International financial institutions and emerging capital markets in Africa

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Abstract
The creation of closed-end country funds has been an important step in extending the globalization of finance to developing regions. This article examines three instances of closed-end fund creation and argues that international financial institutions (IFIs) have been necessary for the evolution of the closed-end funds industry in Africa. IFIs provide a certain amount of investment moneys; they reduce transaction costs, provide information and promote products that allow states, firms and investors to benefit. Eventually, if IFIs can demonstrate the benefits of investment, the networks they foster can make other private capital market activities exclusive of a particular IFI possible. The article specifically considers the International Finance Corporation and the Commonwealth Development Corporation and compares these examples with one where an IFI was not involved Morgan Stanley's Africa Investment Fund. Taken together, the examples conceptualize IFIs as go-betweens among state and non-state actors which can facilitate solutions to economic and political market failure in the contemporary era of global governance.

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