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AfDB unveils $45m for investors in infrastructure

ARUSHA, TANZANIA- Private companies in the partner states of the East African Community (EAC) that are planning to invest in infrastructure projects have now got an opportunity to borrow funds from the African Development Bank (AfDB) for implementation of their projects.
This opportunity follows the approval of $45m senior loan to the emerging African infrastructure fund (EAIF) to support private sector infrastructure projects and infrastructure-related companies in sub-Saharan Africa.
A statement issued by the bank on its website said that this is the second AfDB loan to the fund while in the year 2009, the bank approved a $31.25m senior loan and a $12.5 million standby loan facility.
Established in January 2002, EAIF has a track-record of providing long-term foreign currency debt financing to private infrastructure projects across the sub-Sahara region.
The statement said that while EAIF lends on commercial terms, it aims to support projects that promote economic growth, reduce poverty, and promote environmental and social best-practices. It said that the fund has approved over 30 transactions since inception and currently has a portfolio of projects amounting to approximately $500m across the energy, telecom, transport, mining and manufacturing sectors.
"This project is in line with the AfDB's focus on financing infrastructure to build a favorable environment for private sector activity and investment," said the statement.
It said the bank's vision emphasizes support to projects in power, transportation, and telecommunications, which are all areas covered by EAIF.
"Since the approval of the first loan to the Fund in 2009, the fund has worked with the bank on several projects, such as the Addax Bioenergy Project in Sierra Leone, and the KivuWatt Power Project in Rwanda,".
"Sub-Saharan Africa requires substantial investment in all the infrastructure subsectors targeted by the fund while the providers of long-term senior and subordinated debt on appropriate terms are limited" said Tim Turner, Director of AfDB Private Sector and Microfinance Department.
"Hence, the bank is pleased to join the Austrian Development Bank and the International Finance Corporation (IFC) in providing additional debt financing to the fund, which has contributed to significant resource mobilization, new and improved infrastructure access and job creation," he said.
He explained that the joint AfDB, Austrian Development Bank and IFC additional financing, which amounts a total of $105m will facilitate the fund's operations during 2012 in areas such as power, water and waste treatment and manufacturing.
"This will increase infrastructure access and foster a more conducive enabling environment for both investors and communities served by the projects, create jobs and contribute to government revenues," he added.
He pointed out that Africa has immense infrastructure development needs which greatly exceed the level of resources achievable solely through public finances and official development assistance.
This infrastructure gap is a major constraint on doing business. In addition to basic infrastructure including power, water, energy, transportation, there is also a growing demand for investments and other assistance in related sectors such as core industry, agribusiness, and natural resources," he noted.
"As a result, African countries appreciate the key role that the private sector plays in the development of infrastructure not only from a financing standpoint but also in terms of the transfer of expertise," he said.
 
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