Bridging Africa’s $68bn infrastructure finance gap
The New Partnership for Africa’s Development (NEPAD) (www.NEPAD.org) – African Union’s economic development programme gathered international investors and CEO-level business leaders at the NASDAQ Stock Market on18th September, to launch its 5% Agenda campaign.
The launch took place five years after a January 2012 African Union Summit adopted the Programme for Infrastructure Development in Africa (PIDA) which sets out 51 cross-border infrastructure programmes and more than 400 actionable projects in four sectors.
According to the World Bank, the continent needs to spend $93 billion annually (44% for energy; 23% for water and sanitation; 20% for transport; 10% for ICTs; and 3% for irrigation) until 2020 to bridge its infrastructure gap, which is currently removing an estimated 2% of GDP growth every year.
On the other hand, Africa only managed to close 158 project finance deals with debt totalling $59 billion over the decade 2004-2013, which represents only 5% of infrastructure investment needs and 12% of the actual financial flows.
The 5% Agenda campaign highlights that only a collaborative public-private approach can efficiently tackle these issues and calls for allocations of institutional investors to African infrastructure to be increased to the declared 5% mark.
Speaking at the launch event in New York, Ibrahim Assane Mayaki, NEPAD CEO, commented: “Infrastructure plays a leading role in supporting growth on the continent. At the same time, it can represent an innovative and attractive asset class for institutional investors with long-term liabilities. By launching the 5% campaign in New York today, we invite investors to take advantage of the wide-ranging opportunities Africa has to offer and to move forward with what can only be a win-win partnership”.
Tony O. Elumelu, one of Africa’s most prominent entrepreneurs and active participant in the CBN said: “Africa is getting stronger every day with new business opportunities and innovative ideas but what is still crucially missing is project implementation. African governments need to work on creating conducive environments to attract these investments which are so vital for the continent’s growth and development.”
According to a 2016 McKinsey report, institutional investors and banks have $120 trillion in assets that could partially support infrastructure projects.
The 5% Agenda roadmap, the backbone of NEPAD’s campaign, is foreseen to have the following impact:
- Unlocking notable and measurable pools of needed capital to implement regional and domestic infrastructure projects on the continent.
- Broadening and deepening the currently very shallow African capital markets, whilst at the same time contributing significantly to regional integration and job creation.
- Promoting the development of innovative capital market products that are specific to the continent’s challenges and potential in regards to infrastructure development.
- Raising the investment interest of other institutional and non-institutional financiers that so far have been hesitant to include African infrastructure projects as an asset to their investment portfolio based on specific, concrete next steps and project suggestions.
Contacts:
NEPAD – Communication
Millicent Seganoe
MillicentS@NEPAD.org
For further information on NEPAD and the “5% campaign”, see: http://APO.af/u2YH7u.
