African financial industry players are seeking to entice the continent’s institutional investors into capital markets as foreign investors flee amidst heightened risk perception and a slowdown in global financing.
The industry stakeholders, including banking sector leaders, capital markets regulators, payment and remittance service providers, financial technology innovators, are currently gathered in Lome, Togo, to brainstorm how to attract extra financing for the continent’s private sector as traditional sources dry up.
At the two-day Africa Financial Industry Summit (Afis) organised by the International Finance Corporation (IFC) and Paris-based Pan-African media organisation Jeune Afrique, the players seek to mobilise at least $1.5 trillion in financing from new sources including institutional investors.
Beside enticing institutional investors, the conference, which is being held for the third time, also seeks to broker free movement of capital across the continent, regulatory harmony, nurturing talent for innovation, and tapping technology to boost financing for such areas as climate finance.
“Ramping up private capital mobilisation to support continental trade, energy transition, digital transformation, and MSME financing is paramount to address pressing development challenges facing Africa,” said Sérgio Pimenta, IFC’s vice president for Africa.
Aliou Maiga, IFC’s Africa regional director for financial institutions group, said by bringing nearly all financial players on the continent together, the summit seeks to “find solutions to issues that will unlock our development”.
“The question is how do you use the financial industry to be able to really solve global issues,” Maiga told The EastAfrican.
“So, my hope is that we make some progress the alignment of incentives and understanding of the vision between policymakers, regulators, and the private sector, and that, to me, is what really unlocks growth.”
The summit comes as foreign investors flee African capital markets due to a series of economic crises that have caused depreciation of African currencies and increased the risk on investing on the continent, shrinking available capital for private sector businesses and increasing the cost of credit for small firms.
With the flight of the foreign investors, who have traditionally held the most shares in African financial markets, players in the industry have been seeking alternative ways of unlocking financing for the continent, including by enticing institutional investors who have traditionally focused only on government bonds.