G20 Compact with Africa (CwA) Peer-learning Seminar to focus on Blended Finance

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The African Center for Economic Transformation (ACET) and the Government of Côte d’Ivoire will host a Compact with Africa (CwA) peer-learning seminar on blended finance in Abidjan, Cote d’Ivoire on September 12.

The peer-learning event is expected to bring stakeholders – government, private sector and development partners – together around strengthening the local dimension of blended finance and will provide an opportunity for CwA countries to learn from other countries’ good practice while discussing how blended finance can be further improved. The event will also be attended by development finance institutions, multilateral institutions and representatives of G20 countries as well as CwA government officials.

Mobilising additional funds from the private sector is critical to meeting the financing needs of the Sustainable Development Goals (SDGs) and according to the United Nations, developing countries require an investment of approximately USD 4.5 trillion a year between 2015 and 2030 to achieve the SDGs, leaving an annual investment gap in the critical sectors of about USD 3.1 trillion.

In Africa, particularly in the CwA countries, financing infrastructure development is of key importance to supporting economic growth, which is only possible with appropriate investments. Developing additional and alternative sources of financing beyond traditional instruments is therefore necessary to meet the financing gap in many countries.

The mobilisation of large-scale capital by improving the risk-return profile of investments, especially for investment-heavy sectors such as power, renewable energy, telecommunications, water and agribusiness, represents a key opportunity for Africa, and blended finance – defined as the strategic use of development finance for the mobilisation of additional external finance, with ‘additional finance’ referring primarily to commercial finance – has proven to be an important solution to mobilise private investments for the SDGs in developing countries.

Blended finance is also essential in helping CwA countries make progress in line with the agreed policy matrices, easing financing constraints and attracting investors from G20 countries. However, scaling up blended finance without a good understanding of a country’s specific context, including perceived risks, may not lead to optimal contributions from all financial institutions, hence leading to lower development outcomes.

The first session of the seminar will thus include presentations on the importance of blended finance, why it is particularly relevant to CwA countries and how blended finance can support Africa’s economic transformation. Other sessions will focus on the key issues related to blended finance, particularly the local context, discuss research findings including those from ACET, OECD and the MDBs, challenges DFIs face and what they are doing to address local conditions that impact their ability to provide financing. Country case presentations from Senegal and

Indonesia will emphasise approaches that help make blended finance work and better manage perceived risks while a panel discussion involving representatives of CwA countries, international organisations, DFIs and the private sector will address the priorities needed to increase blended finance in CwA countries.

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