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Structured Finance : Conditions for Infrastructure Project Bonds in African Markets

Cedric Achille Mbeng Mezui
Bim Hundal
NEPAD
Regional Integration and Trade Department

Structured Finance : Conditions for Infrastructure Project Bonds in African Markets

Cedric Achille Mbeng Mezui
Bim Hundal
NEPAD
Regional Integration and Trade Department

“The report on Structured Finance in Sub-Saharan Africa-Conditions for Infrastructure Project Bonds is the latest addition to the ongoing efforts to harness more domestic resources for development, with particular emphasis on building Africa’s infrastructure.

“This report is very timely, given the urgency to significantly scale up financing to address Africa’s large and growing infrastructure deficit,” said Boamah. African countries have been growing at rates in excess of five per cent. Indeed, seven out of the 10 fastest-growing countries in the last few years are in Africa. This has created a growing middle class and a flourishing financial sector. Savings are accumulating with institutional investors such as pension funds and insurance companies.

An opportunity for further innovation exists and would be welcomed by the market, the book argues. Several African countries today have given priority to the issuance of infrastructure bonds. Many countries have been attracted by the example of Kenya, which has launched infrastructure bonds both from the central government and from state-owned enterprises such as KenGen. The Government of Kenya has led the way by introducing certain tax advantages for investors buying such bonds. This has helped to build interest in the institutional sector.

The report also elaborates on examples from other emerging markets such as Chile, Brazil, Peru and Malaysia using project bonds as a way to catalyze investors’ interest in infrastructure projects. Such examples can serve as a template for African countries on how to develop their own markets.

Publié le 26 avril 2013