Africa’s Institutions Endorse AfDB’s Africa50 Fund to support Infrastructure Financing

donald-kaberuka---afdb-presidentIn a joint declaration issued in Tunis, Tunisia, on 19 July 2013, African institutions endorsed the AfDB’s Africa50 Fund as Africa’s vehicle to facilitate large-scale mobilization of resources and to unlock international private financing with a view to addressing Africa’s infrastructure gap. During the meeting the heads of key African political, economic and finance institutions “pledged to work together towards building Africa50Fund”.

“We, Dr. Nkosazana Dlamini Zuma, Chairperson of the African Union Commission (AUC), Dr. Carlos Lopes, Executive Secretary of the Economic Commission for Africa (ECA), Dr Donald Kaberuka, President of the African Development Bank Group (AfDB), the Regional Economic Communities (RECs), regional Development Financial Institutions (DFIs) and NEPAD Planning and Coordinating Agency (NPCA), take forward our cooperation in search of new and innovative ways for substantially scaling-up investments in regional and continental infrastructure to support Africa’s transformation,” the communiqué said.

The meeting “welcomed the Africa50Fund as a new, credible and innovative vehicle for infrastructure financing in Africa”. They commended AfDB’s initiative, “which is essential vehicle for ensuring that the vision and goals of the Africa Agenda 2063 on the delivery of regional transformational infrastructure projects is achieved.”

The Africa50 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.

It was endorsed in May 2013 by the Finance ministers at AfDB’s Annual Meetings in Marrakech, is a new initiative that will partner with regional institutions for transformational projects. The focus will be trans-continental infrastructure, including priority projects under the Programme for Infrastructure Development in Africa.

Setting the stage at the opening ceremony, President Kaberuka underscored the critical role of infrastructure in Africa’s development. “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% GPD growth and above (sustainably) unless the infrastructure bottleneck is overcome,” he said.

“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,” Kaberuka added.

Taking a pragmatic approach, AfDB President said that 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. I first mentioned this idea at the SADCC Summit in Maputo,” he said.

For Kaberuka, the Bank is ready to accompany African countries ‘development efforts with this new vehicle. “It will be a vehicle which can build on the AfDB track record and financial strength as investor, financial engineer, attract local and international pools of savings, utilize smart aid and leverage that to up our funding of infrastructure. It will be a strongly rated instrument able to issue a bond of significance – a bond attractive to investors.”

Kaberuka concluded by reiterating AfDB’s commitment: “The African Development Bank, given its experience and mandate, will play a lead role, but this is our collective instrument.”