Regional Blocs Pool Funds for Joint Projects
African regional trading blocs will utilize bonds, donor funds and development bank credits to raise money for key regional infrastructure projects including the Sh1.5 trillion Lamu transport corridor, officials announced in Nairobi Tuesday.
Remittances by member states funds from European Union Investment Bank, Public Private Partnership engagements and donations from development agencies are other sources of Sh4 trillion ($40 billion) needed annually for efficient trans-boundary transport system.
The regional blocs are banking more on external financing to support green field (new) projects and to expand the existing ones to meet increasing trade volumes since most of the national government have huge domestic budgetary deficits to plug.
“These entities have each made separate pledges to us. I have a rough idea of what we have in hand and how much more we still need before the projects start,” Mr Sindiso Ngwenya, Comesa Secretary-General said.
He declined to divulge further details saying it could pre-empt the tripartite conference that is set to discuss the regional projects with international financiers in Nairobi Wednesday and Thursday.
The projects are meant to connect 19 countries of Common Market for East and Southern Africa (Comesa), Southern Africa Development Community (SADC), Inter Governmental Authority (IGAD) and East African Community (EAC) ahead of the planned merger.
Majority of the countries belonging to the three trading blocs are landlocked making the planned ports, roads and railway critical elements in the intraregional trade.
“The Nairobi forum is the continent’s opportunity to address the poor infrastructural link has kept intraregional trade in Africa at the lower level of 10 per cent compared to West Europe’s 60 per cent,” said Kenya’s Trade PS, Mr Abdulrazaq Ali.
The officials said contractors from the region will have the priority during the tendering process since they expect to built capacity for rehabilitating them in future.
The heads of the states from southern, central and northern Africa had given the trading blocs a total of 36 months to harmonise their rules of origin and set up a free trade area aimed at easing trade among member nations.
“For projects such as Lamu where the Kenyan Government has finalised a feasibility study, we expect the construction to start soon,” said Mr Ngwenya who also serves as the chairman of the tripartite taskforce that coordinates the development of key transport corridors of the region.
In taking control of the regional projects, the taskforce relies on the legal framework provided by the MoU signed two years ago among the regional economic communities.
“In the region, a project such as Lamu transport corridor belongs to all states that it connects and is therefore not controlled by Kenya,” said Mr Philip Wambugu, Director of Infrastructure at EAC secretariat.
Officials said Comesa Secretariat was already scouting for a Transaction Advisor to guide the issuance of infrastructure bonds among the 19 member states.
The deliberate efforts will begin soon after the Nairobi Conference to build capacity of the member state’s capital markets to permit the floating of regional bonds, officials announced.
By George Omondi