RABAT, MOROCCO - AFRICAN countries need to clean up the perceived risk tag in order to attract infrastructural finance, it has been noted.
This emerged yesterday during the 2024 Africa Investment Forum (AIF) Market Days being held in Rabat, Morocco.
The African Development Bank (AfDB), the host of the three-day forum that ends today, said the continent would need to invest about 5,5% of its annual gross domestic income to meet the housing needs of Africa’s booming population.
Zimbabwe alone has a housing backlog of two million.
During a panel discussion, experts discussed how to mobilise finance for urban planning and development, which involved getting fundamentals right in terms of garnering finance.
Big Win Philanthropy director of cities, Hastings Chikoko, said the African risk was exaggerated.
Keep Reading
“The only way to get investors through that process is to deliver risk,” Chikoko said.
“And what I mean by that is you need to give them investment opportunities that they can put capital into, see the risks, and then get so excited that they're now chasing after them.”
He cited South Africa as an example where the debt returns that investors are getting today for a 20-year loan are less than the sovereign’s 10-year normal cost.
“So, it’s not enough just to say that the risk is a normal loan. We actually have to demonstrate by giving the opportunities back out of the club,” Chikoko added.
“We need to depart from a humanitarian relief kind of mindset, where we make proposals to the table and expect someone to invest out of sympathy for what it is.”
Development Bank of Southern Africa Origination and Coverage Group executive Mohan Vivekanandan said investors wanted returns.
“The cities are in the business of implementing, so that they can raise their economy on a regular basis. So, everybody really and truly wants different things but somehow those two positions come together. And it’s interesting to hear what the market demands,” he said.
“And really and truly, that’s what it boils down to, investors being able to put their monies in and know that it will yield.”
Vivekanandan said it was also key to know how to structure business so that one was able to give the investor an opportunity.
“Unless we do anything about it, unfortunately, we are not going to grow,” Vivekanandan said.
“That’s why we are saying to investors, let’s participate. Let’s see more projects being funded from public-private partnerships.”