New fund to boost infrastructure development in Africa endorsed
23 July 2013
African institutions have endorsed the African Development Bank (AfDB) 'Africa50Fund' an innovation vehicle for financing infrastructure development on the continent.
'Africa50Fund' is an initiative by AfDB to facilitate large-scale mobilisation of resources and to unlock international private financing with a view to addressing Africa's infrastructure gap. The fund was established in response to the request by African Heads of State to the AfDB to develop innovative financing solutions to address Africa's infrastructure deficit.
According to a press statement, during a meeting that drew heads of key African political, economic and finance institutions last week, the officials pledged to work together towards building Africa50Fund and welcomed it as a new, credible and innovative vehicle for infrastructure financing in Africa.
Speaking at the high level meeting, AfDB President Dr Donald Kaberuka underscored the critical role of infrastructure in Africa's development. He said; "The one thing which can really slow down the recent performance in its tracks is infrastructure. No country in the world has been able to maintain 7 per cent GPD growth and above (sustainably) unless the infrastructure bottleneck is overcome."
Going beyond reflection
The fund will be innovative in its design and structure, leveraging infrastructure financing resources from sources as diverse as African central bank reserves, African pension funds, African sovereign wealth funds, the African Diaspora, and high net worth individuals on the continent, according to the statement.
"We are today, all sources combined, hardly able to put together 45 billion dollars a year, leaving an annual gap of similar volume. We are all doing different things in our respective regions with new initiatives and funds being created, but let us face it: there is limited additionally and no critical mass," said Kaberuka.
He added; "Africa's regional economic entities, as well as development institutions should go beyond reflection on scenarios for financing infrastructure. They should outline how it will be financed. That is the idea of the Africa 50 vehicle."
For Kaberuka, AfDB is ready to accompany African countries development efforts with this new vehicle. AfDB has so far pledged US$20 billion to the fund which was established in May by the Finance ministers at AfDB's Annual Meetings in Marrakech, Morocco.
The meeting that was held in Tunis, where the AfDB is headquartered, was attended by among others, Dr Nkosazana Dlamini Zuma, the chairperson of the African Union Commission and Dr Carlos Lopes, the Executive Secretary for the Economic Commission for Africa among other dignitaries.