Kibaki: Get new source for infrastructure cash
African states should reduce reliance on external borrowing for infrastructure funding, President Mwai Kibaki, has said, adding that capital markets could offer alternative sources of funds.
“One of the ways we can raise funds which we have not fully exploited, is through development of national and regional instruments. This will tap into our domestic savings and reduce heavy reliance on external borrowing and grants,” he said.
The President, who was speaking while opening a regional infrastructure conference at Kenyatta International Conference Centre, said countries should find innovative ways to diversify funding, methods of ownership and management of infrastructure projects.
“We need to move fast to further strengthen our capital markets to enable them develop products such as infrastructure bonds and municipality bonds,” he added.
The conference, which ends today, is being attended by delegates from Common Market for East and Southern Africa, East African Community, Southern Development Community and Inter-Governmental Authority on Development.
According to Comesa secretary-general, Mr Sindiso Ngwenya, the countries will require $93 million every year for the next 10 years to develop infrastructure connecting them.
He added that transport is major hindrance to trade between countries, with only 10 per cent of intra-border trade in the continent, compared to 62 per cent in Europe.
The continent contributed only 3 per cent of world trade, despite constituting 12 per cent of the total world population.
“It costs $1500 to transport a 20 feet container from Japan to Mombasa and $5000 to transport the same container to Burundi.
About 40 per cent of the cost goes to officials at the border points,” he said.
Mr Kibaki said the region was one of the lowest in energy production and consumption, which undermined economic development, yet huge potential lay in hydro, geothermal, gas, coal and wind.
“Creation of industrial states is a matter of necessity now, if we are to eradicate poverty. We must collectively invest in generation capacity and build power grid interconnectors. This will facilitate trade in power from surplus to deficit regions,” he said.
