The grey zone – Why missing data keeps the world’s poorest countries poor

Hessel Meinderts is Senior Consultant at Steward Redqueen focused on development finance. In this blog, he argues that poor and fragile countries remain underinvested because missing data makes risks, returns, and impact difficult to assess. He emphasises that tools exist to generate credible evidence, and improving measurement in these contexts should be a strategic priority for development finance.

Afghanistan, Somalia, South Sudan – open an atlas and these countries appear largely in grey, marked “no data available.” That absence is not accidental. These are among the world’s poorest and most fragile countries, with limited capacity to collect and maintain reliable statistics. However, lack of data does not just reflect poverty; it helps sustain it, creating a self-reinforcing cycle that keeps these countries excluded from global development and investment flows.

The issue sits at the heart of how risks and returns are assessed. Investors, including multilateral development banks (MDBs), development finance institutions (DFIs), and impact investors are accountable to boards and shareholders who expect clear, defensible risk–return-impact analyses. While capital is often portrayed as unwilling to take risk, the deeper issue is that many low-income and fragile contexts are effectively unknown to investors. Reliable data on firm performance, credit histories, asset quality, and climate exposure is frequently missing, outdated, or inconsistent. As investors are unable to price risk, this leads to underinvestment in Least Developed Countries (LDCs) and Low-Income Countries (LICs), alongside other key factors like conflict, political instability, and weaker rule of law.

The result is a distorted allocation of development and climate finance, where countries that are most in need of investment are excluded because they lack the resources to prove their case. As development budgets are tightening across the world, capital increasingly flows to middle-income countries and sectors where data allows risk to be analysed, benchmarked and defended internally, and development interventions offer predictable results. In 2023, European DFIs invested only 8 percent of their capital in LDCs and LICs (EDFI, 2023). 

The absence of robust climate data has for instance significantly hampered LICs in accessing financing from multilateral donors like the Green Climate Fund (GCF). Without historical data on climate impacts or baseline measurements, these countries struggle to develop the evidence-based project proposals that meet stringent funding requirements. The result is a vicious cycle where a lack of data perpetuates a lack of funding, leaving the most climate-vulnerable countries with the least capacity to respond.

Yet where data has been systematically collected, a different picture emerges. The Global Emerging Markets (GEMs) Risk Database is an initiative that pools data on credit default rates and recovery rates from defaulted projects in emerging markets. Analysis of this data reveals that lending in many developing markets carries default rates comparable to advanced economies. This demonstrates how granular evidence can replace perceived risk with observed risk, fundamentally reshaping investment decisions.

Beyond strengthening national statistical agencies, a necessary but long-term objective, there is scope for targeted interventions that generate credible evidence even in the most challenging environments.

Some of Steward Redqueen’s recent work demonstrates how meaningful evidence can be generated, often at reasonable cost, when there is willingness to adapt methods to context. Examples include an impact assessment of broadband fibre investments in DR Congo using satellite imagery, field-based primary data collection for a fund operating in a refugee-hosting area in Kenya, and survey-based analysis supporting one of the few remaining private sector development initiatives in Afghanistan.

For MDBs, DFIs and impact investors, devoting resources to improved data quality in the world’s grey zones should be seen as a strategic priority. Addressing data scarcity requires intentional action by these investors, who are uniquely positioned to act as data creators, not just capital providers. They already sit on vast amounts of portfolio and performance data that private investors cannot access individually. By aggregating, anonymising, and sharing this data they can reduce information asymmetries that markets alone will not resolve. Importantly, this is not about perfect data, but about credible, comparable evidence that allows investors to move from fear-based exclusion to informed risk-taking.

The tools are available. The question is whether there is sufficient willingness to use them to shed light on the grey.