MFW4A's African Pension Funds Roundtable

Unlocking Domestic Institutional Capital in Support of AfDB's High 5 Agenda

African Development Bank (AfDB) is scaling up its efforts to leverage financial resources from the private sector to help the continent meet its development needs. It is calculated that there is a need of USD 170 billion per annum to finance the Bank’s High 5s.2 The overall resourcing needs across the High5s over 2016-2025 are estimated at over USD 1 trillion. The Bank has committed to mobilize over USD 269 billion during the same period. In order to finance this ambitious agenda, a greatly enhanced role for institutional investors such as pension funds (both global and domestic) will be critical, as they can play a key role to bridge the existing gap. In this context, Making Finance Work for Africa (MFW4A), the AfDB’s Financial Sector Development Department (PIFD), and the Strategy and Operational Policy Department (SNSP) in partnership with African Pension Funds Network (APFN), organized a two-day roundtable on the theme “Unlocking Domestic Institutional Capital in Support of the AfDB’s High 5” on 7-8 November 2017 in Abidjan. Among the participants were representatives from African pension funds and regulators, industry experts and staff members from the Bank’s key departments. The key objectives of the event were to: (i) create a common understanding of the opportunities and challenges facing Africa’s domestic institutional investors; (ii) identify and discuss the key drivers behind investment decisions of African institutional investors, in terms of risk appetite, African pension assets and sector; (iii) analyze the demand and interest of the funds to collaborate with the Bank and (iv) explore how the Bank can work with domestic institutional investors to leverage investment in support of the Bank’s High5s agenda. The event was delivered over six core sessions, which ranged from overview of the pension fund’s industry landscape and trends to sector specific investment opportunities. The participants deliberated on a range of different issues and themes including:

• African pension funds industry landscape
  
• Opportunities and challenges in different sectors (private equity, industry, agriculture, energy and transport)
  
• Regulatory frameworks and investment constraints
• Collaboration opportunities between the Bank and pension funds (investment vehicles, co-investment platforms and risk mitigation instruments)
• Knowledge and experience exchange, capacity-building

Day 1: African Pension Funds Landscape: Opportunities and Challenges The first day focused on setting the scene for discussions by highlighting the industry trends, regulation and the evolution of industry portfolios. The scope of the discussions was on identifying the opportunities and challenges that the pension funds face and the need for these resources to be channeled to address Africa’s development needs. In addition, the participants discussed the investors’ risk perception, the importance of diversification to manage risks, the role of proactive asset management and the need for strengthened capacity building within different stakeholder groups. Day 2: Leveraging financial resources for AfDB’s High5 agenda The second day of the roundtable focused on discussing the potential for collaboration between pension funds and the Bank in the following key areas aligned with the Bank’s High5 agenda: private sector and industrialization, agriculture, energy and transport. The participants shared their views on how the Bank could best support the pension funds in order to leverage additional resources for Africa’s development. The main take-aways from the event were presented in form of “proposed solutions”. A series of actions with concrete implementation measures were identified to be carried out with an indicative timeline by a task force MFW4A will convene with the support of african pension funds, regulators and AfDB's specialists. Download
HERE the full proceedings report of the roundtable.