11 Dec 2019

Development Finance Institutions (DFIs) globally face a funding gap of US$ 2.5 trillion while Africa has a gap of around US$ 1.3 trillion requiring leverages in the finance sector to mobilise funds towards sustainable development goals.

In an interview on the side-lines of the Southern African leg of the Association of African Development Finance Institutions (AADFI) blended finance training held in Gaborone recently, managing director of Convergence Blending finance Africa, Ms Lade Araba said structured finance was essential to mobilising and deploying public funds to attract private investment. 

She said this after presenting a finance structure known as blended finance to DFI trainees as an approach to mobilise new sources of capital towards investable SDGs such as climate change, agriculture and green energy.

She described blended finance as a structuring approach that allowed institutions to invest alongside each other while achieving social impact, financial return or a blend of both.

Ms Araba said the blending finance approach could be used with other approaches in order to achieve high impact developments while at the same time reducing risks, so that highly transactable deals become attractive for investors. She said there was a lot of activity in blended finance which has to date transacted over 1 000 participants. 

AADFI chairperson Mr Thabo Thamane who is also the chairman of a local DFI CEDA, noted that it was important for DFIs to take advantage of structured approaches in finance systems in order to leap-frog opportunities for growth and development of SDGs.

He noted that training in blended finance came at an opportune time where DFIs need to take advantage of investment opportunities in emerging markets. ends