Closing Africas Investment Gap Innovative Financing Models Take Centre Stage At Aif 24

Despite its potential, Africa continues to grapple with a financing gap, estimated by the African Development Bank to be in the region of 200bn a year. The effects of the pandemic and the current geo-political tensions have added to the long-held misperceptions about the continent, as well as some structural challenges to make it even more challenging for most countries on the continent to access finance.

This state of affairs calls for innovation and according to Hassatou Diop NSele, the vice president for finance and chief financial officer of the African Development Bank Group, the bank is already showing the way in this regard. Speaking ahead of a panel discussion on innovative financing models at the 2024 African Investment Forum, NSele said the Bank views innovation as more than a tool, but as a necessity.

Our commitment to financial innovation is central to redefining how we mobilise resources. We, at the African Development Bank, recognise that our mandate of combating poverty and improving lives on the African continent is formidable and this is why we are not just about lending, but we are about attracting additional resources into the continent, playing a catalytic, counter-cyclical role, she said.

The Bank, NSele, said, had initiated a number of novel transactions that accounted for the continents unique circumstances while also delivering the desired results. Among these was the first synthetic securitisation transaction by a multinational development bank, which it launched in 2018 and which was well received by investors. This transaction helped to transform the risk perception of the Bank and we have first time investors who had never bought African risk taking a slice of our portfolio, she said, adding that the model had since been replicated by the Inter-American Development Bank.

The Bank was also the first multilateral development bank to undertake a hybrid capital transaction which also received an overwhelming response from the markets.