Regional blocks mull infrastructure bonds

September 27, 2011

, NAIROBI, Kenya, Sep 27- Leaders from four regional blocks are set to meet in Nairobi from Wednesday to discuss floating infrastructure bonds for key projects.

The Southern African Development Community (SADC), the East Africa Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) – which together have formed the Tripartite – will be joined by the InterGovernmental Authority on Development (IGAD) for the meeting.

Tripartite Chairman Sindiso Ngwenya said on Tuesday that it was time governments became innovative in the ways of raising money for infrastructure, as the cost of financing in some cases might be too huge for one investor.

“There is need for us to have innovative means of financing infrastructure for the very simple reason that it requires a huge capital outlay, in some cases making them even unattractive for investors,” Ngwenya said.

The bodies are focusing to finance major infrastructure projects along four critical corridors – Central, Northern, Lamu and Djibouti in Eastern and Horn of Africa region.

The corridors traverse 10 countries – Burundi, Democratic Republic of Congo, Djibouti, Ethiopia, Eritrea, Kenya, Rwanda, Southern Sudan, Tanzania and Uganda.
Ngwenya said during the conference, leaders will be seeking to get funding to the tune of Sh308 billion ($3 billion) for an infrastructure facelift to boost East and southern Africa as an investment destination.

Ngwenya said since a number of the projects are government owned, feasibility studies to show the economic viability of the projects will need to be conducted to attract funding.

“Sometimes it’s a chicken and the egg situation, if the projects are not prepared they are not bankable then you don’t get them financed. But you can put say $5 million for that exercise and get $250 million for the same project,” he said.

The main significance of the corridor development programs is to reduce the time and the costs of importing or exporting goods by surface transport in the Eastern and Southern region.

With intra trade in Africa estimated at 10 percent, Ngwenya said regional connectivity would improve access to new and emerging markets and boost economic growth.

“We need to accelerate the rate at which we trade with each other by ensuring infrastructure and trade bottlenecks are eliminated to facilitate easy movement of goods,” he said.

Selected infrastructure projects in roads, rail, ports, inland waterways and energy sectors will be showcased in the conference.

The conference will be opened by President Kibaki and will be attended by, among others, King Mswati III of Swaziland, who is the Chairperson of COMESA, President Pierre Nkurunziza of Burundi and chair of the EAC, President Jose Eduardo dos Santos of Angola, and chair of the SADC.

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