Development finance institutions and the effectiveness of development finance for African countries
Essien, Emmanual Bassey
Unlocking the potential for growth at African Development Finance Institutions has become imperative, with the financial crisis of 2007/2009 having generated new discussions on the role of the state in the economy, most especially in the financial sphere (Calice, 2013). This raises new interests among decisionmakers involved in development finance institutions (DFIs), according to the World Bank (2013). It is noteworthy that DFIs played a very important role in avoiding a drastic credit crisis in many developing economics, by intensifying their activities, in terms of deleveraging and increased risk avoidance by private agents (Calice, 2013). The challenge at present, is the manner in which adequate use of DFIs can be guaranteed, to safeguard against the deployment of some costly policy instruments, while ensuring they play a dynamic role in providing access to finance (Gutierrez, Rudolph, Homa and Blanco, 2011). With prevalent market failures in the provision of finance for infrastructure, agriculture, and housing, as well as small and medium enterprise (SME) finance, this is specifically relevant for Africa, and provides a strong rationale for DFIs to play an active developmental role. The study findings will help countries in Africa and finance professionals in investment and development banking, to improve their application of policies and procedures, in order to achieve the mission and vision of the proposed developmental projects. In addition, the research findings will serve as good reference material for scholars studying development finance, while the longterm benefit will result in assisting Investment bankers, DFIs, Donors, and individuals, as well as governmental institutions, to operate optimally in providing services to their customers more effectively. Although much has been done towards improving knowledge about African DFIs, to provide evidence on key areas to target., more research is, however, still needed (Calice, 2013). The aim of this study, therefore, is the analysis and evaluation of the perceived or real problem(s) associated with the effectiveness of development banks for African countries. In other words, to explore a comprehensive assessment of the development effectiveness of African DFIs to measure public policy performance and how it can enhance development financing. Both qualitative and quantitative methods of data collection were employed, to critically evaluate the development effectiveness of African Development Financial Institutions. Primary data, collected using online questionnaires, came from selected DFIs in the headquartered, corporate business environment in Johannesburg, South Africa and Lagos, Nigeria. A well-functioning, efficient and effective, international development financing system is essential for: global poverty reduction; improving living standards in developing countries; reducing worldwide inequalities; and for achieving the Millennium Development Goals (MDG), with feedback from respondents of this study indicating that much has been done by DFIs in Africa. The findings, indicate potential problem areas, with regards to environmental issues and their handling, as well as there being no proper stakeholders’ needs alignment, which could be due to collaboration issues, and/ or lack of training and experience.
Research Thesis being in partial submission for the degree of Master of Management in Finance and Investments at the University of Witwatersrand.
Essien, Emmanual Bassey (2017) Development finance institutions and the effectiveness of development finance for African countries, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/23682>