The AfDB promotes project bonds to finance Africa's infrastructure
The African Development Bank (AfDB) has published a new report exploring how finance techniques can be used to mobilise African domestic capital in order to fund infrastructure development.The African Development Bank (AfDB) has published a new report exploring how finance techniques can be used to mobilise African domestic capital in order to fund infrastructure development.
Entitled "Structured Finance - Conditions for Infrastructure Project Bonds in African Markets", the report highlights the opportunity for project bonds, while outlining the conditions for efficient capital markets, the AfDB stated in a press release.
According to the document, domestic government bond markets are well established and becoming increasingly sophisticated in Africa and an opportunity for further innovation exists with the issuance of "infrastructure bonds".
Kenya, for example, has already launched infrastructure bonds both from the central government and from state-owned enterprises, and has introduced tax benefits for investors buying such bonds.
Recent figures from the World Bank reveal that the continent’s infrastructure deficit is considered one of the most significant barriers to sustaining Africa’s growth. It is estimated that the continent will need to invest nearly $93 billion (€71.3 billion) per year over the next decade to bridge the deficit.