As­mita Parshotam

Lesotho Times - - Business -

Pri­vate fi­nanciers are re­luc­tant to in­vest in poor, non-re­source-rich African coun­tries, and low-in­come coun­tries in Africa at­tract only 25 per­cent of in­vest­ment flows into Africa. Ac­cess to de­vel­op­ment fi­nance at af­ford­able rates is there­fore crit­i­cal for de­vel­op­ing coun­tries.

Un­for­tu­nately, there is a grow­ing gap be­tween the need for and the avail­abil­ity of in­fra­struc­ture fi­nanc­ing for low-in­come coun­tries.

One of the rea­sons for this is that the African De­vel­op­ment Fund, the con­ces­sional branch of the African De­vel­op­ment Bank (AFDB), is both in­suf­fi­ciently fi­nanced and un­able to en­sure the ef­fi­cient dis­burse­ment of fund­ing re­quired to meet the needs of Africa’s poor­est coun­tries.

It is there­fore crit­i­cal that fi­nanc­ing in­sti­tu­tions that pro­vide con­ces­sional funds for low in­come coun­tries, like the African De­vel­op­ment Fund, are well cap­i­talised.

Equally im­por­tant, how­ever, is that the avail­able funds should be dis­persed in a man­ner that ef­fec­tively ad­dresses the de­vel­op­ment needs of Africa’s poor­est.

The fund is re­liant on loan re­pay­ments that the bank ob­tains from African mid­dle-in­come coun­tries and con­tri­bu­tions from pre­domi- nantly de­vel­oped economies. This has meant that the in­flu­ence of de­vel­oped coun­tries on the lend­ing poli­cies of the fund is dis­pro­por­tion­ately high.

As one of few African voices at the fund’s re­plen­ish­ment meet­ing (where coun­tries pledged new fi­nances for the next three years) held last month, South Africa had an op­por­tu­nity to flag the con­cerns of low-in­come coun­tries and pro­vide im­por­tant sug­ges­tions on how the fund can im­prove its ser­vices and as­sis­tance.

As a ben­e­fi­ciary coun­try, Le­sotho was in­vited to at­tend the re­plen­ish­ment meet­ing, where it of­fered crit­i­cal in­sights into the chal-

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