Global Finance: Over the past four decades, how has TDB Group's mandate and geographic footprint developed, and what have been the most important steps in promoting trade, regional integration and sustainable development in all member countries?
Admassu Tadesse: TDB Group is an MDB that has evolved into a group with various subsidiaries and strategic business units that provide specialized financial and non-financial services in all areas of commercial and development banking, asset management, leveraged and impact financing, captive insurance, and capacity building.
We were raised over the past 40 years by COMESA Member States to support the region's economic integration and sustainable development programs through special short- and long-term trade and infrastructure financing. Then we gradually changed to embrace other African economies – to better capitalize on internationalization and support economies of scale. Although our original mandate of financing and promoting trade, regional economic integration, and sustainable development remains the same, our structure, stable vehicles and toolbox have evolved through institutional changes and new solutions, to ensure that we remain fit for purpose as times change.
With almost US$ 60 billion in financing invested over the years, we have become an important player in the African trade finance market and these days, we are focusing on clean energy efforts and cooking, infrastructure that enables trade, and industrial capacity in sectors such as agriculture, health, and building materials such as cement and steel.
GF: What are the key structural challenges African countries face in accessing affordable, long-term finance, and why are development finance institutions (DFIs) important in bridging this gap?
AT: Regional DFIs such as the TDB Group were established decades ago following global ones, to help bridge the financing gap and cater to Africa's specific needs. To do this, we mobilize global and African capital, de-risk it, and accompany it with different solutions to sustainable development programs.
Lack of affordable and long-term capital is a core issue. Apart from persistent sight premiums despite calm market conditions, global and African politics are having a major impact on risk pricing and credit sustainability, with commodity price volatility and supply chain volatility adding pressure. This also affects our financial industry, which is already working continuously to adapt to evolving industry regulations, while inventing out-of-the-box solutions to solve problems of scale, price and tenor, as well as the availability of investment opportunities. That is why we have grown into a Group with different vehicles and offerings.
Structurally, while our policy makers are working on improving the regulatory environment and policy to facilitate the flow of money across borders, improve savings and tax benefits, and provide more comfort to capital – the financial industry can work to support the expansion of African capital markets, help build repo markets, increase the activity of local currency, develop new products, and so on.
GF: How can other financing structures and new financial products help mobilize capital, attract partners and increase access to finance for both governments and private companies in Africa, and what role do DFIs play in driving these efforts?
AT: Different types of funds and partners gravitate towards different institutional structures and products – hence our Group structure.
We have our own Trade and Development Banking SBU, which provides short-term bilateral trade and long-term project financing, through direct loans or equity financing, credit development, and advisory and agency services.
We have our own Trade and Development Fund, TDF, which plays a key role in providing concession and impact funding, solving project escalations with technical assistance and grants, and channeling money to sectors and communities that are often neglected by traditional finance including SME lending.
Then, we have our asset management division with various vehicles designed to match investors' preferences and priorities, and which combine funds and programs with other high-quality assets that bring competitive advantages and impact, as well as managers of specialized commercial and infrastructure funds including the commercial asset management company ESATAL 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 provides training, seminars, conferences, and other human and institutional capacity building 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 alignment, partnerships and long-term capital strategies are important to maximize impact and drive sustainable development?
AT: The needs are great and many. The list is long. We need to invest in both economic and social infrastructure – transport including road, rail, ports, airports, transport hubs; water and sanitation; digital and communications infrastructure; industrial infrastructure such as various types of processing facilities and facilities; the potential to boost industrial growth and electrify our communities; health including hospitals and medical devices; education to build the future workforce; houses; etc.
In order to advance our development ambitions, we need to grow faster than our society, and provide job opportunities for the latter, which can be achieved through a strong industrial base, and the ability to trade our products between us and the rest of the world, through value added production and value chains.
I have already talked about policy, partnerships and long-term strategies. What I will add is that diversification of partnerships is key to strengthening resilience to various shocks and reducing risk. This is the core of our funding strategy. We are determined to remain humble and quick to innovate to do more on our balance sheet, to do more for our continent and its many communities.
