African Development Bank is proposing to raise funds from among Africa central banks foreign reserves kept abroad to finance infrastructure. The funds which will come in form of a bond will be issued to central banks in exchange for 5 per cent of their foreign reserves. Disclosing the plan to reporters President of African Development Bank Donald Kaberuka said that the funds would be invested in viable infrastructure projects, offering member states good returns on their investment, adding that the proposal would be put to members in Tokyo during the IMF meeting in October.
According to those close to the planning, it will be Africa’s first infrastructure bond to member nations to raise up to $22 billion for investments in projects such as ports and airports. Africa home of about one billion people and 54 states has witnessed strong economic growth rates in recent years, as a result of commodities price boom and growing consumer power. But it needs to mobilise huge amounts of money to fund construction of roads, rails and energy generation projects.
Speaking to reporters on the plan Donald Kaberuka AFDB President said “The idea is to get a 5 per cent 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”. African central banks have generally invested their foreign exchange reserves in northern hemisphere markets, where they earn nothing or very little return, Kaberuka said
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 us 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.
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.
