Switzerland's participation in the multilateral development banks
Switzerland is a member of various multilateral organisations. Apart from the multilateral development banks (MDBs), these also include several UN organisations and global funds. As a member of the MDBs, Switzerland has its own staff in the headquarters of the banks. These on-site offices are called Executive Director's Offices (EDOs).
At the end of each year, the Swiss representatives of the EDOs meet with the competent teams of the SECO, the Swiss Agency for Development and Cooperation and other federal agencies in Bern. Switzerland wants to actively shape the strategic and institutional orientation as well as the operational activities of the MDBs. The EDO staff is close to the decision-making in the banks' headquarters and represents Switzerland on the Boards of Directors of the MDBs (for more information see below «Swiss representation on Boards of Governors and Directors»).
This annual meeting in Bern is about sharing the experiences of the past year, defining priorities for the coming one and coordinating.
Through active participation in the MDBs’ governing bodies, Switzerland is helping to shape international cooperation.
Swiss representation on Boards of Governors and Directors
Due to the high number of members, each country cannot be individually represented on the Board of Directors of the MDBs. Member states are therefore divided into constituencies, each of which has an Executive Director representing the entire group on the Board. The Director’s office is called EDO. In the World Bank and the EBRD, Swiss Directors lead a constituency that includes a further eight and seven countries respectively. In the regional banks, Switzerland alternates with other members in leading a constituency. The Board of Directors is the second-highest body and is responsible for the Bank’s financing, functioning and operations.
The highest decision-making body of an MDB is its Board of Governors, which rules on major policy and strategic issues. Each member state is represented on the Board of Governors. At the World Bank, the EBRD and the AIIB, the Head of the Federal Department of Economic Affairs, Education and Research (EAER) acts as the Swiss Governor. At the lower level, the EAER also represents Switzerland on the Boards of Governors of the regional development banks.
Switzerland is a member of the following MDBs, in which it participates in the governing bodies:
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It consists of five institutions with a common commitment to reducing poverty, increasing shared prosperity, and stimulating sustainable development.
Switzerland is represented by a Director in the Board of Directors. In addition to the institutional cooperation on the Board of Directors, Switzerland and the WBG also cooperate on operational interventions.
The WBG consists of these institutions:
International Bank for Reconstruction and Development (IBRD)
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Centre for Settlement of Investment Disputes (ICSID)
In the framework of the 2030 Agenda for Sustainable Development, the WBG has set two goals:
End extreme poverty by decreasing the percentage of people living on less than US$1.90 a day to no more than 3 percent; and
Promote shared prosperity by fostering the income growth of the bottom 40 percent for every country.
The EBRD seeks to develop and strengthen the private sector in the former east bloc countries and also, since 2012, the countries on Europe’s southernmost border. It does this by supporting businesses in a wide variety of sectors by way of loans, guarantees and investing in equity capital. One-third of the EBRD’s activities are devoted to reducing the carbon footprint of recipient countries.
Switzerland is represented by a Director in the Board of Directors. In addition to the institutional cooperation on the Board of Directors, Switzerland and the EBRD also cooperate on operational interventions. Switzerland’s main focus is on:
Infrastructure projects in relation to water and waste management
Projects for strengthening small and medium-sized enterprises and local financial institutions
The main aim of the AfDB is to promote sustainable economic development and social progress in African member states. In doing so, it strives to alleviate poverty.
With the African Development Fund (AfDF), the AfDB has a separate lending window that grants the poorest developing countries preferential loans and non-repayable grants.
Switzerland shares a constituency with Germany, Portugal and Luxembourg, jointly holding one seat on the Board of Directors. In addition to its institutional work on the Board of Directors, Switzerland is also committed to achieving the following operational goals:
Climate-resilient and eco-friendly growth
Private sector development
Greater concentration on fragile states and conflict contexts
The AsDB was set up to support the poorer countries of the Asia and Pacific region and improve living conditions there. It aims to achieve integrated and environmentally sound growth as well as regional cooperation and integration.
With the Asian Development Fund (AsDF), the AsDB has a separate lending window that provides the poorest developing countries non-repayable grants.
Switzerland shares a constituency with Belgium, France, Italy, Portugal and Spain, jointly holding one seat on the Board of Directors. In addition to the institutional cooperation on the Board of Directors, Switzerland and the AsDB also cooperate on operational interventions. Switzerland’s medium-term objectives are as follows:
strengthening the quality and sustainability of AsDB’s operations;
increasing AsDB’s capacity to support renewable energy and energy efficiency, disaster risk management and climate resilient urban development; and
promoting conflict-sensitivity in AsDB’s operations and policies.Increasing effectiveness, especially in the water sector.
The AIIB is a regional financial institution. It aims to improve social and economic outcomes in Asia with a focus on investing in sustainable infrastructure projects. It was set up in 2015, on an initiative by China. Switzerland joined the AIIB in 2016 and is represented by a Director in the Board of Directors.
The AIIB has 92 member countries (47 regional and 45 non-regional states) and 14 prospective member countries
The AIIB’s activities focus on sustainable infrastructure projects in Asia in transportation, energy and water supply, as well as on urban development and digitalisation. It utilises its own resources and mobilises public capital and private investors. The Bank grants loans, issues guarantees and invests in equity capital.
The IDB is the largest multilateral source of financing for development projects in Latin America and the Caribbean (LAC). It works to reduce poverty and social inequalities in the LAC region and to promote sustainable economic growth.
The IDB Group also includes the following organisations focusing on private sector development:
IDB Invest: Inter-American Investment Corporation (IIC): support for small and medium-sized enterprises
IDB Lab: Multilateral Investment Fund (MIF): technical assistance, guarantees and credits to micro and small enterprises
In addition to the institutional cooperation on the Board of Directors, Switzerland and the IDB also cooperate on operational interventions. Switzerland focuses in particular on the following goals:
Strengthening the IDB’s capacities in the water sector and urbanisation
Strengthening the IDB’s capacities in the field of reducing poverty with a particular focus on inequalities, fragility and gender issues
The GCF is a global climate fund created to respond to climate change by investing in low-emission and climate-resilient development. It takes into account the needs of developing countries that are particularly vulnerable to the impacts of climate change.
In allocating its financial resources, the Fund seeks to achieve a funding balance between mitigation and adaptation. In addition, it strives to enhance the involvement of the private sector in order to mobilise additional financing.
Switzerland shares a seat in the GCF Board with Finland whereby the Constituency also includes Hungary, Monaco and Liechtenstein. It shares the objectives and principles of the GCF and attaches particular importance to the following key priorities:
Increased investment in low-emission energy and enhanced support for sustainable land use and forest management
Strengthened adaptive capacity and resilience of the most vulnerable countries and communities
Enhancing the involvement of the private sector in order to mobilise financial aid to support the climate policy of developing countries
Ensuring transparent and inclusive procedures and the effective use of funding
Improving complementarity and coherence with other climate finance institutions and implementing a gender-responsive approach