DFIs urged to invest into development over financial returns

Chief Regional Operations Officer for African Development Bank, Dr Lufeyo Banda, urged Development Finance Institutions (DFIs) to invest their finance capital in ways that ensure development mandate takes priority over generating financial returns.

Banda in his remarks via Zoom during the opening of the Southern African Development Community (SADC) DFI Network Chief Executive Officers (CEOs) Forum in Swakopmund on Thursday, noted that the use of public money is important as it can help generate more stable, low-cost and long-term forms of finance and reduce pressures to prioritise maximising profit over the DFIs’ developmental mandate.

“If DFIs rely heavily on commercial funding, the intuitions may face similar market incentives and pressures as private institutions do, for this reason, ensuring a role for public funding will help protect the development mandate, as this may conflict with purely commercial motives.

DFIs should therefore be careful about how they raise money, as this can have a significant impact on their ability to remain true to their development mandate,” he noted.

Banda added that DFIs operational strategies should also ensure that a portion of their financing is ‘public’ in nature, which can then be complemented by private sources, principally borrowing on the capital markets.

The objective of the forum is to discuss and share experiences on how DFIs have been able to mobilise appropriately priced capital to meet their developmental mandates and close existing market gaps.

The forum hosted by Agribank, the Development Bank of Namibia, the Environmental Investment Fund of Namibia and the National Housing Enterprise, is taking place under the theme: ‘Balancing DFI developmental mandate with sustainability and is being attended by DFI CEO’s from across SADC.

Finance and Public Enterprises Deputy Minister Maureen Hinda-Mbuende emphasised the need for inward-looking in terms of how effectively and efficiently DFIs could deliver their respective mandates, while balancing with desired development impact, with the current economic challenges.

“Moreover, there is also greater consideration and action required in terms of innovative, agile and strategic alignment amongst others with the likes of other development partners, financial technology and green climate finance mechanisms, to strengthen the balancing act while executing the development mandate,” she expressed.

Source: The Namibian Press Agency

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