The NEPAD Agency officially launched its 5% Agenda initiative which aims to bridge Africa’s $68 billion infrastructure finance gap.
The launch took place five years after a January 2012 African Union Summit adopted the Programme for Infrastructure Development in Africa (PIDA) which sets out 51 cross-border infrastructure programmes and more than 400 actionable projects in four sectors.
According to the World Bank, the continent needs to spend $93 billion annually until 2020 to bridge its infrastructure gap, which is currently removing an estimated 2% of GDP growth every year.
Meanwhile Africa only managed to close 158 project finance deals with debt totalling $59 billion over the decade 2004- 2013, which represents only 5% of infrastructure investment needs and 12% of the actual financial flows.
The 5% Agenda campaign highlights that only a collaborative public-private approach can efficiently tackle these issues and calls for allocations of institutional investors to African infrastructure to be increased to the declared 5% mark.
Joining forces to create conducive environments
Speaking at the launch event in New York, Ibrahim Assane Mayaki, NEPAD Chief Executive Officer, indicated that for pension and sovereign wealth funds to invest in large-scale infrastructure projects in Africa, a variety of issues need to be addressed to facilitate long-term allocations.
Chief among these matters is the need to reform national and regional regulatory frameworks that guide institutional investment in Africa.
“The private and public sector are joining forces in Africa to create conducive environments to attract these investments, which are so vital for the continent’s growth. As the NEPAD Agency, we believe that Africa must take leadership in financing its infrastructure projects” he said.
Mayaki added: “Infrastructure plays a leading role in supporting growth on the continent. At the same time, it can represent an innovative and attractive asset class for institutional investors with long-term liabilities. By launching the 5% campaign in New York today, we invite investors to take advantage of the wide-ranging opportunities Africa has to offer and to move forward with what can only be a win-win partnership”.
The launch of the campaign gathered high-level international investors and business leaders, including members of the PIDA Continental Business Network and the African Union.