The AfDB estimates the continent’s infrastructure needs amount to $130bn-$170bn a year, with a $68bn-$108bn financing gap. Picture: ISTOCK
The AfDB estimates the continent’s infrastructure needs amount to $130bn-$170bn a year, with a $68bn-$108bn financing gap. Picture: ISTOCK

The African Development Bank (AfDB), the continent’s largest development finance institution, has pledged to make its inaugural Africa Investment Forum a "deal-making conference" that is focused on transactions rather than on "general conversations around issues".

The objective of the forum, which takes place in Johannesburg in November, was to close deals, Josephine Ngure, deputy director-general at the bank, said on Wednesday.

In his drive to raise $100bn in new investment over the next five years, President Cyril Ramaphosa will hold an investment summit in October.

On Tuesday, ahead of the 10th Brics summit, Ramaphosa and his Chinese counterpart, Xi Jinping, announced a $14.2bn investment in SA from Asia’s most populous nation.

The forum would support Ramaphosa’s summit, as the AfDB routinely aligned with the goals of individual African governments, Ngure said.

While countless conferences promoting African investment opportunities are held annually, the continent attracted just 3% in global foreign direct investment in 2017, the UN World Investment Report notes.

High cost of funds

The high cost of funds, perceived corruption and high corporate tax rates were the major obstacles to investment on the continent, Neville Mandimika, an Africa analyst at Rand Merchant Bank, said.

The forum hoped to attract would-be investors for whom specific policy issues were causing blockages so that these could be resolved, Ngure said.

Closed "boardroom sessions", which would run alongside open sessions, would focus on sealing "investment-ready" deals, she said.

The forum also aims to attract investors who are seeking funding for specific projects and those who are interested in co-financing arrangements with governments and development finance institutions.

Institutional investors frequently bemoan the lack of "bankable projects" in Africa, meaning projects in which risks are deemed acceptable because of government guarantees, collateral or some assurance of future cash flows.

Institutional investors such as insurance companies, pension funds and sovereign wealth funds had more than $100-trillion in assets under management globally.

"We are competing with all other regions to get a share of these resources," Ngure said.

The AfDB estimates the continent’s infrastructure needs amount to $130bn-$170bn a year, with a $68bn-$108bn financing gap, she said.

ziadyh@businesslive.co.za

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