AfDB targets $100bn fund for infrastructure

The African Development Bank plans to raise $100 billion (Sh8.8 trillion) to finance bankable infrastructure projects across the continent, a senior bank official has said.

The institution’s regional director for East Africa Gabriel Negatu said about half of the fund would be raised by digging into the foreign currency reserves of willing states among the financier’s 53-member countries.

The rest of the money will come from borrowing from global markets and could help finance regional railway, ports and electricity projects in Africa.

Mr Negatu was speaking to business executives from across the continent in Mombasa at the fourth Africa Governance, Leadership and Management Conference, a think-tank organised by the Africa Leadership Forum.

He said the fund is expected to be operational within three years and could help finance the proposed port at Lamu, the planned $11 billion harbour at Bagamoyo in Tanzania, and the standard gauge railway line from Mombasa to Kigali, Rwanda through Uganda.

Participants heard that prudent macro-economic management, a boom in resource exports and pro-business reforms had driven growth in Africa over the last decade with half of the continent now enjoying per capita incomes of more than $1,000 per year.

He said although foreign Direct Investment was up fivefold since 2000, the cost of starting a business had dropped by more than two-thirds and delays halved in the last five years, the growth had not been felt by many.

“This growth is not felt by all Africans and has not been inclusive,” Mr Negatu said. “The rising tide has not lifted all boats.”

The meeting is seeking ways of accelerating growth and intra-African trade and partnerships, under the theme “Opening up Africa to Africa”.

Former Nigerian President Olusegun Obasanjo, who is the patron of the AFL, said political leaders had driven the African integration agenda over the last 50 years and that while they needed to continue showing commitment and involvement, the private sector must “seize the wheel” and drive the process.
“The process of integration is too important to be left in government hands alone,” he said.

He said intra-African trade, which has remained low since the early 1990s while growing in Asia, Europe and North America, was a “sad commentary” on Africa’s integration process.

“I do not buy the argument that we cannot trade among ourselves because we produce the same commodities. In Europe , France and Germany produce similar commodities but they trade heavily with each other,” he said.

Kenyan entrepreneur Manu Chandaria, whose business interests span the continent and as far as China, said the private sector must lead efforts to achieve faster growth and deeper trade partnerships.

“Africa cannot wait for singular expansion. It must be multiple growth and this must be driven by the private sector.”

Apart from putting the private sector at the heart of Africa’s economic renaissance, African policy makers are looking at new ways of engaging the rest of the world in light of China and Asia’s growing economic influence.

Abdoulaye Mar Dieye, a director at the UNDP regional bureau for Africa said because six of the 10 fastest-growing countries in the world in the last decade are in Africa and 16 out of the 29 countries expected to grow fastest in the next couple of years are also in the continent, there is a need to define a joint African economic policy of engagement.

“Africa needs to be cautious not to replace the Washington Consensus with the Beijing Accord,” he said in remarks read to participants on his behalf.
“Africa needs to develop its own consensus for partners to buy into.”

Central Bank of Kenya Governor Njuguna Ndung’u said poverty in Africa was due to lack of access to markets and that Kenya’s progress in mobile banking offered practical examples of mobilising capital from previously unbanked people and bringing them into the formal economy.

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