bar before entering politics.
Paying for a century with 15-year money
Loan tenor versus asset life, years — Mottley's examples
"You build water systems with 10- and 15-year money, but they may last a century. So why are you being forced to pay for it in 10 to 15 years? The same applies to hospitals or clinics."
Helping ourselves first: Barbados' resilience and regeneration fund
Who pays in, each year
"We are helping ourselves, but we recognize that that will not be sufficient to bridge the gap and to build the resilience that is necessary to fight the many crises we are facing."
The Vulnerability to Viability (V2V) Compact aims to help climate-vulnerable countries move to viability. What does that mean in practical terms?
MMIt means that ordinary people can have access to the things they need to be able to protect their lives and their livelihoods. If you don't have access to water, you can't live. If you don't have education, you remain ignorant and a victim of your circumstances of birth. And for health: You can have many problems until you have a health problem – and then you have only one problem. So V2V ensures that governments can bring access to water, access to education and access to affordable healthcare to their populations.
How can more affordable and predictable finance help countries become more resilient to crises?
MMRight now, if we are forced to borrow at high rates, the interest and the high debt service crowd out other things that are essential to development. You may end up building a school with 10-year money, but you do not have enough time to build up the capacity of the children who come out of that school to help you repay the loan. Or you build water systems with 10- and 15-year money, but they may last a century. So why are you being forced to pay for it in 10 to 15 years? The same applies to hospitals or clinics. It stops us from being able to do other things that are necessary for development. It stops us from investing money in productive sectors. If we can build up our education and health sectors and can guarantee water supplies, then we can deliver resilient development.
Is this financially viable?
MMWe are not asking for charity. In our own country, for example, we have created a framework where every employee and every self-employed person will put a quarter of 1 percent of their salary into a resilience and regeneration fund. Employers match what the employees put in, and the government uses a metric of 0.35 percent of GDP every year to add to that fund. So we are not asking people to help us when we are not helping ourselves. We are helping ourselves, but we recognize that that will not be sufficient to bridge the gap and to build the resilience that is necessary to fight the many crises we are facing.
What role can partners like the OPEC Fund play?
MMBeing able to have partners such as the OPEC Fund for International Development and others is an important statement of the South helping the South. These institutions have the capacity to make that difference. They are faithful to their mandates. Those who have are coming together to help those who have not yet, and that is the best example not just in international finance, but in morality too.
"If we can build up our education and health sectors and can guarantee water supplies, then we can deliver resilient development."Mia Mottley, Prime Minister, Barbados
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Review
Africa as a development frontier of the 21st century
Our reviewer finds reason for optimism in Joe Studwell's How Africa Works, but also takes issue with some conceptual shortcomings of the widely acclaimed international bestseller.
As Africa's development path remains convoluted, the demand for answers remains strong. The success of the latest book by the development economist Joe Studwell proves the point. His book How Africa Works has not only won the praise of the Financial Times and Bill Gates but also found a wide audience. In bookstores it is hard not to find it these days.
This is unusual because the last time books about development were bestsellers probably dates to the days of Mao Zedong, Frantz Fanon or Eduardo Galeano. Studwell takes a more conventional approach, building on the reputation he won with his widely successful forerunner "How Asia Works," which chronicled the economic rise of Asia (more exactly: Far East Asia and the so-called "Asian Tigers" Hong Kong, Singapore, South Korea and Taiwan).
In his Asia book, he identified three key success factors: (1) land reform, (2) focused industrialization and exports and (3) support for small and medium-sized enterprises. These are also the main ingredients in the development recipes he cooks up in his new book. In general, and with an audience of FT readers in mind, he does a fairly decent job.
Land reform
e.g. Ethiopia's land reform in favor of smallholder farmers relieved hunger and created a stepping stone for textile manufacturing.
Focused industrialization and exports
For North Africa, the key question is how to become manufacturing hubs integrated into the European value chain.
Support for SMEs
The third ingredient carried over from Studwell's recipe for Asia's success.
The book in three parts
Select a part — the map highlights the countries it discusses
Overall, Studwell draws a rather optimistic picture for Africa as a development frontier of the 21st century and offers his readers a positive outlook and good talking points at the next Davos World Economic Forum (also where the FT is ubiquitous.) It is rightly promoted as a well-written introduction into Africa's growth prospects and the all-too-often neglected opportunities that exist on the continent.
"The good news is that Africa's demographics and its educational attainment have changed beyond recognition in the independence era... Those changes give cause for optimism today about Africa's prospects, albeit with many challenges yet to be confronted."Joe Studwell
However, there is a problem
Studwell's book fails to consider several key development challenges. The biggest and most important oversight is the book turns a blind eye to the role of the financial sector, globalization and global capitalism. Authors like Dafe, Kaltenbrunner, Kvangraven et al. showed in a 2023 paper in the journal Development and Change how the lack of a strong and diversified financial sector harms the establishment of local bond markets and local currency lending in Sub-Saharan Africa. While Asian banks were crafted as instruments of industrial policy, most African banks are still reproducing colonial hierarchies, designed to reallocate surplus funds.
My second issue with the book is the historical context. Regardless which philosophical viewpoint one takes, it is important to look at the trajectories of developing countries up to the 1980s. Consider Senegal, for example: Since independence in 1960, the country pursued a course of rapid industrialization, protecting its nascent industries with tariff and non-tariff barriers. Progress was rapid and by the late 1970s Senegal was the most industrialized country in Francophone Sub-Saharan Africa.
However, much of the external debt in developing countries had been accrued at floating interest rates, meaning that the currency risk was borne entirely by the borrowing country. A seismic shock occurred when the global benchmark LIBOR on six-month US dollar deposits reached 18.5 percent in late 1981 during the so-called Volcker shock. Rates did not fall below 9 percent until 1985.
Senegal: a double whammy
- US dollar-denominated floating-rate debt required dramatically higher debt service, while export revenues (groundnuts, phosphates, fish) came home as CFA francs.
- With 65% of its foreign exchange reserves deposited at the French treasury, there was no mechanism to hold a US dollar reserve position.
- The Volcker recession collapsed commodity prices; the CFA peg meant no option to devalue.
- An IMF program followed: oversight of fiscal policy, liberalization — and the dismantling of infant industry.
65%
of reserves required at the French treasury
South Korea: a different path
- Under US protection during the Cold War, able to manage its exchange rate.
- Used public funds to create strong domestic industries earning US dollars through exports.
- Those dollars serviced external debt.
- By its first IMF program — during the 1997 Asian financial crisis — it was already one of the leading "Asian Tigers."
(Volcker shock)
below 9%
This historical context and background is absent from Studwell's book, which is a serious shortcoming. The book contains additional claims and views about education, geography and other subjects that are debatable. A debate is always good and to be welcomed, but it would be a more profound read had Studwell included more depth and substance rather than opting for the type of broad overview typical of what's found in an airport bookshop.
"Post-independence African governments were caught between trying to emulate European political systems, for which they lacked resources and attempting to end traditional, aristocratic governance systems – reinforced by low budget colonialism – that proved remarkably durable."Joe Studwell
The back page
"Rooted in Austria, delivering globally"
The OPEC Fund Private Sector Department hosts a business event to deepen the relationship with its host country's corporate sector.
Established in 1976, the OPEC Fund has always been based in Vienna, Austria. The country's proactive promotion of development across the Global South has created numerous opportunities for joint engagements. A business event at the OPEC Fund Headquarters in May served as a welcome refresher of a long-standing relationship.
Vice President, Private Sector Khalid Khadduri welcomed participants by underlining the need to join forces: "Development cannot be delivered by one actor alone. Cooperation is the way forward, because partnership powers progress." He characterized the relationship between the OPEC Fund and its host country with the words: "Rooted in Austria, Delivering Globally."
In its first 50 years the OPEC Fund has frequently worked with Austrian companies and financial institutions, most recently with Raiffeisenbank International (RBI) in Albania, Bosnia-Herzegovina and Kosovo. "I see a lot of potential in working with the OPEC Fund on projects related to energy transformation and support for local infrastructure," said Rainer Schnabl, RBI Management Board Member for Corporate and Investment Banking.
Sabine Gaber, Member of the Executive Board of the Austrian Development Bank, agreed on the importance of cooperation: "The key is really to come together through good and reliable partnerships like the one we have with the OPEC Fund. It is important that multilateral development banks (MDBs), the public sector and private sector enterprises work together to structure deals with different instruments."
One of the key instruments in the hands of MDBs, participants agreed, is their capacity to provide comfort to investors in order to mobilize much needed funding. In a panel discussion participants identified risk sharing as a crucial instrument to facilitate investment: "It is not just finance," Vice President Khadduri summarized. "The role of MDBs is to guide companies and help them manage risk."
Because of the comparatively small domestic market, Austrian companies are traditionally strongly export-oriented, boasting global leaders in selected sectors and markets. They are well known for their strong presence in emerging markets where they regularly punch above their weight. Alexander Schwab, Global Vice President of the machine builder Andritz Hydropower, told the audience "Twenty-five percent of all turbines for hydropower plants worldwide are supplied by us." In Africa his company is the market leader with a share of around 50 percent.
The event attracted some 50 representatives of leading Austrian companies and financial institutions. The offer to deepen cooperation and partnership was very well received: "I see tremendous value in this," Ms. Gaber said. "We really need to bring together all Austrian stakeholders so we can combine our strengths to help create new markets in the Global South, introduce new technologies and support hidden champions." Vice President Khadduri agreed: "The feedback I got was extremely positive. I think this was the first step and now we will make sure to follow up."