DEVELOPMENT FINANCE INSTITUTIONS AND GREEN TRANSITION: CROSS-COUNTRY EVIDENCE ON CLIMATE-RESILIENT GROWTH AND REGIONAL SPILLOVERS

Abstract

DFIs are now better placed to become drivers of climate-resilient development and there are questions about whether concessional and blended finance can deliver sustainable results in fragile, transboundary settings. This paper evaluates five projects supported by DFI in the Niger River Basin through a mixed-method design incorporating both process tracing and conjunctural causality research. The results demonstrate that concessional finance lowers risk and mobilizes private co-finance, and resilience outcomes are achieved only when such finance is institutionalized, combined with strong governance conditionalities, climate-proofed project design, and regional integration. Evidence in projects including the Zungeru Hydropower Plant (Nigeria) and the CLSG Transmission Line illustrates how this conjunctural set produces not only direct adaptation consequences, including fewer blackouts, better irrigation, and livelihood improvements, but also systemic spillovers through the West African Power Pool. The disputed Fomi Dam, on the other hand, points to the limits of concessionality when institutional credibility is lacking and adaptive safeguards are not in place. The results challenge linear explanations of development finance in that the catalytic role of DFIs depends on the co-existence of financial, institutional and regional complementarities. The research adds to theory through promoting a conjunctural causality model of DFIs evaluation and to practice through a roadmap of embedding governance, climate-proofing and integration in future financing of green transitions.