At the African Development Bank’s annual meeting this week in Morocco, the bank’s president is pitching two agendas aimed at forging Africa’s mighty economic potential: How to get more funding, and build an infrastructure bond.
The problems constraining Africa’s economy known are not new, as the continent still lacks critical infrastructure, regional economic integration remains a dream and fragile states are a concern.
Scaling up Africa’s progress in the last decade means addressing these three intersecting issues that have slowed down the region’s economic train, AfDB President Donald Kaberuka said on Monday.
“We have the will, we have the systems, but we still don’t have all the funds,” Kaberuka noted during his opening speech at the AfDB’s 48th annual meeting.
The AfDB chief explained that the bank “can work magic with what it is given, raising nine dollars for every one of its own,” but needs fresh financing from both African and non-African members, especially the latter for the Africa Development Fund.
In the 12th ADF replenishment in 2010, donors agreed to give $9.5 billion to allow the ADF to continue providing concessional loans and grants from 2011 to 2013.
The latest country to have joined AfDB is Australia, which according to its latest budget proposal, will offer initial payment and contribution for the 13th and 14th replenishment at AU$160.9 million ($154.5 million). Meanwhile, the United States would like to give about $32 billion to the bank for fiscal year 2014, the same amount as in 2012, according to President Barack Obama’s budget request.
“Second, we need our African members’ support in a new initiative which we believe is a visionary solution to bring about the vision of transformation, and a revolutionary response to failings in finding, facilitating and funding infrastructure projects,” Kaberuka said.
This initiative calls for creating a so-called “Jubilee infrastructure bond” financed by both domestic and international public and private investment.
The AfDB says that the continent needs $93 billion every year to fund its infrastructure requirements, but 30 percent of that requirement is not met.
“With a $10 billion start-up — that is just 2 percent of Africa’s combined foreign exchange reserves — it will allow us to finance $100 billion worth of projects,” Kaberuka said, noting the value of the projects to be funded will be more than the entire infrastructure action plan for 2020.
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