Kenya Wednesday received a major boost in its efforts to connect landlocked markets on its northern borders after rich countries announced an African hub initiative to mobilise $20 billion for cross-border infrastructure projects.
The Lamu transport corridor is one of the 16 projects that have been picked to benefit from the mix of philanthropic and development financing under the initiative.
The Sustainable Development Investment Partnership (SDIP) announced the creation of a regional hub dedicated to African projects in Kigali, Rwanda, where the World Economic Forum Africa opened Wednesday.
SDIP itself is an initiative hosted by the World Economic Forum and a host of rich countries working under the aegis of the Organisation for Economic Cooperation and Development (OECD).
The SDIP Africa Hub will mobilise blended finance, which combines funding from private investors and lenders, governments and philanthropic funds, to support infrastructure development in Africa.
“The SDIP Africa Hub is an important first step to accelerate the engagement of SDIP members on the continent. We envision the hub building local capacity to advance blended finance best practices for infrastructure investment and ensure a consistent pipeline of projects from Africa,” said Terri Toyota, head of the Foundations Community and Development Finance.
Kenya, which only recently received a big blow to its infrastructure development dreams after Uganda pulled out of a joint crude oil pipeline designed to run along the Lamu corridor, is expected to get firmly on board this financing channel.
It has in the past three years been working on its side of the corridor commonly referred to as Lapsset (Lamu Port South Sudan Ethiopia Transport corridor) and last month approved an additional Sh1 billion for the project in a supplementary budget.
Kenya has been keen to complete construction of Lapsset headquarters and the first Lamu port berths before opening up the project to private investors.
SDIP has a high-profile membership that includes Bill and Melinda Gates Foundation; Citi; US, Sweden, Denmark, Norway, Netherlands, UK, Development Bank of Southern Africa; Deutsche Bank; East Capital; European Bank for Reconstruction and Development, and the European Investment Bank.
In addition to supporting blended finance to the 16 projects, the African hub of SDIP is also expected to facilitate the exchange of best practices across its network of institutions.
“Countries are able to make much more effective use of private financing when they link pools of capital to specific projects and introduce practical solutions that address risk and ensure financial closure,” said Richard Samans, member of the managing board, World Economic Forum.
Mohan Vivekanandan, Group Executive, Strategy, Development Bank of Southern Africa, said the SDIP initiative hopes to deliver $100 billion in infrastructure projects in the next five years and help build local capacity and solutions by bringing together African and global private- and public-sector organisations.
More than 1,200 participants from over 70 countries are taking part in the World Economic Forum on Africa in Kigali, Rwanda.
The theme of the meeting is “Connecting Africa’s Resources through Digital Transformation”.