Since 2020, DFIs also administered more than RM1 billion of funds for the government to the underserved groups of businesses and facilitated about RM36 billion of Repayment Assistance restructurings to nearly 270 thousand individuals and businesses. All this is commendable. But while supporting the economic recovery will continue to be a top priority in the near term, as institutions designed with developmental mandates, DFIs ought to embrace sustainability as their existential purpose. One could argue that the developmental 1/5  BIS central bankers' speeches  mandates of DFIs, which preceded the foundation and adoption of the sustainability goals had already reflected them. Ending poverty, zero hunger, reducing inequalities, gender equality, industry and economic growth, climate and environment and others are by and large, goals and sectors that DFIs are already involved in. They are not new to DFIs. However, by embracing sustainability, this would heighten the purpose and sharpen that focus for DFIs to enhance the delivery of these mandates and play a key role within the system to support our economy towards a better future. This brings me to my first key point. DFIs can help re-shape the economy towards prioritising the adoption of sustainable agenda as part of the post-pandemic rebuilding efforts DFIs, can help re-shape the economy through sustainable finance as part of the post-pandemic rebuilding efforts. This entails using financing to nudge businesses and consumers to adopt practices that promote resilience and good governance while growing sustainably and protecting the environment. The need for this is undeniable and inevitable.

On the other hand, the private sector may have larger financial capacity but is traditionally more inclined to support low-risk and well-served customers, whilst high risk customers are either left out or are charged quite expensively to buffer for uncertainties. In overcoming these challenges, DFIs ought to collaborate with other entities in mobilising capital and diversifying risk across different institutions, thus providing an opportunity for the private sector to participate in these segments within the comfort of their risk tolerance. In parallel, DFIs need to continuously build their internal expertise and deepen their understanding of the sectors or segments through regular engagement with the industry, as well as enhance industry analysis, leveraging on access to data within the government. This would augment DFIs’ credibility to lead and crowd-in the private sector towards participating in innovative funding structures. There are two noteworthy solutions that DFIs may wish to find ways to adapt to the local context: Firstly, a risk-sharing facility that can catalyse private capital. This entails offering instruments that enhance the private sector’s willingness to finance high-risk segments. For example, USAID partnered with the Medical Credit Fund (MCF) in Africa in providing USD 1 million catalytic first-loss capital which successfully drew in USD 17 million debt financing from impact investors. MCF, in turn, worked with African financial institutions to provide loans and technical assistance to healthcare SMEs in providing quality healthcare services as well as ensuring business sustainability. Secondly, the use of blended finance while offering financing instruments that promote customer resilience.