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16 CCOOLULUMMNNSS||IaBnaTkheormMscoKnenzie According to the African Development Bank (AfDB), poor infrastructure has cost the continent a cumulative 25% in forgone growth in
the last two decades alone, equivalent to the growth
rate achieved in the past 10 years. This productivity gap between Africa and the rest of the world continues to grow, with the World Bank outlining the continent needs substantial funds to begin bridging the infrastructure gap.
Despite emerging markets long being known as key drivers of economic growth
in the global economy, maintenance of
this status requires extensive development and infrastructure  nance. Investments in infrastructure however are often big ticket, long term commitments with  xed locations and structures, which require substantial  nancial buy-in.
The risks and potential for stranded costs
in infrastructure investments in emerging markets are further exacerbated by the e ect of volatility on emerging markets (being
the  rst to su er in times of uncertainty, given their higher public debt, lower foreign reserves and shallow  nancial markets), lack
of political will/support and inadequate legal and regulatory frameworks.
In the midst of this prolonged volatility, coupled with low credit ratings and a lack of exposure to private investors, emerging markets, and Africa in particular, require innovative  nancing solutions to bridge the gap between public and private investment. This is where the development  nance institutions (DFIs) play a pivotal role.
DFIs as a substructure
Africa is not crippled by a lack of infrastructure investment capital, but more so by a lack of bankable projects. Apart from general investment barriers, infrastructure projects are coupled with completion
risks (regulatory or policy uncertainty), performance risks (both during and post construction) and revenue risks (ensuring that the project not only repays its debts, but also provides an adequate return for investors), which e ects the project’s overall ‘bankability’.
In this regard, DFIs are vital in ensuring
such projects are bankable, by bringing capital, technical expertise and capacity where private sector players were unable, ill equipped or unwilling to do so on their own. The key role that DFIs have to play in making a project bankable can be divided up into three distinct categories:
1. Funding source: DFIs can provide a broad range of  nancing products and can act as a loss absorber on both green eld as well as

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