The role of Subnational Development Banks in financing an urban and territorial resilient post-covid recovery

This position paper is a contribution of the Alliance of Subnational Development Banks-SDBs in Latin America and the Caribbean to the Second edition of the Finance in Common Summit. It highlights the strategic role of Subnational Development Banks - Public banks with the mandate to finance local governments and stakeholders – to finance a resilient post-covid recovery at the local level.

• As professional intermediaries, SDBs, acting as “last-mile banks” demonstrated their critical role to channel recovery funding to local actors and to close the subnational financial gap.
• Their knowledge of local contexts - and particularly of local governments - and ability to lend in local currency, as well as to support structuring pipelines of local projects, provides them with a strategic added value in partnering with local and national governments, as well as with Development Finance Institutions to finance local sustainable development.
• SDBs can act as focal points for local financing, pooling the demand for local projects and matching them with investments from public and private resources. They can act as “project takers,” as well as “market and policy makers” to structure subnational financial markets and align local development with the Global agenda.

The Alliance of SDBs in Latin America and the Caribbean was launched in April 2021, following the first edition of the Finance in common Summit. This multi-stakeholder alliance gathering SDBs and their institutional and financial partners aims to strengthen the capacity of SDBs to broaden and improve their services offered to local governments and stakeholders and to consolidate portfolios of local projects to finance just local urban and territorial transitions.