This policy brief summarizes a comprehensive assessment of the role of development finance institutions (DFIs) in supporting development objectives in three countries – Kenya, Ethiopia and Ghana.
The authors examined the development plans of three African countries to find out whether DFIs allocate resources to sectors that each country identifies as strategic priorities. The report includes the perspectives of six DFIs: Swedfund, Norfund, Finnfund, DEG, IFC and CDC.
- Development finance institutions (DFIs) are generally averse to national development plans shaping their investment decisions and funding allocation.
- This study finds that DFI funding is low in some sectors that countries identify as national development priorities, including manufacturing in Ethiopia, healthcare and ICT in Ghana, and transport and ICT in Kenya. This presents commercial opportunities for additional DFI investments.
- DFIs risk losing out on these and other opportunities to enhance their development impact if investment decisions are solely led by the private sector.
- A framework for assessing alignment between DFIs’ investment portfolios and national development priorities is critical to unearthing additional opportunities for many DFIs.
- DFIs suggest that more targeted engagement with governments could be an optimal strategy in different contexts.
This text was first published on the Stockholm Environment Institute website.