Kigali - The African Development Bank (AfDB) is stepping up plans to finance power and rail projects as China boosts lending on the continent by half.
The Tunis-based lender is set to endorse this week the Africa50 Fund, which is targeting $10 billion (R103bn) of equity from initial capital of $3bn, to finance infrastructure projects. Central bank governors and finance ministers across the continent will meet from today at the bank’s annual conference in Rwanda’s capital, Kigali, to back the plan. The World Bank estimates African nations have a funding shortfall of $50bn a year to ease energy shortages and transport bottlenecks.
The AfDB’s spending on the continent is dwarfed by China, which invested more than $13bn in infrastructure in 2012, as the second-largest economy boosts its reliance on Africa’s oil, coal and other commodities.
“The AfDB is investing significantly into African infrastructure,” Joe Cosma, head of government and infrastructure at Ernst & Young in Johannesburg, said. “They are investing time in working out how they can work with African governments to define infrastructure requirements and investment options. In a sense, they are competing with the Chinese.”
The AfDB approved funding of $9bn in 2011, with infrastructure projects accounting for $3.4bn of that, the lender said. Chinese Premier Li Keqiang said on a visit to Africa this month that the government would boost its line of credit to African nations by $10bn to $30bn. He also pledged to almost double capital in the China-Africa Development Fund, which gives financing to Chinese companies for private equity deals, to $5bn.
“Chinese investors provide funding and technical expertise, a full implementation package, which African governments find attractive,” Cosma said. “The AfDB is much more connected to the African governments and they can use this relationship to their advantage.” – Bloomberg