East African economies have in the past 10 years borrowed $29.42 billion to grow their transport, communication, manufacturing and energy sectors. The region’s economies are now spending almost 8% of their revenues to service these loans, which analysts say are becoming a burden, especially given that their impact on growth is yet to be seen.
The Export-Import Bank of China has agreed to loan the Africa Finance Corporation US$ 300 million to support its financing of African infrastructure projects.
Investments in the infrastructure sector in East Africa are forecast to reach US $98.8 billion by 2022 - but hurdles to be overcome include high transaction costs, inadequate availability of bankable projects, and limited local capacity for project preparation and tender.
US President Donald Trump is expected within days to approve an initiative to overhaul the US investment strategy in Africa.
Ministers from Japan and over 50 African countries started a two-day meeting in Tokyo on Saturday to discuss the need for quality infrastructure and the challenges in making development more inclusive on the continent, where China’s influence is growing.
With an estimated funding deficit of $40 billion a year, private-sector solutions from Africa’s home-grown pension fund industry as well as international insurance firms could help plug the gap.
Infrastructure spending requires the hand of the state to put finance in place.
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