Accra, July 12, GNA - Ghana and other African states may soon be compelled to debate the sources of development finance in order to agree on the most beneficial financing for sustained flow of funds for development and growth.
Dr Joe Abbey, Executive Director of the Centre of Policy Analysis (CEPA), said at a meeting of African finance and economics scholars and researchers in Accra on Wednesday that sources of funds for development in Africa had moved from one phase to another and currently countries like Ghana were strongly lobbying to raise loans from the international corporate market aside the concessional loans.
The bottom line, he said, was whether to go for soft or hard loans both of which have their advantages and disadvantages. The topic for discussion at the two-day meeting, which would discuss research works on development finance, was "Research in Development Finance for Africa".
The meeting being attended by participants from 10 African countries, is organized by the University of Ghana Business School (UGBS) and the African Centre for Investment Analysis (AICA) of South Africa.
It would, as part of its programme, re-launch the African Finance Association (AFA), which seeks to furnish policy makers and the business world with findings on development finance.
Dr Abbey said Africa's situation in development financing was approached with a wholesale application of concepts and models in search of solutions to the myriad of problems.
He said the continent received aid or donor inflows from the two main global blocs who were made to feel as if the gesture was a moral obligation but with time, aid fatigue set in with scepticism on the use of the funds.
There was no correlation between growth and development, Dr Abbey said, adding that there were also no checks and balances hence the institutionalisation of conditional assistance. He said these and other difficulties such as those resulting from debt sustainability had compelled some nations to search for alternative sources of development finance.
Professor Kofi Nti, Dean of UGBS, said the school had for the past few years given attention to research, which had given it recognition in countries like the United States of America, Spain, the United Kingdom, South Africa and Senegal.
He said researching into development finance in Africa was important because "for us in Africa, the issue of raising long term capital to support indigenous production and infrastructural development remains one of the most challenging problems."
He noted that most commercial banks preferred to finance low risk projects, trade and consumer durables.
"You are all aware the scale of commercial bank financing in Africa is lower than it could be, because of severe credit risk, for example, the large undocumented informal sector, unclear title to property, weak legal enforcement of contracts and the absence of information on the financial history of individuals and firms."
Prof. Nti said it was therefore important that scholars understood the economic and organizational reasons why the original development finance institutions proved unsustainable. "By confronting such design issues, we stand a better chance of developing sustainable public sector development finance institutions." Prof. Nti added that the researchers could by so doing also make contributions to the development of criteria for qualifying and upgrading entrepreneurs.
Prof. Nicholas Biekpe, a member of the AFA, said the Association was a special African forum for emerging countries and had been in existence for the past eight years.
He explained that input and findings from the Association's meetings were made public in the African Finance Journal. The meeting in Accra is the third in a series and the first to be held in Ghana. The first two meetings were held in South Africa but the next one would be held in Egypt.
