This thesis looks at the relationship between National Development Banks (NDBs), governments, financial market participants, and non-financial firms in Africa. Despite rapidly increasing financial inclusion since the 2000s, Africa is the continent where enterprises struggle the most to access credit, particularly long-term loans, which NDBs specialise in offering. Though NDBs have featured prominently in academic and policy debates over the past decade, their function and impact in Africa are insufficiently investigated. This research project addresses this gap in the literature by comparing the experiences of Côte d’Ivoire and Rwanda’s NDBs to draw lessons on development banking in developing countries, the political economy of finance and development, and, most broadly, how the interactions between the financial sector, the state, and enterprises affect economic development.

The central argument of the thesis is that the standard practice by mainstream economists of attributing the lacklustre performance of African NDBs to political corruption is highly deficient. Besides government officials, foreign players such as bilateral and multilateral institutions also influence the ability and the willingness of NDBs to accomplish their mission. The thesis finds that NDBs in Côte d’Ivoire and Rwanda have an outsized role in promoting the industrialization of their respective economies compared to privately owned banks. However, structural factors and external pressures make it challenging for these NDBs to reach their full potential. In Côte d’Ivoire, for example, the International Monetary Fund’s policies encouraged Côte d’Ivoire’s main NDB to shift its focus from enterprise financing to consumer loans. In Rwanda, the struggles of the country’s only NDB stem more from the difficulty to mobilise funds due to foreign exchange risk than from the bank’s governance, management, and operations. Both case studies also highlight the limitations of modern central banking for developing countries trying to support local entrepreneurship, since the prevailing tendency of these banks to prioritise price stability over credit creation is shown to hinder NDBs.