By John Oyuke
The African Development Bank ((AfDB)) plans to issue Sh3.36 trillion ($40 billion) bond to support infrastructure development in Africa.
TheAfDB President Dr Donald Kaberuka said the Bank is exploring avenues of tapping the huge foreign exchange reserves held by African governments overseas by guaranteeing the infrastructure bond.
Kaberuka said African governments have foreign exchange reserves amounting to $450 billion (Sh37.8 trillion), usually invested in low or zero interest earning accounts overseas.
He said if African governments were to invest just 5 per cent of this money held overseas in this infrastructure bond, which will be guaranteed by the AfDB, Africa would be able to raise $22 billion (Sh1.87 trillion) easily.
“This is three times the amount committed by the World Bank and AfDB to sub Saharan Africa,” Kaberuka said at th-e Kenya Bankers Association 50th anniversary in Nairobi.
With additional investments from other international investors, the continent can easily raise $40 billion, which would go a long way in bridging the infrastructure financing gap in Africa, Kaberuka, who was the chief guest observed.
The Tunis-based multilateral development bank estimates that Africa needs over $90 billion per year to tackle the infrastructure deficit.
Kaberuka said AfDB is an AAA-rated institution and, therefore, a guarantee from the Bank would offer sufficient comfort to international investors.
“Time has come to work with a triple A-rated African institution like AfDB to invest on their behalf,” he asserted.
The Bank’s projects include the Thika Superhighway and the Athi River–Namanga Road.
