Multilateral Development Banks and Sustainable Finance in Africa

Recently, the popularity of the multilateral development banks in the mainstream literature on sustainable finance cannot be underestimated. With limited fiscal space and aid budgets in African countries, there is a plethora of financial constraints when it comes to the realization of sustainable development goals. It appears that multilateral development banks like the African Development Bank, International Monetary Fund, and World Bank can bridge sustainable financial gaps in many African countries. Hence, the multilateral development bank model is a viable and strategic modus operandi for dealing with financial challenges related to the 2030 Agenda. Owing to the size and scale of operations of multilateral development banks, these banks can support programs and initiatives designed to address regional and continental issues like climate change and disaster relief. More interestingly, they are associated with remarkable international legitimacy as they support global development programs. Nonetheless, the literature linked to multilateral development banks and sustainable finance is scattered. Therefore, this chapter focuses on the role of multilateral development banks in supporting sustainable financing in Africa. A comprehensive literature review methodology underpinned this study. The results revealed that multilateral development banks finance projects on climate change, support environmental protection, offer financial support to underserved populations, offer loan financing, grant assistance, and provide technical support. However, they promote dependence syndrome and hamper financial innovations in Africa. These results are of great importance to policymakers, management of financial institutions, development practitioners, project managers, and educators.