Blended Finance 2.0: Mobilizing Commercial Capital

AFF Day 3

On Tuesday, July 28, 2020, Corporate Council on Africa (CCA) hosted the third and final session of the webinar series on Blended Finance: Catalyst for Africa’s Post COVID-19 Economic Recovery. Today’s webinar entitled Blended Finance 2.0: Mobilizing Commercial Capital was moderated by Peter Sullivan, Managing Director, Head of Public Sector Africa at Citi.

Mr. Sullivan opened the discussion by stating that public-private capital mobilization through blended finance is an effective way to address the social and economic displacement resulting from the COVID-19 pandemic.

Donna Sims Wilson, COO at Kah Capital Management, highlighted her work for MiDA, a partnership between National Association of Securities Professionals and USAID. MiDA is USAID’s solution for meeting the potential for investment in African infrastructure and has facilitated over half a billion dollars in U.S. investments in Africa. Ms. Wilson identified a lack of de-risking during project implementation as the key bottleneck for private investment in infrastructure. She emphasized the use of fund managers and streamlined blended finance models as ways to make implementation more efficient and appear less risky.

Olivier Eweck, Head of Sub Saharan Africa, Public Sector, Global Corporate Bank at JP Morgan Chase & Co., views blended finance as an opportunity for Africans to benefit more from investment on the continent. He argued that if African businesses can use blended finance models and improve bankability, they will receive more investments that provide 2-way incentives. Mr. Eweck also discussed how risk is often mispriced in Africa due to a lack of familiarity with the continent and biases fueled by the media. He believes commercial banks like JP Morgan Chase & Co. can mitigate this problem by providing structure to blended finance models and encouraging other financial organizations to provide guarantees along with funding.

Samalia Zubairu, President and CEO of the Africa Finance Corporation (AFC) stated African countries must acknowledge risk perceptions, de-risk, and redistribute risk to relevant stakeholders that can manage it. AFC works with insurance companies, commercial banks, and investors to redistribute risk to get additional capital for projects. In leveraging blended finance in their hydroelectric project in Cameroon, AFC received a partial risk guarantee from the World Bank which it leveraged to get local currency financing for the project. In his closing, Mr. Zubairu urged leaders on the continent to take advantage of the disruption in the global supply chain and create more supply centers to add value to the continent's resources and create jobs.

Florie Liser, President and CEO, CCA, closed the panel by reaffirming CCA’s commitment to change Africa’s risk profile and attract diverse sources of commercial capital into the continent.