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AfDB broadens its commitment

By Nicholas Norbrook in Arusha
Posted on Friday, 10 August 2012 10:43

Opening the AfDB proceedings, President Donald Kaberuka took the delegates back to the Arab Spring, which had unfolded under the AfDB’s nose in Tunis. “We deliberated extensively on the implications of these events for Africa as a whole, and what that meant for the Bank’s work.

Fund of funds for agriculture
At the AfDB meetings, Credit Suisse announced it had won the contract to run a fund of funds to invest in sustainable agriculture. Boasting both an anchor equity investment of $100m from the AfDB and the blessing of the World Wildlife Fund, Agvance Africa will invest in up to 15 private-equity funds that are targeting top companies across the agricultural value chain; it hopes to reach $500m
in commitments.
ECP opens Nairobi office
Private-Equity firm, Emerging Capital Partners (ECP) opened an office in Nairobi in April, its seventh on the continent but the first in East Africa. “This is the last major region where we are establishing a presence,” said Bryce Fort, an ECP managing director. The firm has $1.8bn in capital but has focused on Francophone Africa. It marked the expansion with an undisclosed investment in Nairobi Java House, and it plans to expand in Kenya and elsewhere in the region.
The new bond rush in Abidjan
Following on from previous successful bond issuances last year, a three-year, 60bn CFA franc bond launched in April was over-subscribed by nearly 20%, according to traders. It will list on the regional BRVM bourse, with money raised to be spent on infrastructure. Confidence in the paper reflects broader backing of Ivorian economic management. Côte d’Ivoire will recommence payment of arrears on its $3.2bn 2032 Eurobond, once the IMF has arranged a debt-relief plan.

The conclusion was overwhelming. It was about growth, but growth that was broad-based and inclusive, that created jobs, that gave hope and opportunity for Africa’s majority, its youth.”

Despite African GDP growth forecasts of 6% that will gratify the West, Kaberuka poured cold water on the ‘feel good factor.’ He told The Africa Report it was necessary to advance quickly on two fronts if the growth seen in Africa was not to remain in the hands of a few.

The first is to improve what is often euphemistically referred to as ‘governance’.

A number of initiatives were launched at the meetings, such as the Declaration on Good Financial Governance, signed by member-state finance ministers including those from South Africa and Uganda. It compels governments to hold up their end of the social contract: goods and services in return for taxes.

The African Capacity Building Foundation also launched the African Governance Outlook, which helps African countries track how well they are managing their budget inflows and holes.

And the African Legal Support Facility is helping countries negotiate better deals with investors, such as a recently renegotiated contract between Djibouti and Dubai-based DP World.

The second way in which Africa will avoid an Arab Spring-style revolt is by directing its economies away from mineral exports and towards agribusiness and manufacturing.

This is easier said than done. Recent progress in garment manufacturing, for example, will remain fragile until Africa sets up its own textile factories, which will require much more energy and water.

Infrastructure remains Africa’s industrial-sized stumbling block.

The Bank is working hard to tackle this, helping to mobilise funds at home and abroad to spend on roads, railways and power stations. Some $1.5trn has been spent on transport.

The AfDB helped build or rehabilitate 25,000km of roads between 2009 and 2011, and it installed 15,000km of electrical transmission lines over the same period●

Also read:
World Economic Forum: Chinese titans under the microscope
Economic planning for uncertain times – Donald Kaberuka
Grow Africa: Fertile grounds for funds

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