The Association of African Development Finance Institutions (AADFI) has stated that it invests $24 billion every year in various projects across the continent, operating at the subnational, national and regional levels.
Meanwhile, the AADFI has pledged to continue its support to African Heads of State and international organizations. According to the AADFI, it will help finance the needed transitions and transformation of African economies. In the context of the COVID-19, the Association indicated that its efforts will centre on achieving sustainable, resilient and equitable development.
Also, the Association indicated that it is willing and ready to enhance cooperation among its members to build a strong financial system. The AADFI indicated that this will be consistent with the objectives of the Paris Agreement and the UN SDGs.
Readiness to tackle climate change issues
It also highlighted its readiness in dealing with the crosscutting issues of climate and private sector involvement.
“We, as public development banks, are uniquely positioned to provide effective financing support. This includes mobilizing private investment and domestic savings. We are increasingly doing so, collectively, and today, we reaffirm our commitment to do more”.
However, the AADFI has acknowledged that it still faces some major obstacles in tackling the impacts of climate change. These Banks also face some challenges strengthening the African private sector, notably to effectively manage risks.
“We call on heads of state and international organizations to support our role in the African financial system… To provide us with the necessary means and incentives”.
These incentives, according to the AADFI, include a clearer mandate for climate and delivery on the Sustainable Development Goals. Others are additional capacity building, greater access to concessional resources, and reinforcement of capital bases.
Also, the AADFI is pleading with governments to help its members take advantage of the issuance of IMF’s special drawing rights.
Addressing financing gap in Africa
African countries are facing a huge investment gap. At the same time, they must address their debt service payments. All these factors weigh significantly on their ability to finance their development programs. As a result, the AADFI believes that development partners should enable African countries to face this debt challenge. This will help preserve financial stability on the continent.
Furthermore, the Association has welcomed the measures adopted by international partners to strengthen cooperation and partnership to “finance in common”. This, it said, will “better support Africa’s development agenda”.
Moreover, the AADFI indicated that all regions of the world have relied strongly on their local resources to develop their economies. As such, the AADFI has stressed the need to strengthen African financial institutions. It stated that, this is “a prerequisite for the success of all international measures taken to provide financing to African economies”.
Reinforcing African public institutions will lead to the emergence and strengthening of a robust local private sector. This, the AADFI said, will result in a rise in the mobilization of national, regional and international investments.
Meanwhile, there are 95 public development banks on the African continent. These banks are providing long and medium term finance to key growth-enhancing sectors such as agriculture and manufacturing.