AFRICANGLOBE – Expressing his apprehension at the opening of yet another continental conference season, Hannibal was refreshed to see himself proved wrong at the recent African Development Bank (AfDB) meetings that took place on 27-31 May in Marrakech.
The problem has always been an excess of talking and an underwhelming level of delivery. But, for once, a problem raised by AfDB President Donald Kaberuka at a conference in Mauritius two years ago now appears to have a solution.
Kaberuka’s Mauritian lament was directed at African central banks and pension funds, which place their sometimes significant reserves in ‘safe’ foreign assets, buying up dollars, euros or other investments in the rich world.
Given Africa’s huge infrastructure requirements, he asked, why did African countries not find a way of putting those reserves towards Africa’s development – something that would then inevitably have the multiplier effect of ratcheting up the continent’s economy, rather than supporting a foreign power.
The AfDB estimates infrastructure needs at $100bn per year this decade.
The problem is all the more pressing given that funding for African infrastructure has become more scarce in the past two years, with the euro crisis and United States debt concerns focusing minds elsewhere.
The US Federal Reserve’s quantitative easing programme, which has pumped dollars into the global system, is also coming to a close – a programme that had made emerging market assets seem more attractive.
Against this backdrop, the AfDB’s Africa50Fund is a concrete plan of action. It plans to pull in financing from Africa’s pension funds and new crop of sovereign wealth funds, as well as wealthy private individuals.
The P80 group of leading global pension funds is also partnering with the fund, a sign that global capital is still keen to find ways into African investments, guided by local partners such as the AfDB, which is putting its own cash on the table.
The Africa50Fund will include a focus on the green economy, with projects in the energy, water, transport and agriculture sectors. Former President of Botswana Festus Mogae, spearheading the campaign, says, “There is no shortage of bankable projects in Africa.”
In a sign of the times, South Africa’s Government Employees Pension Fund has said it is increasing its allocation of its investments into Africa from 1% to 5% of its total R1.2trn ($122bn) under management, making it the largest pension fund in Africa