New investment fund by Africans for Africans

African ministers have officially launched the Pan African Infrastructure Development Fund, recruiting African public and private investors to finance hydroelectric projects, highways, and other infrastructure through a continent-wide entity.

The fund was announced July 1 at an African Union summit in Ghana that debated how to speed up integration of the countries on the world’s poorest continent.

“This is a fund by Africans for the benefit of Africans,” South African Foreign Minister Nkosazana Dlamini-Zuma said.

Her Ghanaian counterpart, Nana Akufo Addo, said the homegrown initiative was a break from the tradition of African states “holding their hands out for alms” from the world.

Congo’s Inga hydro complex among possible deals

The fund’s chief executive, Tshepo Mahloele, said the fund had more than 19 possible infrastructure deals in the pipeline. They include the massive Inga hydroelectric project in the Democratic Republic of Congo (HNN 7/2/07), an airport in West Africa, a toll road in Nigeria, a gas scheme in Namibia, and a satellite covering the whole of Sub-Saharan Africa.

“Of our five top projects, what we call our A list, we’re sure that we should be able to close two within the next 12 to 18 months,” Mahloele said.

Mahloele said mostly South African public and private investors, including banks and pension funds, had already committed US$625 million to the first long-term equity fund of its kind in Africa.

“We have set ourselves the next 12 months to get to $1.2 billion,” Mahloele said, adding the fund made a point of obtaining its initial commitments from African institutions. “It is unlikely that we will get anyone to invest on the continent unless Africans start investing themselves.”

Start-up investors include the South African government-owned Public Investment Corporation and Ghana’s Social Security and National Insurance Trust.

“We’ve got a lot of international interest,� Mahloele said. �We’ve got the Singaporean pension funds looking, we’ve scheduled engagements with American institutions, and also some of the regular development finance institutions.”

The initiative would provide long-term financing for cross-border energy, transport, telecommunications, water, and sanitation projects. Other investment instruments — quasi-equity, structured finance, and high-yielding debt — are to be considered.

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