Bola Olajuwon, Cairo
Investment experts from Africa and their development partners have weighed the possibility of sourcing about $500 billion from pension funds.
The move is aimed at bridging the revenue gap to develop infrastructure projects in the continent.
Besides, it is geared to raise infrastructure projects’ funding from 1.4 per cent to five per cent by converting pension funds to “a pipeline of bankable projects”.
The stakeholders also spoke about the need to engage the public and the private sector as well as other funding mechanism like the sovereign funds.
However, experts who raised the idea at the ongoing Programme on Infrastructure Development in Africa (PIDA) in Cairo, Egypt, noted that perception of risks involved in such funding is real.
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During a panel session on the idea, titled: “Managing risk to encourage private sector engagement and investment in infrastructure development,” Brian Dlamini of Development Bank of South Africa, noted that the African Union (AU) Commission and New Economic Programme for African Development (NEPAD) are looking at the idea to achieve PIDA objectives and accelerate the continent’s sustainable development goals.
He suggested the need for evaluation of risk assessment, formulation of reforms and enactment of the required legislation to enable the pension funds industry to fund infrastructure projects.
On the concern of stakeholders on the risk involved, he said issues surrounding such risks could be mitigated from the project formulation stage.
Another member of the panel and an Investment Officer with Kwacha Pension Trust Fund, Lusaka, Zambia, said the primary function of pension administrators is to receive contributions from members and invest them for profitability.
She said the risk involved must be determined to enable contributors enjoy a better life.
She, however, noted that pension fund managers must come together to mitigate the risks involved, fund such projects, create fund for legal issues and meet frequently for timely intervention.
Transaction Advisor and Technical Assistant to AUDA- NEPAD Carla Rooseboom said the United Kingdom (UK) faced similar issues about 10 years years ago, which was later tackled.
She advised that the accessment of risks involved must be weighed including other factors.
The stakeholders had sought greater regional and cross-border integration as well as cooperation to bridge the continent’s infrastructure needs put at between $130 and $170 billion a year.
The financing gap for the required infrastructure needs was put at between $68 and $108 billion.
Key players in the infrastructure sector noted that enhanced partnerships between the public and private sectors to develop the continent’s infrastructure to spur industrial growth and employment creation would bring the continent a little closer to achieving the Pan- African dreams of the African forefathers: an interconnected Africa, where divisions of the colonial pasts would fade away.
They agreed that greater economic activities, enhanced efficiency and increased competitiveness on the continent were continually being hampered by inadequate transport, communication, water and power infrastructure.
Since its inception in 2015, PIDA Week has evolved and grown to become the flagship advocacy and marketing event for PIDA, which was formed to drive Africa’s aspirations for infrastructure development in line with Agenda 2063.
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