What are the opportunities and relevant approaches for DFIs to contribute to the development and strengthening of the financial sector to unleash economic growth?
In frontier markets, there is huge potential in financial sectors though they are currently often underdeveloped. It means businesses and individuals can lack access to credit and, when loans are available, they are usually short-term and concentrated on the trading and services industries. Developing financial sectors is a crucial step in increasing access to finance and enabling companies to grow.
Frontier markets are, by their very nature, deemed high risk, and development finance institutions (DFIs) have a difficult job of balancing their development impact with their responsibilities to preserve value for taxpayers. This paper highlights opportunities and relevant approaches for DFIs to contribute to the development and strengthening of the financial sector to unleash economic growth.
This publication – the fifth in our Foundations of Growth series – highlights opportunities and approaches for development finance institutions (DFIs) and impact investors to contribute to the financial sector in frontier markets and support economic growth.
The Foundations of Growth series of publications shares the trends, lessons, challenges, and opportunities of investing in frontier markets in Africa. The series is aimed at helping development finance institutions, donors and impact investors develop their strategies for operating in these markets.
ARIA, a joint initiative we began with BII (with Proparco now onboarded into the intitiative) aims to address systemic barriers in frontier markets in Africa. Market creation is a pivotal ambition in our 2030 Pioneer, Develop, Scale strategy. It aims to generate more investment opportunities for development banks and other large-impact investors seeking to contribute to private sector development in the markets and sectors that it currently cannot reach. For more on our market creation approach, click here.