The African Development Bank plans to float Africa’s first infrastructure bond to member nations to raise up to $22 billion for investments in projects such as ports and airports, its president said on Tuesday.
The continent of 1 billion people and 54 states has posted strong economic growth rates in recent years, thanks to a commodities super cycle and growing consumer power.
But it needs to mobilise huge amounts of money to fund construction of roads, rails and energy generation projects.
“The idea is to get a 5 percent commitment on the (African central banks’ hard currency) reserves… time has come to work with a triple A-rated African institution (AfDB) to invest on their behalf,” Donald Kaberuka, the AfDB president told reporters.
African central banks have generally invested their foreign exchange reserves in northern hemisphere markets, where they earn nothing or very little return, Kaberuka told reporters.
The funds raised would surpass by $3 billion the $19 billion that both the Tunis-based AfDB and the World Bank commit to sub-Saharan Africa every year, he said after an event to celebrate Kenya Bankers Association’s golden anniversary.
“The time has come for we Africans to … tap into the surpluses of emerging countries, that is where the money is. But charity begins at home. So, tap into our own resources,” Kaberuka said.
Funds would be invested in viable infrastructure projects, offering member states good returns on their investment, Kaberuka said, adding that the proposal would be put to members in Tokyo during the IMF meeting in October.
AfDB has bank rolled various infrastructure projects on the continent in recent years, including a newly finished eight-lane superhighway linking Nairobi with the industrial town of Thika, which has eased traffic flow in the Kenyan capital.