Global Finance: Over the past four decades, how has TDB Group’s mandate and geographical footprint evolved, and what have been the most significant milestones in advancing trade, regional integration and sustainable development across member states?
Admassu Tadesse: TDB Group is an MDB that has evolved into a group with different subsidiaries and strategic business units which provide specialised financial and non-financial services across all sectors in trade and development banking, asset management, concessional and impact financing, captive insurance, and capacity building.
We were conceived 40 years ago by COMESA Member States to support the region’s economic integration and sustainable development agendas with specialised short and long-term trade and infrastructure financing. We then gradually reformed to welcome other African economies – to better capitalise on cross-country complementarities and support economies of scale. While our initial mandate to finance and foster trade, regional economic integration, and sustainable development has stayed the same, our structure, stable of vehicles and toolbox have evolved through institutional reforms and new solutions, to make sure we remain fit-for-purpose as times change.
With nearly US$ 60 billion in financing deployed over the years, we have become an important player in the African trade finance market and these days, we are focusing efforts on clean energy and cooking, trade-enabling infrastructure, and industrial capacity in sectors like agriculture, health, and structural materials like cement and steel.
GF: What are the key structural challenges that African countries face in accessing affordable, long-term capital, and why are development finance institutions (DFIs) critical in bridging this gap?
AT: Regional DFIs like TDB Group were set-up decades ago following global ones, to help bridge the financing gap and cater to Africa-specific imperatives. To do this, we catalyse global and African capital, de-risking it, and escorting it via different solutions into sustainable development initiatives.
The lack of affordable and long-term capital is indeed a core issue. Beyond perception premiums which persist even amid calm market conditions, global and African geopolitics greatly impact risk pricing and debt sustainability, with commodity price volatility and supply chain turbulence adding further pressure. This also affects our financial industry, which is already continuously working to adapt to evolving industry rules, while innovating out-of-the-box solutions to solve for the problems of scale, price and tenor, and availability of investible opportunities. That’s why we grew into a Group with different vehicles and offerings.
Structurally, while our policy makers work on improving the regulatory and policy environment to facilitate cross-border money flows, improve savings and tax revenues, and give more comfort to capital – the financial industry can work on supporting the expansion of African capital markets, help build repo markets, step-up local currency activity, innovate products, and more.
GF: How can alternative funding structures and innovative financial products help mobilize capital, attract partners and expand access to finance for both governments and the private sector in Africa, and what role do DFIs play in driving these efforts?
AT: Different types of capital and partners gravitate toward different institutional structures and products – hence our Group structure.
We have our Trade and Development Banking SBU, which offers bilateral and syndicated short-term trade and long-term project finance, through direct debt or equity financing, credit enhancement, and advisory and agency services.
We have our Trade and Development Fund, TDF, which plays a catalytic role offering concessional and impact funding, addressing project upstream issues through technical assistance and grants, and channelling capital to sectors and communities often overlooked by traditional finance including through SME lending.
Then, we have our asset management arm which has diverse vehicles customised to match varying investor preferences and impact priorities, and which comprise funds and initiatives with high quality alternative assets that deliver competitive returns and impact, as well as specialised trade and infrastructure-focused fund managers including the ESATAL trade asset management company and the TDB Infrastructure Investment Management Company.
Finally, in addition to our TDB Captive Insurance Company – TCI – we also have a capacity building vehicle, the TDB Academy, which offers trainings, seminars, conferences, and other human and institutional capacity development interventions to TDB and its partners.
GF: As TDB Group looks ahead to the next 40 years, what are the key infrastructure and trade-enabling investments needed to support Africa’s growth? What policy alignments, partnerships and long-term capital strategies are essential to scale impact and drive sustainable development?
AT: The needs are large and multifaceted. The list is long. We need to invest in both economic and social infrastructure – transport including road, rail, ports, airports, logistics hubs; water and sanitation; digital and telecommunications infrastructure; industrial infrastructure like different types of processing zones and facilities; energy to power industrial growth and electrify our communities; health including hospitals and medical equipment; education to build the workforce of the future; housing; etc.
To advance on our development aspirations, we need to grow faster than our population, and offer job opportunities for the latter, which is achievable through a robust industrial base, and the ability to trade our products among ourselves and with the world, with more value-added production and value chains.
I have already referred to policy, partnerships and long-term capital strategies. What I will add is that diversification in partnerships is key to bolstering resilience to different shocks and mitigating risks. This is at the core of our funding strategy. We are keen on staying nimble and quick to innovate to do more with our balance sheet, so that we can do more for our continent and its myriad communities.
