President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has commended the United Kingdom’s Department for International Development (DFID) over its investments in the bank.
He made the commendation while speaking at the at the UK-Africa Investment Summit, “Sustainable Infrastructure Forum.”
Noting that the DFID is a key strategic partner of the AfDB, Adesina disclosed that since the DFID joined the bank in 1983, its “strong and consistent support for the African Development Fund has helped us to support the development of low-income states, especially the fragile states.”
According to him, with the DFID’s support, the AfDB through its operations, in the last four years “has helped to connect 18 million people to electricity, 101 million people with access to improved transport and 60 million people with access to improved water and sanitation.”
He pointed out that although there was currently a lot of talk about the continent’s infrastructure financing gap, the issue should be looked at in terms of the infrastructure demand opportunity for financing, adding that there is a $68-108 billion annual investment opportunity in areas such as railways to ports, airports, water, sanitation, ICT and energy.
He, however, noted that many of these opportunities can’t be realized unless there is a lot more investment in project preparation, “to make projects bankable.”
“Institutional investors hold a large pool of capital that needs to be mobilized and channeled into financing of infrastructure. Total assets under management alone by pension funds, sovereign wealth funds and the insurance sector in Africa is about $1.8 trillion.
“Tapping just a fraction of this into infrastructure will go a long way to close the infrastructure financing gap. Many reforms are needed. One is to designate infrastructure as an asset class for institutional investors. Meeting their infrastructure allocation targets would require them to hire quality staff who understand infrastructure,” he said.
According to the AfDB boss, while borrowing to finance infrastructure can be good for many countries, especially if such financing is concessional, greater focus should also be put on ensuring that governments attract the private sector into infrastructure financing.
“More focus is also needed to improve the policy, legal and regulatory environment to support greater private sector investments in infrastructure,” he said.
Adesina pointed out that the AfDB, through its NEPAD infrastructure project preparation facility, has helped to mobilise financing for $8.5 billion of infrastructure projects.
In addition, he noted that the AfDB helped to establish “Africa 50,” an institution to support infrastructure project preparation and financing which has “raised over $860 million and will now be establishing a $1 billion third-party private fund to finance infrastructure investments by private sector on a commercial basis.”