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Beyond aid : new sources and innovative mechanisms for financing development in Sub-Saharan Africa


  • Ratha, Dilip
  • Mohapatra, Sanket
  • Plaza, Sonia


Given Sub-Saharan Africa's enormous resource needs for growth, poverty reduction, and other Millennium Development Goals, the development community has little choice but to continue to explore new sources of financing, innovative private-to-private sector solutions, and public-private partnerships to mobilize additional international financing. The paper suggests several new instruments for improving access to capital. An analysis of country creditworthiness suggests that many countries in the region may be more creditworthy than previously believed. Establishing sovereign rating benchmarks and credit enhancement through guarantee instruments provided by multilateral aid agencies would facilitate market access. Creative financial structuring, such as the International Financing Facility for Immunization, would help front-load aid commitments, although these may not result in additional financing in the long run. Preliminary estimates suggest that Sub-Saharan African countries can potentially raise USD 1-3 billion by reducing the cost of international migrant remittances, USD 5-10 billion by issuing diaspora bonds, and USD 17 billion by securitizing future remittances and other future receivables. African countries that have recently received debt relief however need to be cautious when resorting to market-based borrowing.

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  • Ratha, Dilip & Mohapatra, Sanket & Plaza, Sonia, 2008. "Beyond aid : new sources and innovative mechanisms for financing development in Sub-Saharan Africa," Policy Research Working Paper Series 4609, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4609

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    References listed on IDEAS

    1. John Page & Sonia Plaza, 2006. "Migration Remittances and Development: A Review of Global Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(2), pages 245-336, December.
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    7. Collier, Paul & Hoeffler, Anke & Pattillo, Catherine, 1999. "Flight capital as a portfolio choice," Policy Research Working Paper Series 2066, The World Bank.
    8. Dilip Ratha & William Shaw, 2007. "South-South Migration and Remittances," World Bank Publications, The World Bank, number 6733.
    9. Richard Cantor & Frank Packer, 1995. "Sovereign credit ratings," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 1(Jun).
    10. John Gibson & David McKenzie & Halahingano Rohorua, 2006. "How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand," Working Papers in Economics 06/02, University of Waikato.
    11. Simeon Inidayo Ajayi, 1997. "An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa," IMF Working Papers 97/68, International Monetary Fund.
    12. Mohammed Salisu, 2005. "The Role of Capital Flight and Remittances in Current Account Sustainability in Sub‐Saharan Africa," African Development Review, African Development Bank, vol. 17(3), pages 382-404.
    13. Andrew Powell & Dilip Ratha & Sanket Mohapatra, 2002. "Capital Inflows and Capital Outflows: Measurement, Determinants, Consequences," Business School Working Papers veinticinco, Universidad Torcuato Di Tella.
    14. Paul Collier & Anke Hoeffler & Catherine Pattillo, 2004. "Africa's Exodus: Capital Flight and the Brain Drain as Portfolio Decisions," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 13(02), pages 15-54, December.
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    Cited by:

    1. Franklin Allen and Giorgia Giovannetti, 2010. "Fragile Countries And The 2008-2009 Crisis," EUI-RSCAS Working Papers 13, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    2. Nagesh Kumar, "undated". "South-South and Triangular Cooperation in Asia-Pacific: Towards a New Paradigm in Development Cooperation," MPDD Working Paper Series WP/09/05, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    3. Arbache, Jorge & Go, Delfin S. & Page, John, 2008. "Is Africa's economy at a turning point?," Policy Research Working Paper Series 4519, The World Bank.
    4. Essers, Dennis & Cassimon, Danny, 2012. "Washing away original sin: vulnerability to crisis and the role of local currency bonds in Sub-Saharan Africa," IOB Working Papers 2012.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    5. Naudé, Wim & Bezuidenhout, Henri, 2012. "Remittances provide resilience against disasters in Africa," MERIT Working Papers 026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Thorsten Beck & Samuel Munzele Maimbo & Issa Faye & Thouraya Triki, 2011. "Financing Africa : Through the Crisis and Beyond," World Bank Publications, The World Bank, number 2355.
    7. Branca, Giacomo & Lipper, Leslie & Sorrentino, Alessandro, 2012. "Benefit-costs analysis of climate-related agricultural investments in Africa: a case study," Congress Papers 124109, Italian Association of Agricultural and Applied Economics (AIEAA).
    8. World Bank, 2008. "Kenya : Accelerating and Sustaining Inclusive Growth," World Bank Other Operational Studies 18927, The World Bank.
    9. SENBETA, Sisay Regassa, 2012. "How important are external shocks in explaining growth in Sub-Saharan Africa? Evidence from a Bayesian VAR," Working Papers 2012010, University of Antwerp, Faculty of Applied Economics.
    10. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092.
    11. Museru, Malimu & Toerien, Francois & Gossel, Sean, 2014. "The Impact of Aid and Public Investment Volatility on Economic Growth in Sub-Saharan Africa," World Development, Elsevier, vol. 57(C), pages 138-147.
    12. Massimiliano Bertollo & Omar Appolloni & Juana Bustamante Izquierdo & Francesco De Angelis & Edoardo Lelli & Slavko Vesenjak, 2009. "China and the Different Regional Approaches in Africa," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(2), pages 404-420, June.
    13. Wim Naudé & Henri Bezuidenhout, 2014. "Migrant Remittances Provide Resilience Against Disasters in Africa," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(1), pages 79-90, March.
    14. Ilene Grabel, 2008. "The Political Economy of Remittances: What Do We Know? What Do We Need to Know?," Working Papers wp184, Political Economy Research Institute, University of Massachusetts at Amherst.
    15. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    16. World Bank, 2009. "Kenya - Poverty and Inequality Assessment : Executive Summary and Synthesis Report," World Bank Other Operational Studies 3081, The World Bank.

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