The African Development Bank (AfDB) has added its weight to the move to utilize pension and sovereign wealth funds to finance critical infrastructure in Africa.
President of the bank, Dr Akinwunmi Adesina, who met with President Muhammadu Buhari at the presidential villa, Abuja on Tuesday, said African governments should invest the $1.8trillion pension and sovereign wealth assets on the development of infrastructure on the continent.
Recall that the federal government has also stated its intention to tap on the funds to provide infrastructure in the country.
Speaking to State House correspondents after the meeting, Adesina noted the $68billion to $108billion infrastructure gap in Africa, which he said could be adequately addressed by utilizing the $1.8tn accrued pension and sovereign wealth funds.
Adesina, who was the minister of agriculture under Dr Goodluck Jonathan administration, therefore appealed to African leaders to explore the possibility of applying the money to infrastructure development.
He noted that doing so would be a case of “charity begins at home”, instead of going elsewhere to seek funds for development or investing the funds.
According to him, Africa would be better positioned to compete favourably in trading with others it has good infrastructure.
He said: “Today, Africa has an infrastructure gap of about roughly $68bn to $108bn infrastructure financing gap. At the AfDB, we have been working so hard to close that particular gap.
“When it comes to the issue of attracting capital to do that, there are three things that I will say; first, we have to also look at home. Today, in Africa, the size of the sovereign wealth fund and pension fund and insurance pull of fund (mutual funds) is about $1.8tn.
“If we can just tap a little part of that, we will close very quickly the infrastructure gap that we are talking about. But, you see a lot of sovereign investment funds being invested in other sovereigns outside the continent.
“So, they become the sovereign wealth of others and then you go back and borrow back your own money; it doesn’t really make a lot of sense. I say that charity always begins at home.”
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Also speaking on the adoption of Eco single currency by West African countries, he said it was a welcome development.
According to him, with the African Continental Free Trade Area Agreement (AfFCTA) coming into force, a unified currency for the sub-region would put the sun-region in a better position to compete on the continent.
The AfDB boss stated: “I support the Eco fully,” Adesina said, adding that the AFCTA is “the biggest thing to happen to Africa.”
He added: “That free trade area itself is worth over $3.3tn in terms of trade. Obviously, it’s not optimum to trade in so many currencies.
“So, it makes common sense to have a unified currency and of course for that to even be achieved, the Eco; I support Eco greatly. I think it’s a great idea to do.
“But, obviously, there are a number of convergence criteria that will have to be met and I am sure that our President is talking with other presidents to be sure that they can meet those criteria and the region can be fully integrated.”
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