Lapsset among projects to benefit from $20bn initiative

Kenya received a major boost in its efforts to connect its economy to northern landlocked markets on Wednesday after the rich countries formed an African hub to mobilise $20 billion for cross-border infrastructure projects.

The Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor is among the 16 regional projects set to benefit from a mix of philanthropic and development financing targeted under the initiative announced in Kigali.

The regional hub dedicated to African projects was made public by the Sustainable Development Investment Partnership (SDIP) on the first day of the World Economic Forum (WEF).

SDIP is an initiative hosted by the forum and a host of rich countries working under the aegis of the Organisation for Economic Cooperation and Development (OECD).

The SDIP Africa Hub will mobilise blended finance, which combines funding from private investors and lenders, governments and philanthropic funds.

BLENDED FINANCE

“The SDIP Africa Hub is an important first step to accelerate the engagement of SDIP members on the continent” said Mr Terri Toyota, the head of the Foundations Community and Development Finance and member of the Executive Committee of the WEF.

He added: “We envision the hub building local capacity to advance blended finance best practices for infrastructure investment and ensure a consistent pipeline of projects for the initiative from Africa.”

The initiative is likely to be applauded by Kenya, which only recently received a blow after Uganda pulled out of a joint crude oil pipeline designed to run along the corridor to Lamu.

Kenya has over the past three years been working on its side of the corridor.

Last month, the government approved an additional Sh1 billion that the National Treasury allocated to the project in the supplementary budget.

The government has been keen to complete the Lapsset headquarters and the first berths before opening the whole project to private investors.

SDIP members include Bill and Melinda Gates Foundation, Citi, the United States, the United Kingdom, the Netherlands, Sweden, Denmark and Norway. Others are Development Bank of South Africa, Deutsche Bank, East Capital, the European Bank for Reconstruction and Development and the European Investment Bank.

There are also HSBC Industrial Development Corporation of South Africa (IDC), Inter-American Development Bank, International Finance Corporation, Investeringsfonden For Udviklingslande, Meridiam Infrastructure, Multilateral Investment Guarantee Agency, Sumitomo Mitsui Banking Corporation and Standard Chartered.

In addition to supporting blended finance in support of the projects, the African hub of SDIP is also expected to facilitate the exchange of best practices across its network of institutions.

“Countries are able to make much more effective use of private financing when they link pools of capital to specific projects and introduce practical solutions that address risk and ensure financial closure,” said Mr Richard Samans, a member of the managing board of the WEF.

MEANINGFUL CONTRIBUTION

Mr Mohan Vivekanandan, group executive, strategy, at Development Bank of Southern Africa, added: “The DBSA believes that the SDIP initiative, and its goal of delivering $100 billion in infrastructure projects within the next five years, will make a meaningful contribution and also help to build local capacity and solutions by bringing together African and global private- and public-sector organisations.”

More than 1,200 participants from over 70 countries are taking part in the WEF on Africa that is being held in Rwanda until tomorrow.

The theme of the meeting is “Connecting Africa’s Resources through Digital Transformation”.