Long-Term Finance and Capital Markets Back

Africa Long Term Finance Initiative (ALTFI)

Long-term finance (LTF) relates to funding to support productive medium- and long-term investments by enterprises, households, and governments. Long-term investment is crucial to foster productivity growth, economic diversification and Africa strcutural transformation by financing infrastructure such as power, water & sanitation, roads, and social infrastructure. Long-term capital offers the opportunity to small, medium and large firms to expand their productive capacity while allowing financing sources for construction and housing markets in light of continuing urbanization.

The Africa Long-Term Finance Initiative (ALTFI) is a joint initiative of the African Development Bank (AfDB), the Financial Sector Deepening Trust for Africa (FSDA), the German Cooperation (BMZ, implemented by GIZ), and the Making Finance Work for Africa (MFW4A) Partnership. Launched in 2017, the initiative is hosted at the AfDB in Abidjan, Côte d’Ivoire, and governed by a Steering Committee chaired by the AfDB’s Finance Vice President.

Objective and approach

The Initiative takes a comprehensive approach to LTF. The ALTFI’s overarching objective is to boost the intermediation of LTF in Africa to close the financing gap for firms, in particular SMEs, as well as for housing and infrastructure projects in Africa. This will be accomplished through a two-pronged approach aiming to improve market intelligence across Africa and providing impetus for effective reforms at the national level:

  • LTF Database and Scoreboard

The purpose of the database and scoreboard is to enhance transparency about LTF in Africa and inform policy makers, the private sector and donors about the availability of LTF across Africa. The database and scoreboard will be hosted at the AfDB and will be used to benchmark specific indicators to provide insight as to the comparative level of development of markets for long-term finance across Africa.

  • In-Country Diagnostics

Going beyond comparative data, the in-country diagnostics will provide in-depth analysis of LTF markets in individual jurisdictions. The diagnostics will compass enterprise finance with a focus on SMEs, housing finance and infrastructure finance. The intention is to reveal strengths and weaknesses in the specific country context and develop policy recommendations to improve the intermediation of LTF. The diagnostics will follow a transaction-focused, bottom-up approach working closely with private sector stakeholders to reflect their experience in servicing the market, and leverage international good practice from other developing and emerging countries in using innovative financing techniques relevant to the African context.

Highlights of activities

During the first year of operation, 2018, the LTF partners established a database and dashboard in collaboration with the AfDB's Financial Sector, Research and Statistics Departments. A first country diagnosis was carried out in Côte d'Ivoire in the second quarter of 2018. Other diagnoses are already envisaged in three African countries of the G20 Pact with Africa (CWA), including Ghana and Tunisia.

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