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Commercial finance for development: a back door for financialisation

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  • Ewa Karwowski

Abstract

The global Covid-19 pandemic has accelerated a trend under way for the last decade: the enlistment of private-sector commercial finance for development. This finance can be brought in through (1) regular cross-border flows, (2) blended finance and (3) impact bonds. This briefing argues that intensified foreign financial inflows are likely to draw African economies further into financialisation, which increases financial instability and can undermine the democratic process, jeopardising just socio-economic development. Specifically, the short-termism of portfolio flows requires costly reserve accumulation, foreign direct investment exposes firms to demands for shareholder value generation, and external debt introduces exchange rate risk for domestic borrowers.

Suggested Citation

  • Ewa Karwowski, 2022. "Commercial finance for development: a back door for financialisation," Review of African Political Economy, Taylor & Francis Journals, vol. 49(171), pages 161-172, January.
    • Handle: RePEc:taf:revape:v:49:y:2022:i:171:p:161-172
    DOI: 10.1080/03056244.2021.1912722
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