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Africa’s infastructure deficit has been well documented. Friends and foes of the continent, across disciplines, are unanimous not only on infrastructure’s paucity but agree that bridging the gap is sine qua non to Africa’s economic development and prosperity.
Meeting the continent’s infrastructure needs, analysts have concluded would attract more investment into Africa, accelerate inter and intra Africa trades, enhance Africa’s competitiveness and reduce cost of doing business.
In a report commissioned by Programme for Infrastructure Development in Africa (PIDA) in 2010, closing Africa’s infrastructure gap will cost around $360 billion between 2020 and 2040. This is barely 15 years away and not much has been achieved.
Reeling out some brief statistics, PIDA in same report claimed that “Africa’sroad access rate is only 34 percent, compared with 50 percent in other parts of the developing world, while transport costs are 100 percent higher. Only 30 percent of Africa’s population has access to electricity, compared to 70 – 90 percent in other parts of the developing world. Water resources are underused with only five percent of agriculture under irrigation. The Internet penetration rate is a mere six percent, compared to an average of 40 percent elsewhere in the developing world.”
Because of its humongous costs, which are beyond the financing capacities of governments and donors, financial institutions are considered strategic for financing the much-needed projects in transport, energy, and housing. These projects are necessary to jump-start the socio-economic developments that have punctured the continent for centuries.
Critical to achieving this is the role the pan-African financial institutions with shared aspiration, would play in providing the financial intermediation, project financing, business advisories, accentuating microeconomic stability which would guarantee growth and prosperity.
Banks’ roles as financial intermediaries, mobilisers of savings and channels of scarce funds to sectors in need are critical in hitting the right nails on the coffin of underdevelopment in Africa, considering the impact paucity of infastructure poses to the continent
To catalyse developments, Africa countries would rely on financial institutions to bankroll infastructure projects, facilitate payments, deepen financial inclusion and support trade and investments.
Why would the continent with about 97 percent of the world’s chromium, 90 percent of the world’s cobalt, 85 percent of the word’s platinum, 70 percent of the world’s cocoa, and 60 percent of the world’s coffee, be poor and remains at the periphery of the world finance ecosystem.
Many factors have been deduced, including colonialism, slavery with distortions both created and sustained; dependence on primary commodities subject to the vagaries of the world economic powers; vulnerability of Africa’s economies due to global market fluctuations; weak governance and corruption; infastructure deficits; limited access to health and education, hampering human capital development; incessant conflits and wars and climate crisis.
Despite all these challenges, the continent has huge potential. Africa is growing rapidly and is poised to transform itself into an economic success. With its abundant resources, huge youth population, Africa provides a potential destination for global investment and trade, infastructure financing, human capital development. If the challenges tackled heads on, Africa can unlock its potentials, galvanising economic growth and development.
Catalysing such needed development is critical to unlocking Africa’s hidden potentials. African banks should be capacitated in financing infrastructure, enabling intra-Africa trade, promoting access to quality education and healthcare and enabling micro and macroeconomic stability.
Few African financial institutions have played a significant role in promoting economic development, facilitating trade and economic integration. They have developed products and services, committed resources towards scaling intra-Africa and regional trade, fostering monetary cooperation and financial stability, financing projects with catalysing credentials, which have run into hundreds of billions of dollars.
They have supported the private sector via finance and technical assistance with diverse impacts in the economies.
As we celebrate Africa Day, it is important to recognise the efforts of African Development Bank (AfDB), African Export-Import Bank (Afreximbank), Africa Finance Corporation(AFC), among others in the roles they have played in this space. While AFDB and AFC provide capital and advisory services for projects and programs that have promoted growth and development, Afreximbank have supported businesses involved in international trade on the continent among other needs.
The mentioned institutions have mobilised capital for landmark projects across energy, transport, health and natural resources on the continent, impacting trade and macroeconomic stability on the continent.
Apart from these development banks, some lenders and commercial banks with roots in Africa have played strong, facilitating intra-Africa trade, financing projects and infastructure within and cross-border and deepening financial inclusion. The United bank for Africa(UBA) Group, is in that category.
The Group, founded in 1949 in Nigeria, has become Africa’s Global Bank, promoting economic development and integration, facilitating trades, deepening financial inclusion and capacitating resources on the continent
UBA Group, with presence in 20 African countries and major world finance capitals of New York, London, Paris and Dubai, known for its innovation and disruption have challenged foreign banks, becoming systemic, important bank in many countries.
With over 45 million customers and over1000 business offices, UBA provides trade finance solutions, enabled businesses and individuals to access new markets and opportunities. Tailored products such as AfriCash, a money transfer service provided by UBA across 20 African countries allows customers to send and receive money quickly and securely between various countries where UBA operates.
UBA Group has committed billions of dollars to financing infrastructure in transport, energy, and other essential sectors, powering economic growth and development. Roads have been financed in Senegal, energy infrastructure in Congo, sport facilities in Cameroon. Known for its innovation, UBA offers digital banking solutions, increasing access to financial services and products and promoting financial inclusion.
The pan-African financial institution offers a range of support and financial solutions for Small and Medium Enterprises (SMEs), including loan options, capacity building, and advisory platforms. They also have a dedicated SME account and initiatives like the UBA X AfCFTA to help SMEs across Africa access financing and technical solutions. UBA pledge $6 billion over three years to support SMEs in key sectors through a partnership with the African Continental Free Trade Area (AfCFTA) Secretariat. African banks should emulate UBA Group and champion sustainable finance on the continent. It is heartwarming that African Banks are taking up these challenges with increased participation in key projects on the continent.
Concerted efforts should be directed to mobilising banks’ financing for sustainable infrastructure on the continent. Our governments also need to do more. Financial institutions’ investment and finance for infrastructure will flow more to the country that has the proper policy frameworks on security, sustainable cash flow.
The African Union and its respective members should strengthen private-public partnerships as the key to financing infrastructure on the continent.
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