NSO Policy Interviews: KODEIJA DIALLO, Director of the Non-Sovereign Operations and Private Sector Support Department of the African Development Bank

AfDB NEWS & EVENTS

“Inclusive finance, through digitalization, can help integrate actors from the informal sector”

24-Jan-2020

The director of the Support Department for Non-Sovereign Operations and the Private Sector of the African Development Bank reviews the policy towards the private sector and talks about the so-called informal sector.

 

How could the Bank support poorly structured organizations?

Private sector policy has the merit of having more flexibility and flexibility in the size of the entry ticket and the care of the various types of actors in the private sector; whether they are looking for funding or sponsors looking for projects to finance in Africa. It also offers many possibilities in terms of instruments adapted to new players in the private sector, including those who are not structured, that is to say SMEs in general and entities belonging to microcredit or more or less from the informal sector. .

We deal with both large and small projects indirectly through impact investment funds and initiatives that we set up with support programs for SMEs. It should also be noted that a good number of credit lines granted to development banks and financial institutions are intended to finance SMEs.

Regarding the informal sector, and more particularly SMEs operating in the informal economy, access to finance is their biggest constraint. It should also be remembered that many factors contribute to the financial exclusion of these private sector actors. Indeed, these are actors who do not exist as organized structures with a financial balance sheet, a governance structure, a business strategy, etc. who could facilitate their support. However, there are microcredit projects that help these important players, which must be supported if we want to develop the private sector.

We must therefore support them, in particular through local partnerships. Inclusive finance through digitalization then offers a transformational solution to financial exclusion motivated by the informality of these private sector actors and has the potential to help access this segment of the informal sector, while facilitating their gradual integration. in the formal sector.

What about the new policy for private sector development?

It is part of a private sector development strategy which includes a framework for facilitating the development of this sector, the creation of social and economic infrastructures such as power plants, roads, health, l education as well as business creation and development through direct and indirect loans, etc. It also calls for more intervention in countries in transition and in sectors and segments with a strong multiplier development effect. Overall, the objective of this policy is to optimize our impact and increase our additionality in all our interventions in the private sector because our reason for being is the impact on development.

What is the Bank's strategy in this area, targeting countries in transition?

First of all, it should be recalled that the Bank has been very active through its three windows (ADB, ADF and FSN) and its various facilities such as the African Legal Support Facility to support countries in transition. In addition, to intensify its intervention and facilitate an effective implementation of its strategy towards countries in transition, the Bank created the Transition Support Facility with the dual objective of supplementing and relieving pressure on the use existing resources for low-income countries and actively support private sector development in countries in transition.

At the heart of the private sector development strategy in these countries is the need to improve the business environment, public governance, promote transparency and meet the urgent needs of the targeted countries. In this regard, the Bank will pursue closer alignment and complementarity between its sovereign and non-sovereign operations. The Bank's new non-sovereign operations policy is also a complementary tool which is part of this strategy and is applicable to all the regional member countries of the Bank.

However, with regard to countries in transition, it will be applied according to the nature of the fragility as assessed in each country and all the Bank's available instruments and in particular technical assistance will be used to implement this strategy and strengthen the different intervention approaches of the Bank, with regard to the development of the private sector in countries in transition.