Evidence about the development impacts of DFIs is limited. DFIs carry out evaluations of their investments, but these are generally limited to examining direct outputs and economic impacts; comprehensive evaluation of impacts is complicated and expensive, and is very rarely undertaken. DFIs argue that financial performance and development outcomes go hand-in-hand, as financially successful projects contribute to economic growth which in turn naturally results in improved development outcomes.
Critics charge that DFIs are driven by financial returns and tend to lose sight of their development mandates, investing in locations and sectors with the greatest potential for profit rather than the greatest need for development capital. They also accuse DFIs of failing to carry out adequate evaluations of development outcomes, and in some cases engaging in tax avoidance rather than contributing to national tax revenues.
