The African Development Bank (AfDB) and other Multilateral Development Banks (MDBs) have published a harmonised framework for assessing additionality in their respective private sector operations
The new framework supports the MDBs’ ongoing commitment towards achieving the UN Sustainable Development Goals (SDGs) and the ‘Billions to Trillions’ agenda.
The concept of additionality captures the clear and simple premise that MDBs should make a contribution beyond what is available in the market and not crowd out the private sector. Additionality is one of five common principles endorsed by MDBs in 2012 to guide their engagement with the private sector to achieve development goals, as defined in the MDB principles to support sustainable private sector operations.
These principles were also reinforced in the 2013 DFI guidance for using investment concessional finance in private sector operations and the 2017 enhanced principles for blended finance.
The MDBs’ harmonised framework for additionality in private sector operations provides concrete guidance on the application of the additionality principle. It develops and articulates more detail on the principle of additionality, presents common definitions of financial and non-financial additionality, prescribes guidance on a common approach to the governance of additionality, and provides examples of types of evidence that help demonstrate the presence of additionality.
While recognising the assessment of additionality is context‑specific for each project within the boundaries of each MDB’s mandate, a harmonised approach allows for a more effective and efficient conversation with shareholders on where and how to intervene. This will ensure that MDBs’ resources are used in the most catalytic manner possible and that they are directed where they are most needed, ultimately supporting the delivery of the 2030 agenda for sustainable development.
