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African states need work with African developmental finance institutions, as well as with those outside the continent, in filling the massive infrastructure gaps that exist.
Speaking to City Press on the sidelines of the three-day Africa Investment Forum – held at the Sandton Convention Centre in Johannesburg this week – CEO of the Africa Finance Corporation (AFC) Samaila Zubairu said that, rather than choose foreign financiers over locals, countries should make use of both on a complementary basis.
“African states should work with both because we all have different roles to play,” he said, adding that the most prominent foreign financiers hailed from China.
“We as locals can help the government to structure the project and to define the need for the Chinese to come in – as opposed to having the Chinese define the role that they will play.
Zubairu said the AFC had been a beneficiary of a $300 million (R4.3 billion) loan from China.
He said Chinese finance should not generate fear or pose a major threat, as all finance, irrespective of the financier, should be based on rational decision making.
“All financing should be based on viability, even if the money is coming from your mother. If you want to take the money, you should have a plan on how you are going to repay it. Once that plan is clear, you should make contingencies for things that could go wrong,” he said.
Zubairu said another challenge facing the continent was uncertainty with regard to what some governments want. He praised President Cyril Ramaphosa’s multibillion-rand investment inflow target as a noble initiative to which the AFC also wanted to contribute. “We think it is a great plan and we want to participate once we have projects to support the investment flow,” he said.
Established in 2007, the AFC is a Pan-African development finance institution with 20 African states as members. It is partly owned by the Central Bank of Nigeria and the government of Ghana, among other shareholders. So far, it has invested $4 billion across 28 countries.
Zubairu said that although South Africa was not a member of the AFC, it had invested in the Bakwena toll road in Gauteng – first in 2010 and then it increased its investment five years ago. “We have approached them (government) and they have not accepted membership. We hope that with this new government we can advance that, because the government is open to investments,” he said, adding that the benefit of membership lay in facilitating bigger investments faster.
In his opening address at this week’s investment forum, Ramaphosa said that the event – the first of its kind, convened by the African Development Bank – was a milestone in shaping the continent’s fortunes.
“The forum is a platform for African governments and businesses, continental and international financial institutions, and other development partners, to focus on the critical task of making Africa the next global frontier in investment,” he said.
Ramaphosa said a number of areas needed more attention to attract investments.
“To realise this potential, Africa needs to invest in the skills, capabilities and wellbeing of its people. It needs to improve governance and promote peace and stability. Most importantly, if Africa is to seize the opportunities of the future, it needs to mobilise large-scale, sustained investment, especially in infrastructure. African governments cannot do this without business.
“The private sector and private markets are key players in the African investment landscape, supported by the lending capacity of financial institutions both on the continent and beyond.”
