One of the key drivers of growth and development in emerging markets is the private sector. Urbanisation comes with a growing private sector of SMEs and private firms providing services to the general public, industries and the public sector. Capital investment is key in these emerging urban economies and the International Finance Corporation (IFC), part of the World Bank Group has committed major investments in “diverse sectors of the Kenyan economy”. “Kenyan firms are increasingly taking debt and equity investments from the IFC and other global financiers, including European Investment Bank (EIB), Agence Française de Développement (AFD), Proparco and DEG to compensate for the limited funding opportunities in local capital markets.” According to Business Daily the global fund’s latest investment commitments include a Sh15.2 billion loan to Co-op Bank and a Sh2.7 billion debt and equity investment in a hospital to be built on Nairobi’s Kiambu Road. The financier says it intends to provide $22 million (Sh2.2 billion) in equity and $5 million (Sh505 million) in debt to an investment vehicle that is building the hospital. Owners of the hospital have acquired three acres on Kiambu Road for the facility.
Footage: Rogier van den Berg
From the World Bank: “A high-profile panel on maximizing finance for development, with Dr. Kim, President Kagame of Rwanda, and the CEOs of Standard Chartered, the NZ Super Fund, and the Housing Development Finance Corporation (HDFC) of India, was held at Annual Meetings. Key takeaways follow:
President Kagame pointed out that the prosperity Rwanda needs cannot come from just the public or the private sector alone, and noted that only when they work together can they maximize finance for development.
Renu Sud Karnad of HDFC, agreed that the regulatory framework is often an obstacle for private investment. She explained that IFC was a founding shareholder of HDFC, and it was a leap of a faith as HDFC had no framework when they started. Subsequently, HDFC has built the housing finance market in India and helped create housing industry standards and regulations.
Adrian Orr of NZ Super Fund, indicated that there’s a “wall” of money that wants to get into “frontier” markets, but the two can’t meet at the moment. He applauded the World Bank Group’s leadership in acting as a clearinghouse for investment opportunities and in trying to stabilize regulatory frameworks and standardize the investment procurement framework.
Bill Winters said that Standard Chartered, an investment bank founded in Africa, the Middle East and Asia, is focused on creating the facility to allow underlying businesses to grow and that their value is in catalyzing or bridging the portion of capital that allows an unfinanceable project to get financed.
Dr. Kim highlighted the imperative of maximizing finance to provide the crucial resources needed to finance the SDGs: Maximizing finance is the only chance that we have to provide enough resources to invest in infrastructure, transport, ICT, education and health and to make sure that everyone in the developing world can compete in the digital economy of the future.”
Picture: Outskirts of Addis Ababa, Rogier van den Berg