African Development Finance Institutions (DFIs) have been tasked to implement policies that will enhance their rating to attract global investments with favourable terms.
This will help to support the development of the continent.
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who made the call at the 2022 annual General Assembly of the Association of African Development Finance Institutions (AADFI) in Accra on May 24, 2022, on the theme: "Unlocking Innovative resources for development finance: Agenda for African DFIs", observed that DFIs all over the world complement government efforts through investments in critical sectors that promoted growth and development.
He noted that for effective financing of Africa's development in the face of rising inflation and interest rates, soaring sovereign debt levels and low domestic revenue generation, African DFIs should seek to identify and unlock innovative resources by expanding beyond the current sources of funds.
In a keynote address read on his behalf by the Head of Banking Supervision Department of the BoG, Osei Gyasi, the Governor said in spite of the large number of Africa DFIs, access to global debt capital and loan markets continue to be dominated by a few leading ones due to innovations in credit enhancements and structuring.
The African DFIs, he said, needed to create a pool of bankable projects to attract private capital.
McKinney and company, he said, has estimated that Africa's annual investment in power infrastructure would reach about $55 billion by 2025 from $33 billion in 2015.
Over the same period, annual investment in transport infrastructure, he added, would also need to increase to about $45 billion from $20 billion.
"Major investment in water and telecoms infrastructure would be required. In total, it is estimated that developing countries would need to invest more than $2 trillion a year in infrastructure to keep pace with projected gross domestic product (GDP) growth over the next 15 years", he said.
These, he said, were huge investment requirements and, therefore, to close the financial gap, governments in developing countries needed to partner DFIs to unlock private-sector infrastructure financing on a large scale.
Again, he noted that most African countries were faced with weak domestic revenue mobilisation and severe financing constraints, making it difficult to execute essential developmental projects.
The onus on African DFIs, therefore, Dr Addison noted, was to de-risk development projects and make them attractive to investors.
"In some instances, DFIs must continue to widen and diversify the scope of activities to cater for new financing needs in growth sectors, such as information and communication technology (ICT) and biotechnology".
The Managing Director of National Investment Bank (NIB), Samuel Sarpong, said the continent has, over the years, made some strides in the area of banking and finance, agriculture, education, health, infrastructure development, all geared toward lifting Africa from the shackles of poverty.
He, however, noted that in terms of industrialisation, the continent has fallen short.
The Deputy Minister of Finance, Dr John Kumah, disclosed that as part of government's effort to restore economic stability and improve structural resilience, the Development Bank Ghana (DBG) has been established based on a new thinking of development finance which reflected the lessons from past experiences and current international best practices of corporate governance and sound business operations.