Following the Finance in Common Summit, we, Subnational Development Banks (SDBs) from Latin America and the Caribbean, our technical and financial partners and local and regional governments  and  our  associations  in  the  region,  are  launching  the  Alliance  of  Subnational Development Banks in Latin America and the Caribbean.

We  endorse  the  joint  declaration  signed  by  all  public  development  banks  in  the  world  at the Finance  in  Common  Summit  and  affirm  our  determination  to  collectively  contribute  to  the achievement of the 2030 Agenda and its SDGs and the objectives of the Paris Agreement, while responding to the Covid-19 crisis and the necessary recovery plans.

We commit to strengthen our capacity to support local and regional governments in financing the  delivery  of  and  access  to  sustainable  and  affordable  infrastructure  and  public  services, leaving  no  one  behind,  as  well  as  of  efficient  policies  to  support  a  resilient  and  inclusive development in a just transition.

We commit to reinforce our coordination with public and private financing partners, based on the added value of our specific mandate to channel funding at the subnational level, to cities and territories.

To ensure greater impact, we are committed to join forces and form a coalition of SDBs with ou partners with the aim of increasing our join efforts to answer the urgent investment needs in local  development  and  to  bridge  the  sustainable infrastructure  gap in  Latin  America  and the Caribbean which stands as a pre-requisite to localize the targets set up by global agendas.

The critical role of  local and regional governments and of a sustainable urban and territorial development has been recognized by the Global Agenda endorsed by the United Nations since 2015 (2030 Agenda for Sustainable Development, Paris Climate Agreement, Addis Ababa Action Agenda and New Urban Agenda).

It is acknowledged that 65% of the SDGs may not be fully achieved if urban and local actors are not involved. However, despite a large set of credit lines and financial instruments set up for sustainable  urban  development,  local  and  regional  governments  still  have  difficulties  in accessing the financing required to achieve the ambitious and critical targets set up for 2030.

A  total  of  USD  90,000  billion  is  needed  to  bridge  the  urban  infrastructure  investment  gap  to mitigate global warming to 2°C by 2030 of which only 25% is public. However, less than 10% of international climate finance is currently allocated to local investments.

There is a systemic failure of the subnational financial market characterized by an insufficient connection between:

- the supply side: the financial instruments available are insufficiently adapted to the needs of local and regional governments and insufficiently disbursed,

- and the demand side: local and regional governments hardly meet the requirements in terms of creditworthiness and ability to prepare “bankable” sustainable projects.

Closing this growing financial gap and addressing the systemic failure of subnational financial markets is  therefore  a  critical  challenge aligned  with  the  Addis  Ababa  Action  Agenda,  2030 Agenda for Sustainable Development and the Paris Agreement, collectively set in 2015. It also presents a window of opportunity to shape tomorrow’s low-carbon and climate-resilient cities and territories, and to provide equal access to high-quality services to city dwellers across the continent.

Although we, SDBs, are diverse in status and operating modalities, we share a core mission as public banks mandated to provide financing to local and regional governments or private entities for local public services provision and infrastructure projects.

As public development banks we benefit from three attributes: (i) we are owned, controlled or supported by governments; (ii) we execute a public, development-oriented mandate, addressing market inconsistencies; (iii) we enjoy independent legal status and financial autonomy.

Furthermore, our specific mandate centred on financing the subnational level implies specific responsibilities and value added within the financing chain:

-     SDBs act as professional financial intermediaries to catalyze public and private financing and to channel these resources at local level, providing an efficient response to close the subnational financial gap. As a complement of intergovernmental transfers to local governments and fiscal equalization, SDBs can provide a large panel of financial instruments to unlock and broaden the sources of funding at the local level, such as technical assistance, guarantees, credit enhancement, debt, equity, at concessional or market rates, directly or through commercial banks.

-     SDBs are well-established domestic players closely connected to national policies and strategies to implement the SDGs and the Paris Agreement on climate. They can offer a range of specific benefits, including local currency financing and a deep understanding of local contexts and markets.

-     SDBs have the potential to act as transformative bodies that can pave the way for the development of stronger subnational financial markets in the long term, especially for intermediary cities.

We, SDBs, can therefore play a key role as:

Policy makers to develop and drive national policies aligned with the SDGs and the Paris

Agreement on climate by:

-     contributing to national planning processes and financing national policies to implement the global agendas at the local level

-     integrating both the SDGs and the Paris agreement on climate in our strategies, standards, operating procedures and data.

Market makers by:

-     consolidating the local and urban financial markets,

-     developing an enabling environment for urban investment,

-     improving local capacities to formulate investment worthy projects,

-     developing strong pipelines of projects,

-     steering and providing financing, notably through blended finance

-     partnering with international, national and private financial institutions.

As such, we have a unique role to play in the financial system. Through our public mandates and anchored in our respective institutional and economic contexts, we build bridges between local and national governments and the private sector; between domestic and international agendas; between global resources and microeconomic solutions; and between short-term and longer-term priorities. We can provide urgent and counter-cyclical responses during times of crisis and significantly  contribute  to  reorienting  global  finance  towards  climate  and  SDGs.  We  provide solutions,   both   financial   and   non-financial,   to   deliver   public   services,   to   build   quality infrastructure, to catalyze markets or to improve market functions. We are able to deliver the last mile, in coordination with public development banks and in conjunction with private finance.

For  all  these  reasons,  over  the  past  5  years,  SDBs  gained  a  growing  recognition  by  the international community as  key stakeholders  to  implement  the  global  agendas  and  fill  in the urban investment gap :

-    in the Addis Ababa Action Plan, FFD3 (2015)

-    in the New Urban Agenda, Habitat III Conference (2016)

-    in the Marrakech Partnership for Global Climate Action (MPGCA), the platform of non-state actors led by COP’s high-level champions (2019)

The  Alliance  of  Latin  America  answers  the  objective  of  creating  a  Global  Alliance  of  SDBs announced during the UN Secretary General Climate Action Summit in September 2019 and endorsed by the Marrakech Partnership for Global Climate Action. A first regional alliance has already been set up in Africa, the RIAFCO (reseau des institutions africaines de financement des collectivités locales), in 2014.

The Alliance of Subnational Development Banks in Latin America and the Caribbean is launched on  April  6 th 2021  as  part  of  the  Finance  in  Common  initiative  on  the  proposal of  Banco de Desenvolvimento de Minas Gerais (BDMG), the French Development Agency (AFD), the Global Fund for Cities   Development   (FMDV)  and Institute   for   Sustainable Development and International Relations (IDDRI).

All SDBs and their institutional, technical and financial partners in the region are invited to join this partnership.

The Alliance of Subnational Development Banks in Latin America and the Caribbean ambitions to strengthen  the  capacity  of  SDBs  to  broaden  and  improve  their  services  offered  to  local governments and local stakeholders to finance just local urban and territorial transitions through the 4 following objectives:

1.    Align  SDBs’  strategies,  norms,  standards,  investments  and  portfolios  with  the  2030 Agenda  and  its  Sustainable  Development  Goals  (SDGs)  and  the  Paris  Agreement  on Climate;

2.    Promote SDBs’ engagement on sustainable investments through the consolidation of portfolios of urban and territorial development projects and boost financial urban and municipal markets;

3.    Develop  strategic  spaces  for  dialogue  and  partnerships  with  development  finance institutions,  national  and  local  governments and  their  association,  and  technical  and financial partners in the region;

4.    Promote the strategic  role of  SDBs  and  the  contribution  of the  Alliance to  the  Global Agendas in international  fora, in particular with the following mechanism of the 2030 Agenda and the Paris Agreement on climate.

Through these 4 objectives, the Alliance ambitions to strengthen SDBs in their mission of:

-     Policy Makers: through their strategies, standards and operating procedures and as implementing institutions of national policies on urban development, SDBs will enhance their capacity to contribute to develop and drive national policies aligned with the goals of the global agendas.

-     Market Makers: SDBs will enhance their capacity to contribute to consolidate the local  and  urban  financial  markets,  by developing  an enabling  environment  for urban  investment,  improving  local  capacities  to  formulate  investment  worthy projects, developing a strong pipeline of projects, notably in support of urban and rural development, local economic development and SMEs, broadening sources of  funding,  encouraging  blended  finance  and  partnering  with  international, national and private financial institutions.

1.   We commit to engage in a multi-stakeholder platform to create dialogues between SDBs, national  and  local  governments,  DFIs,  the  private  sector  focused  on  increasing  our capacity to finance sustainable investments through innovative financing instruments and  to  support  the  structuring  of  sustainable  projects  initiated  by  local  and  regional governments.

2.   We commit to participate in and organize regional trainings, technical and institutional co-operation between peers, and with institutional and financial partners, and to develop technical assistance programmes supported by DFIs.

3.   We will participate in studies and data bases on inspiring and innovative models, factors of success

4.   We  will reporton the progress  made  and  promote  the  Alliance  at  international conferencesList of signatories (SDBs)