African Development Bank Steps Up Funding as China Boosts Role
Written by Rene Vollgraaff and David Malingha Doya | From Bloomberg
The African Development Bank is stepping up plans to finance power and rail projects as China boosts lending on the continent by half.
The Tunis-based lender is set to endorse this week the Africa50 Fund, which is targeting $10 billion of equity from an initial capital of $3 billion, to finance infrastructure projects. Central bank governors and finance ministers across the continent will meet from today at the bank’s annual conference in Rwanda’s capital, Kigali, to back the plan.
African nations have a funding shortfall of $50 billion a year to ease energy shortages and transport bottlenecks, according to the World Bank. The AfDB’s spending on the continent is dwarfed by China, which invested more than $13 billion in infrastructure in 2012, as the world’s second-largest economy boosts its reliance on Africa’s oil, coal and other commodities.
“The AfDB is investing significantly into African infrastructure,” Joe Cosma, head of government and infrastructure at Ernst & Young in Johannesburg, said by phone. “They are investing a lot of time in working out how they can work with African governments to define infrastructure requirements and investment options. In a sense, they are competing with the Chinese.”
The AfDB approved funding of $9 billion in 2011, with infrastructure projects accounting for $3.4 billion of that, according to the lender. Chinese Premier Li Keqiang said on a visit to Africa this month that the government will boost its line of credit to African nations by $10 billion to $30 billion. He also pledged to almost double capital in the China-Africa Development Fund, which gives financing to Chinese companies for private equity deals, to $5 billion.
Read more at Bloomberg