De-risking investments & strengthening local capital markets

Trade and Development Bank (TDB) is on a mission to evolve its strategy in unlocking domestic financing, de-risking investments, and strengthening local capital markets across Africa. In an exclusive interview with CNBC Africa's Tabitha Muthoni, Admassu Tadesse, the President of TDB, delved into the bank's approach towards driving sustainable growth and regional integration in the continent. TDB has been actively exploring the utilization of local currencies for financing where feasible, with successful issuance of local currency bonds in several countries including Tanzania, Kenya, Uganda, and the Seychelles. However, the capacity of local capital markets remains a limitation in extending tenures required for infrastructure projects. Tadesse highlighted the progress made in capital market openness but acknowledged the gradual nature of capacity building in this domain. The bank envisions a significant role in fortifying local capital markets by fostering partnerships with domestic financial institutions, thereby complementing traditional development finance models. Tadesse emphasized TDB's strategy of not only issuing local currency bonds but also investing in exchanges to spur market development. While citing South Africa's well-established exchange, he noted the ongoing developmental journey of capital markets across the continent. Amid global uncertainties, particularly in the realm of monetary policies, Tadesse expressed relief at the easing of high inflation-induced interest rates. Despite potential impacts from evolving trade policies, the current outlook appears favorable. TDB is strategically deploying mechanisms to de-risk investments and attract increased capital through public-private partnerships. Tadesse outlined the bank's proactive approach of engaging in project preparation and development through a specialized fund with a higher risk appetite, emphasizing risk-sharing and support for feasibility studies. TDB's de-risking strategies encompass participation in guarantees, equity investments alongside clients, and selective grants for blending purposes. While highlighting the bank's affinity towards green energy financing, Tadesse underscored a diverse portfolio that includes off-grid, mini-grid, and small grid projects targeting renewable energy at micro levels. The collaboration with the World Bank Group under Mission 300 signifies TDB's commitment towards electrifying millions of Africans through innovative energy solutions. With a steadfast commitment to sustainable growth and regional development, TDB's evolving strategy reflects a visionary approach towards unlocking financing opportunities, mitigating investment risks, and fortifying local capital markets to propel Africa's economic transformation.