Nigeria may benefit from multi-million dollar Africa initiatives

Nigeria is in line to benefit from series of multilateral initiatives brokered by the International Monetary Fund (IMF), Germany, the International Finance Corporation (IFC) and leaders of the top Multilateral Development Banks (MDBs).

Under the G-20 Compact with Africa scheme, IMF Managing Director, Christine Lagarde and Germany’s Minister of Finance, Wolfgang Schäuble, at the weekend in Washington DC, signed a €15 million pact in support of capacity development activities across Africa.

The move is to ensure capacity development support for African policymakers to address  challenges in strengthening domestic resource mobilization, implementing fair tax systems, achieving good financial governance, and fostering financial stability and inclusion.
This also, is in support of 2030 Agenda for Sustainable Development. The Compact with Africa is an initiative launched under Germany’s G-20 Presidency in December 2016 and aims to boost private investment and increase infrastructure development in Africa.

Discussing the challenges of infrastructure at the forum, the Deputy Secretary-General of the United Nations, Amina Mohammed, harped on charting enabling framework, rather than identification of the challenges.

She enthused that Basic infrastructure services- roads, water and sewage lines, and electrical power – are scarce in many developing countries, while more than one billion people live without electricity, more than 660 million without access to clean water; and one in three people that lack access to flushing toilets and sewerage infrastructure are targeted.

Similarly, IFC and Europe’s largest asset manager, Amundi, have agreed to create the largest green-bond fund dedicated to emerging markets, estimated at $2 billion, in efforts to deepen local capital markets and expand financing for climate investments. IFC will invest up to $325 million in the new Green Cornerstone Bond Fund, which will buy green bonds issued by banks in Africa, Asia, the Middle East, Latin America, Eastern Europe, and Central Asia. Amundi will raise the rest of the $2 billion from private Institutional Investors worldwide and will provide its services in managing emerging-market debt. The fund aims to be fully invested in green bonds within seven years.

Christine Lagarde noted that with trillions of dollars in capital sitting on the sidelines earning low or even negative returns, deeper engagement with the private sector can create win-win scenarios where investors earn better returns on long-term investments and developing countries get much needed investment and expertise.

“This compact has the potential to mobilize investment and energize inclusive economic growth in Africa. The development, through a donor-funded investment support facility led by IFC and Amundi, local financial institutions’ capacity will be strengthened to issue green bonds, providing training and sharing international best practices with them.

“This green-bond fund will lower the risk for the private sector and attract new investors essentially creating a market where there was none. We’ve already identified dozens of banks in many developing countries around the world that could be interested in this fund,” IFC’s Chief Executive Officer, Philippe Le Houérou, said.

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