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PAID Fund, Africa’s "World Bank"
Samuel Dowuona,
Ghanadot
When I think of a fund wholly conceived, set up, sponsored
and managed by Africans, solely for the much needed
infrastructure development in Africa, one thing comes to
mind; the World Bank.
Such is the Pan-African Infrastructure Development Fund (PAIDF),
which I prefer to call PAID Fund, except this time it is
entirely African based, which means, its application towards
infrastructure development across the continent would fall
short of the suffocating and crippling imperialist
conditionalities that usually come with loans and grants
from the Burton Wood Institutions and from our so-called
development partners.
The fund was set up with the idea of providing an African
solution to Africa’s problems. In that light its launch at
the 9th African Union Summit in Accra was the most apt
fulfillment of Nelson Mandela’s dream when he said “I dream
of the realization of the unity of Africa, whereby its
leaders combine in their efforts to solve the problems of
this continent.”
At least in two ways the PAIDF is
similar to the World Bank; firstly because it is for
infrastructure development as a way of creating
opportunities for economic development and better living
standards for the people of Africa and secondly because the
fund itself, which currently stands at US$625million was
largely made up of pension fund investments from eight
pension fund management institutions and banks on the
continent.
Ghana’s Social Security and National Insurance Trust (SSNIT)
a state owned pension fund manager, contributed at least
US$10 million. The rest of the money largely came from
institutions in South Africa in particulars and from the
southern African region in general.
Besides SSNIT, the other contributing institutions were the
African Development Bank (AfDB), the Development Bank of
South Africa, Barclays Bank/ABSA Group, Metropolitan, Old
Mutual Group and Standard Bank Group.
The fund is intended to raise an initial amount of US$1.2
billion and for that its five-member management team led by
South Africa’s finance management guru, Tshepo Mahloepe as
Chief Executive Officer, is looking at the international
community to attract corporate investors to it match up.
Indeed, at the launch, some European Union delegates at the
AU Summit expressed interest in investing in the fund. That
for me looks suspect, but it is line with the aspirations of
the managers.
The PAIDF sets out to achieve two basic aims; one, to
address Africa’s critical shortage of equity investment in
basic infrastructure with particular focus on energy,
transport, telecommunication and water and sanitation.
Secondly it would be a useful
vehicle for pension funds as it has a long-term investment
horizon of 15 years, presenting an opportunity to match up
pension fund liabilities through profit.
It is estimated that investors are likely to earn about 26
to 30 per cent profit on their investments in the fund.
There is a third fall out effect if the fund achieves its
two basic objectives; that is to ensure that the
donor-recipient relationship that has endured between
virtually the rest of the world and Africa since colonial
times would give way to a new regime where Africans would
build a new future by and for themselves, a kind of Marshall
Plan for the continent as was done for Europe at the end of
the second world war.
One would ask, why the particular attention to energy,
transport, ICT and water and sanitation and not the usual
social subjects like education and health. But careful study
has shown the four selected infrastructure affect all other
aspect of national development including health, education,
agriculture and all.
WATER AND SANITATION
Even though water is a basic human right according to the
United Nations, it is estimated that over 300 million out of
816 million Africans still do not have access to clean water
and suitable sanitation.
The situation could be aggravated by global warming, as
rivers are predicted to carry less water by the end of this
century, with some drying up completely.
It is no secret that lack of water and suitable sanitation
causes a wide range of infectious and fatal diseases.
On the contrary, the availability of adequate and sufficient
water impacts positively on economic development from the
health of the people to enhancing agricultural productivity.
In tackling the issue of the provision of water and
sanitation the PAIDF therefore seeks not only to save the
300 million people who lack those two essentials but also to
create an infrastructure on which economic development could
be leveraged to improve the living standards and provision
of social amenities and facilities across the continent.
ENERGY
Energy supply, the availability or lack of it impacts
economic development to a very large extent. There are three
identified broad ways by which energy affect development.
They include contribution to the improvement of people’s
lives, development of economic activity and to the
efficiency of public interventions.
A typical example of the negative impact of inadequate
energy supply is the ongoing energy crisis in Ghana and its
resultant 0.8 per cent rise in inflation over a period of a
month according to Minister of Finance, Kwadwo Baah-Wiredu.
The development of Africa’s energy lags behind her
population growth. The irony of it is that even though
Africa is home to 13 per cent of globes population, possess
7.3 per cent of known world oil reserves and accounts for
10.2 per cent of world oil production, the continent has
only 3.6 per cent of the worlds’ oil refinery capacity and
accounts for only three per cent of world energy
consumption.
The potential is that as far as renewable energy is
concerned, at least 21 out of the 53 African countries could
profitably exploit hydro electric energy. Currently only
seven states including Ghana, Zambia, Mozambique and Nigeria
have exploited that potential, but the PAIDF has identified
potentiasl like the Inga River in Congo, which promises to
generate at least 40,000 megawatts of electricity; enough to
supply the whole continent. There is yet a similar potential
identified in Namibia. Fund managers and their governments
believe they could even export this to southern Europe when
the dream is realized since Africa may need only 3,000
megawatts .
TRANSPORT
Besides linking producers to consumers of goods and
services, transportation also links workers to places of
employment, students to schools, patients to health care and
everyone to family and friends, so says David Mozer.
Africa is the continent with the least number of countries
which have access to the coast. As a result it is estimated
that Africa needs to spend up to three times as much as
developed countries getting goods to the market.
The situation calls for very efficient inter-city and cross
boundary transport systems, which is something Africa lacks.
The inefficient transport system in Africa obviously imposes
high premium on trade, travel and business.
In that respect the PAIDF would focus mainly on providing
transportation systems of regional value like road and rail
networks among others for smooth movement of goods, services
and peoples within the continent to boost cross boundary
trade and business.
INFORMATION AND COMMUNICATION TECHNOLOGY (ICT)
In his inaugural lecture at the Ghana Golden Jubilee
Lecture, Kofi Anann, immediate past UN Secretary-General
noted that even though ICT is the order of the day and the
only way to go in this generation, more than 60 per cent of
Africans still lack access to the basic elements of ICT.
The statistics paints a more gloomy picture of the African
situation; the Global Competitiveness Report indicates that
of the 816 million African only one in four have a radio
(204 million), one in 13 have a television (62 million) and
only one in 35 have fixed line telephone (21 million).
Additionally, only one in 130 has a personal computer (PC)
(5.9 million), one in 160 uses the internet (five million)
and only one in 400 has a pay-television (two million).
With such a situation on hand there is no doubt that Africa
needs a heavy and sustained investment in the ICT to rise to
the challenges of globalization. This is where the PAIDF
comes in.
But there is rigorous criteria designed for the disbursement
of the fund, to ensure that it is equitably distributed and
also investor interest is secured. By the dictates of the
disbursement criteria, at any point in time, no more than 25
per cent would be invested in a particular region, not more
than 20 per cent would be invested in a single country and
again not more than 35 per cent would be invested in
particular sector.
One would have thought that the PAIDF would put the shivers
in the spines of the western imperialists. On the contrary
the EU and other private institutions in the west have
expressed interest in investing in the fund.
It is hoped that their involvement with the fund would not
make the imperialists crippling tactics on Africa rear its
ugly head even in the PAIDF. We all thank God that at long
last Africa is standing up on its own as in the words of Dr
Kwame Nkrumah, “ The Black man is capable of handling his
own destiny”. But we also want to warn the fund managers and
our leaders that they should not
break our trust this time around.
Samuel Dowouna, ACCRA, July 8, 2007, Ghanadot.com
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