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Carlos Lopes outlines abundance of resource to finance Africa’s development gaps
ECA Press Release 03/2013
Addis Ababa, 26 January, 2013 (ECA) - At a high-level meeting of the NEPAD Heads of State and Government Orientation Committee (HSGOC) that took place today, the Executive Secretary of the United Nations Economic Commission for Africa (ECA), Mr. Carlos Lopes outlined some key issues to be reflected in an ongoing comprehensive study on the mobilization of domestic resources for financing Africa's development and, in particular, the implementation of NEPAD projects.
The emerging ideas in the study represent the efforts underway to find solutions from within the Continent to finance gaps in infrastructure and other priorities for Africa’s transformational agenda.
According to the presentation made by Lopes, the average size of projects to be financed would range between $50 million and
$100 million, leveraging co-financing from the African Development Bank, other regional banks, private equity funds, international partners and other private sector investors.
For instance, an Africa Infrastructure Development Fund is geared to supplement investment in national and regional infrastructure projects, particularly the implementation of the Programme for Infrastructure Development in Africa (PIDA).
He also highlighted the need to tap into the thriving private equity industry, currently valued at $30 billion noting that there are up to 38 private equity funds which are invested in infrastructure in Africa, including satellites, toll roads, dams, and airports. He added the need to continue to promote the establishment of Africa-based private equity funds.
The Executive Secretary also mooted the need for an African Bonds Market, saying, African bond issues are flourishing in the international bonds market, though relatively new and limited to a few countries. He highlighted Ethiopia, Kenya, Nigeria, South Africa and Zambia, where recent bond issues were oversubscribed by up to 15 times.
“To make Africa's bonds perform better, there is a need to ensure superior returns, low borrowing costs, appropriate fiscal incentives, and credit guarantee facilities to protect against default,” he said.
Touching on remittances, Mr. Lopes informed the high-level forum that the securitization of Africa's Diaspora Remittances would also be beneficial. “There are good examples of use of this instrument in Africa and elsewhere,” he said, highlighting that the African Export-Import Bank (Afreximbank) arranged for Ghana to borrow $40 million secured by Western Union transfer remittances.
“There is an enormous resource base for all these instruments to thrive in Africa such as pension funds, which are growing at a staggering pace,” said Lopes.
Added to the mix was the idea of establishing an Africa Credit Guarantee Facility (ACGF) that he said, could help build investor confidence.
He also underscored the need for improved tax administration as this has the potential to increase tax returns, he said are as low as 10% in some countries as compared to the 15% threshold for low income countries. In addition, he emphasized the need to stop illicit financial flows which are estimated at about
$50 billion from the continent. In this regard, he said the ongoing work of the High-Level Panel on Illicit Financial Flows from Africa will be instrumental.
The Executive Secretary also took the opportunity to pledge support to a new initiative set up to honor the leadership and commitment of the late Prime Minister Meles Zenawi to Africa's development and especially NEPAD. The Meles Zenawi Centre for Sustainable Development will be hosted within the NEPAD agency, according to Mr. Lopes.
“This is a most befitting gesture in memory of a great African leader and global figure”, he stated.
Mr. Lopes was addressing the 28th high-level meeting of the NEPAD Heads of State and Government Orientation Committee (HSGOC) for the first time in his capacity as the Executive Secretary of the ECA. The high-level forum is meeting in advance of the African Union Heads ofState Summit to begin over the weekend.
The study will be formally presented to the African Union Summit inMay 2013 at a proposed special session devoted to Domestic Resource Mobilization.
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ECA Information and Communication Service P.O. Box 3001
Addis Ababa Ethiopia
Tel: 251 11 5445098 Fax: +251-11-551 03 65 E-mail: ecainfo@uneca.org
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