De-risk Africa: Lure pension funds to invest in continent

By Southern Times Writer

AFRICA must commit to a roadmap that will allow African pension funds to invest in Africa’s own infrastructure projects, says Ibrahim Assane Mayaki, CEO of the Nepad Planning and Coordinating Agency.

Mayaki told participants to a high-level meeting on “innovations in infrastructure development and sustainable industrialisation” on Sunday, in Dakar, Senegal, that pension funds are relevant to Africa’s development, as per statement issued by Economic Commission for Africa (ECA).

The high-level meeting was organised by the Economic Commission for Africa and the United Nations Economic and Social Council (ECOSOC).

Mayaki disclosed that 28 pension funds out of 52 from 20 countries are currently valued at US$1.4 trillion and in the past five years have invested 2.9 percent of their money in infrastructure, which translates to US$41.8 billion, of which US$37.9 billion was invested in unlisted equity instruments and US$$3.9 billion through infrastructure project bonds or loans with a paltry amount going to Africa.

“Therefore, if Africa is to lead its own industrialisation, we must ensure that infrastructure projects are reclassified as an asset class that can attract African pension funds to invest much more into infrastructure projects particularly trans-boundary projects that are in the Programme for Infrastructure Development in Africa,” he said

Under the Programme for Infrastructure Development in Africa (PIDA), issues like regional road infrastructure, physical and procedural improvements at border crossings, port infrastructure and energy inter-connectors are being addressed with the regional economic communities and at the country level.

The Nepad chief said for Africa to industrialise, create jobs and transform its economies, leaders must commit to reforms that will sustain the enabling environment for attracting increased private capital into infrastructure. De-risking Africa, he said, is fundamental.

“Industrialisation is the main solution to our main problem on the continent which is job creation, especially for the youth in the next 20 to 30 years,” he said.

Mayaki added that the continent must also increase allocation of public investment in infrastructure needs to be prioritised at the same time as ensuring debt sustainability, adding Africa must also take a strong and uncompromising position on the need for development partners to support the setting up of technical assistance to support early stage infrastructure projects preparation.

“The industrialisation of Africa is at a critical stage and we call for sustained action by African governments,” he said.

Africa can finance its industrialisation, with remittances of over US$62 billion annually, illicit financial flows of US$50 billion, mineral revenues of US$168 billion and a potential stock market capitalisation of US$1.3 trillion, he said while noting the ECA’s High Level Panel report on Illicit Financial Flows.

Mayaki said Africa’s industrialisation and infrastructure development is irreversible, adding that the continent must strategically position itself in two ongoing global transformative discussion topics of the third industrial revolution and the new digitalised economy.

The question, he asked, is where does Africa want to fit?

“However, if Africa is to be successful in increasing the number of regional and domestic infrastructure projects and show impact in advancing sustainable inclusive development, wholesale changes are needed in mind set and perceptions on the issue of investment risk in Africa,” he told the high-level meeting.

April 2017
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