AFRODAD is hosting a webinar to discuss and validate the briefing paper on “Evaluating the Development Finance Landscape in Africa”. The webinar will assess the new approaches that are being adopted to development financing in Africa including the opportunities and challenges that they bring. It is expected to increase awareness on the Landscape of Development Finance in Africa and how it is evolving, and how the new approaches can be utilised to cover the developmental gap in Africa.

The specific objectives are to:

1. Analyse the development finance process and it’s potential to provide sufficient resources to finance development in Africa.
2. Track the various forms of development finance flows in Africa and their public debt implications (Emphasis should be made on making a comparative analysis between traditional lenders (WBG) and emerging (BRICS).
3. Assess the allocation of special drawing rights aimed at ameliorating debt challenges emanating from development finance.
4. To produce a regional analytic briefing paper that can be used as a policy advocacy tool to reform the development finance architecture

Date and Time of the webinar

Tuesday 01 November 2022, from 11:00AM to 12:30PM Harare, Pretoria Time.

REGISTER HERE

Background

Africa has major development aspirations in the broader context of a global and continental economic development agenda. This in turn calls for substantial financial resources at a time when the global development finance landscape is changing, from a model centered on official development assistance (ODA) and the coverage of remaining financing needs through external debt, to a framework with greater emphasis on the mobilisation of domestic resources. Hence, access to finance is critical to accelerating growth and development in Africa.

Development financing for economic growth and poverty reduction is one of the challenges facing the least developed countries (LDCs), and it is worsened by the inability of domestic resource to meet the financing requirements, such that these countries have resorted to external sources to finance development projects and social programs. Facing constraints on mobilising domestic resources and fiscal space, while recognising the importance of investment in infrastructure to help their economies grow, governments are increasingly turning to the private sector as an alternative additional source of funding to meet the funding gap. The rationale for Public Private Partnerships (PPPs) is mainly based on recourses mobilization as they are a preferred option when institutional failures exist that derail the delivery of goods and services with net development impact as they help in mobilizing additional resources that enable execution of large public programs.

The adoption of two important United Nations resolutions, the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda marked a milestone in terms of setting the international agenda for development finance in the years to come. The 2030 Agenda for Sustainable Development sets the Sustainable Development Goals that countries aspire to achieve in the next 15 years, and the Addis Ababa Action Agenda, sets the agenda and means of implementation for development finance. Both resolutions contain interrelated goals and commitments on sustainable financing for development, which have a bearing on Africa’s development. These resolutions reflect a shift in emphasis from global development finance based on a model predominantly centred on ODA to a new global framework that places greater importance on domestic sources of finance, while maintaining public finance as a fundamental basis for achieving the Sustainable Development Goals. This poses an important financing challenge for African Governments as it is estimated by various sources that the required investment to finance the Goals in Africa could amount to between $600 billion and $1.2 trillion per year. Africa’s public budgetary resources are inadequate to address this need, thus, there is need to adopt new approaches to development finance in Africa.

With financial equity markets being largely underdeveloped in Africa, it entails that the source of capital from domestic equity markets, for firms that seek funding for infrastructure development is limited. Consequently, there is the need for DFIs to fund for development in Africa because their main objective is represented by a policy mandate to foster economic development in the jurisdictions in which they operate. It is presumed that African DFIs can make an important contribution to lengthen maturities in the financial sector and mobilize resources for underserved segments of the economy. Increasing attention is being placed on understanding the spillover effects of DFI investment on the local economy and the contribution of this to economic transformation, which is defined as a long-term process of shifting capital and labor from low productivity to high productivity activities, both within and between sectors

With the continued need for new approaches to development financing in Africa, the role of PPPs cannot be understated. There has been a shift whereby PPPs approach is being embraced due to their purported advantages in off-budget funding, anticipated efficiency gains, and improved service quality. In African, the African Development Bank Group (AfDB) has been involved in supporting PPPs, serving as an important backer of future PPP projects to give potential investors confidence that PPPs remain a viable platform in Africa. Furthermore, the World Bank Group in has also expanded its assistance to developing countries in improving access to infrastructure and basic services through PPPs because they have the potential to close the infrastructure gap by leveraging scarce public funding and introducing private sector technology and innovation to provide better quality public services through improved operational efficiency. Given this crucial role that the envisaged PPPs are expected to play in resuscitating the African economy, it is of paramount importance that a detailed focus on the scope for applying PPPs in the region be done. Particularly, it is important to outline the current status of PPPs adoption in the region, paying particular attention to current projects, challenges and success stories that can be replicated across the region.