Blended Finance: A Strategic Partnership for Growth
On Tuesday, July 14, 2020, Corporate Council on Africa hosted the first session in its Africa Finance Forum webinar series titled, Blended Finance: Catalyst for Africa’s Post COVID-19 Economic Recovery. The panel discussion was moderated by Carolyn Campbell, COO and Member of the Executive Committee at Emerging Capital Partners.
Dr. Hippolyte Fofack, Chief Economist at the African Export–Import Bank began the discussion by analyzing the role of blended finance in the context of COVID-19. He noted that "blended finance...will become even more important not only to close the financing gap but also as an incentive to shift the location of capital from traditional sectors.” Dr. Fofack underscored the need to align public, concessional, and private sectors to eliminate investment project delays in Africa. He encouraged U.S. and African public and private sectors to fund skills development alongside short-term economic responses on the continent to “create conditions for trade and growth to resume” post-COVID-19. He gave the African Export-Import Bank’s $3 billion Pandemic Trade Impact Mitigation Facility (PATIMFA) as an example that has leveraged $15 billion in the needs of financing.
Chinelo Anohu, Senior Director of Africa Investment Forum (AIF), African Development Bank, spoke on AIF as a catalyst for blended finance. One of AIF’s goals is “to speed up blended finance and ensure that investors are matched to the products that satisfy their own personal pursuit.” Investments made through AIF are at a minimum, $30 million. However, AIF is developing a fund specifically for SMEs, which receive investments of less than $30 million, so their owners can receive education in resource access and investment use.
Anthony Welcher, Vice President, Department of Compact Operations, Millennium Challenge Corporation, focused on the importance of Development Finance Institutions alongside African governments in creating financing structures favorable to private sector investment and human development. Mr. Welcher highlighted MCC’s scorecards and compact projects which engage governments and local leaders in sustainable projects that result in increased capacity and improved investment environments. As shown in their compact with Malawi, MCC leveraged their relationship with the public-private infrastructure advisory facility to finance various sectors which overall increased Malawi’s investment rating.
Jake Cusack, Co-founder and Managing Partner, The CrossBoundary Group highlighted blended finance as an incentive to accelerate sector development through investment. He referenced CrossBoundary’s work, in partnership with USAID, in creating the Mali Investment Facilitation Platform where they unlocked $50 million of capital into different investments by providing private advisory services to companies and investors. Mr. Cusack views digital services, such as fintech, energy, and infrastructure as key areas on the continent with a great opportunity for blended finance. According to Mr. Cusack, barriers to blended finance access for companies in Africa include lack of preparation and bankability. He further stressed the importance that blended finance capital not only generates financial returns but also sustainable impacts.
Florie Liser, President and CEO of Corporate Council on Africa (CCA), closed out the event by declaring CCA’s continued dedication to serving as a platform to support the implementation of blended finance initiatives in Africa.