Public Policies and Fields of Action – Infrastructure 8 October 2015Patrick Dlamini, CEO

Association of African Development Finance Institutions (AADFI) provides support to member institutions to build the capacity of

Africa’s DFI cohort

Objectives

To promote economic and social development

through cooperation

Establish a machinery for systematic interchange

Stimulate cooperation for the financing of

economic and social development

Knowledge sharing and best practice

To accelerate regional integration

Benefits

Lines of credit from development partners

Participation in meetings, symposia,

workshops and related activities

Technical assistance and capacity building

Staff exchange and secondment with

member-institutions

Dialogue with multilateral institutions

on development policies and project finance in

Africa

Established 1969, currently 81 members

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Africa’s infrastructure delivery programme needs strong institutions, new modes of finance and partnerships

SUB-SAHARAN AFRICA’S INFRASTRUCTURE LAGS

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INSTITUTIONAL WEAKNESSES

Infrastructure gaps have an impact on growth and trade within regions and across the continent.

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Institutional weaknesses limit the ability to attract FDI and manage existing projects and investments

Source: World Economic Forum: Africa Competitiveness Report 2015

AADFI through its partnerships has prepared member DFIs to play a significant role in Africa’s sustainable development programmes by aligning them to continental and global best practice

• Adoption of International Financial Reporting Standards (IFRS) and Accounting Standards established by the Organisation for the Harmonization of Business Law in Africa (SYSCOHADA)

• Prudential Standards and Guidelines and Rating System (PSGRS) – annual process, next self-assessment process November 2015

• Development of Public Credit Guarantee Schemes for SMEs (where development really happens) • Collaboration with ADFIAP in Malaysia on seeking alternative models for financing and promoting south-

south collaboration for development

NEW OPPORTUNITIES FOR DFIs

• Crowd-in the private sector through structured and supported PPPs • Develop new products to finance infrastructure programmes that include

equity, project finance, project preparation and look at replicating models not widely used (Islamic Banking)

• Co-financing with new institutions (New Development Bank, Asian Infrastructure Investment Bank, etc.).

• Provide risk-protected post-conflict and fragile country support • Introduce innovative risk strategies to finance public goods (water,

sanitation, social infrastructure) • Innovative infrastructure initiatives – green infrastructure, shared-use

infrastructure, etc. • Lead partnerships for sustainable development• Develop equitable global, continental and regional frameworks to meet the

Sustainable Development Goals • New models of partnership to maximise limited resources for maximum

development impact

New role for Development Finance Institutions in financing sustainable infrastructure

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DBSA model

Private-sector partners

Responsiblebusiness conduct

Efficient use of financial instruments

Prevention and prosecution of illegal or unethical behaviour

Tradeable instruments and ownership structure

Professional and sustainable operations

Inclusive community engagement

Ongoing community involvement during operation

Participatory planning and low-burden construction

Risk guarantees andpolitical-risk insurances

Effective interactionwith public sector

Monitoring of political develop-ments, and advocacy strategy

Constructive communication with public agencies

Influence implementation frameworks Infrastructure Delivery Division (with govt) defines and delivers social infrastructure

projects

Frontline divisions work with PIDA, NEPAD and other partners to facilitate infrastructure

programme implementation

Project planning and preparation Integrated infrastructure planning Project preparation to move projects to bankable stage

Targeted development finance Green Fund, Jobs Fund, Global Environmental Facility

Municipal finance, project finance, syndicated finance (new products)

Monitoring and Evaluation (results focus) Increase development impact – make investments matter

Measure for results and make adjustments to drive sustainable development

International partnerships Drive continental and global infrastructure and SDG development

South-South Cooperation (AADFI), Triangular Cooperation (IDFC), B20, ALIDE, etc.

Public-Private collaborationCulture of open dialogue

Management of risk perception and return expectation

Multi-stakeholder dialogue beyond specific projects

The DBSA operational model has taken into account partners, risk mitigation and sustainable development in infrastructure financing

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in conclusion …

• To reiterate, we need strong institutions and strong partnerships• Good frameworks to support Public-Private and Public-Public Partnerships• Ethical financing for sustainable development and broad-based economic growth

BUT we also need

• Brave leaders who make the difficult decisions on how to develop new institutions • Approaches that develop the potential capacity of each institution, country and region to

become the best they can within a new global reality

We cannot follow old development finance practice in a world that is different. We need to be cognisant of those changes, the needs of our countries and the needs we endeavour to meet through financing for development.