A MESSAGE FROM THE MAKING FINANCE WORK FOR AFRICA PARTNERSHIP COORDINATOR
I hope this message finds you well. It is an honour for me to assume the role of the Making Finance Work for Africa (MFW4A) Partnership Coordinator having been involved in the initiative since 2013. I have always held a deep appreciation for the value of MFW4A to its donors and the African financial sector community.
Since its inception in 2007, the MFW4A Partnership has operated under the belief that financial sector development in Africa requires efficient cooperation amongst and between African governments, development partners and other African financial stakeholders in order to substantially leverage individual contributions. I am proud to say that MFW4A has remained true to its mission through these years and continues to provide a valuable platform for knowledge exchange, dialogue and advocacy to advance progress towards an innovative, sustainable, competitive and diverse African financial system.
The current global health crisis precipitated by the COVID-19 pandemic has impacted all aspects of society and the global economy. In Africa, the trajectory of COVID-19 is complex and threatens to reverse the development progress of recent years. Many countries face demand, supply and financial shocks, and have used monetary and fiscal stimulus, and financial sector interventions to cope with the economic downturn. As African governments grapple with responses to meet the needs of the pandemic, the current context calls for a deep reflection on the role of financial sector development in supporting Africa’s post-COVID-19 recovery process. At MFW4A, our immediate priority will be focused on understanding these challenges and opportunities and deriving lessons for more effective and efficient interventions.
The reality of social distancing and travel restrictions has necessitated some adjustments in our work program to ensure continuity of our operations and delivery of our objectives. Fortunately, flexibility was built into the foundation of MFW4A and we managed to deliver on most of our activities. Over the past six months, we hosted more webinars than ever before. An entire series of webinars was dedicated to understanding the implications of COVID-19 on the African financial sector. Topics such as financing SMEs, corporate governance, crisis management and DFIs responses, were tailored to meet the needs of our varied audience, and by all evidence, our participants were highly engaged.
In an effort to further inform our audience on COVID-19 responses in Africa, we have launched the African Financial Sector Responses to COVID-19 Tracker to provide a “one-stop shop” for information on all 54 countries. The list, which includes relevant national, regional, bilateral and multilateral responses to COVID-19, will be regularly updated. The Tracker currently covers 36 countries and 2 regions and will expand to include additional countries as information becomes available.
In our thematic work, there is growing evidence to suggest that the COVID-19 pandemic is disproportionally impacting the micro, small and medium-sized enterprises (MSMEs), considered the engine of economic growth but which are also particularly vulnerable to shocks. We will double-down on our efforts to promote alternative financing mechanisms such as factoring, receivable finance and crowdfunding which remains largely underdeveloped in Africa. Trade finance is another area that is expected to be negatively impacted due to the implications of the pandemic and disruptions in global supply chains across the continent. We plan to further increase our focus on this area. Together with our partners (i.e. AfDB, Afreximbank, GIZ) we will continue to improve the understanding of market dynamics and implement activities geared towards reducing the trade finance gap in Africa.
The current crisis further emphasized the importance of deepening domestic financial markets, as debt service burden surge in many African sovereigns. Unlocking domestic long-term capital for investment has long been a focus for the Partnership. This year, we are partnering with the IFC to understand how African institutional investors allocate assets under management, and their actual and perceived impediments to further diversifying their portfolios. An important part of this work involves testing market appetite for alternative asset classes such as green bonds and sukuk, with a view of informing design, and providing innovative ways to mobilize finance.
In long-term finance, the Africa Long-Term Finance Initiative, a joint initiative of the AfDB, GIZ, FSD Africa and MFW4A, continues to make headway with the imminent release of the Ghana Country Diagnostics report, in addition to the Côte d’Ivoire report which was released earlier this year. A third report focused on Ethiopia will be finalized by the end of the year. In addition to the diagnostics, an online portal will house a comprehensive array of knowledge and information on the development of long-term finance in Africa. Our hope is for the diagnostic reports and the accompanying website to play an important part in strengthening knowledge and improving the intermediation of long-term finance to close the financing gap for firms, housing, and infrastructure projects.
COVID-19 has further elevated the role of digital technologies in the financial sector. The digital infrastructure created by entities such as mobile money and fintech provides a unique opportunity to accelerate the drive towards a robust digital economy in Africa. We will continue to support efforts to promote an enabling environment for digital financial services by leveraging the Community of African Banking Supervisors (CABS). We will also work with our partners to scale-up digital payments, considered the “gateway” to other financial services, by exploring issues such as interoperability in payment systems.
We have exciting plans for the year ahead as we prepare to enter to a new strategic period. MFW4A will continue to support its members and partners in the urgent drive towards unlocking financial sector innovation and resources to shift Africa’s economy towards a more inclusive, sustainable, and climate-resilient continent. We will also introduce new topics to our work program, including integrating a gender and climate lens to all our operations. We remain committed to providing valuable resources to our members and financial sector stakeholders through high quality events, trainings and research focused on timely and relevant issues.
We look forward to your continued support and collaboration.
Stay well, stay safe.
Partnership Coordinator, MFW4A