East Africa has had to rely on a mix of foreign aid and commercial borrowing both domestically and abroad and from bilateral partners to fund projects.
Insurance companies and pension funds will be critical in financing infrastructure deficit in East Africa, an asset manager has said.
Kenya’s infrastructure funding gap for private-public partnerships (PPPs) is estimated at Sh4.2 trillion ($41 billion) between 2012 and 2020. But the whole of East Africa is projected to annually require Sh3.6 trillion ($35 billion) until 2020.
Britam investment analysts Wednesday said through the PPPs, private sector involvement in infrastructure projects will have a welcoming platform.
“The long-term institutional investors like insurance companies and pension funds have a key role to play in financing the region’s infrastructure needs. Life insurers can apportion part of their Sh515 billion ($5billion) balance sheets towards infrastructure investments and pension funds can also invest part of their holdings in infrastructure projects,” the analysts said.
Britam Asset Managers chief executive Kenneth Kaniu said traditionally, the region has had to rely on a mix of foreign aid and commercial borrowing both domestically and abroad and from bilateral partners to fund projects.
“East Africa is among the fastest growing regions in the world, but we still remain uncompetitive because of this element of infrastructure,” said Mr Kaniu during a briefing on the impact of infrastructure projects in East Africa in Nairobi.
China has in recent years become a financier of key energy and transport projects.
Mr Kaniu said it is imperative for the regional states to diversify financial sources and give a larger role to the private sector through PPPs, foreign direct investment flows and more local private financing.
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