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29.03.2007 Africa

AFC to fill the yawning gap of private sector funding

By John Okuley MENSAH

Leading economist, Kwame Pianim says, if made to succeed, the African Finance Corporation would be Private sector to get a major source of funding for billion dollar investments on the continent.

The private sector could be getting the much needed funding if the proposed African Finance Corporation (AFC) becomes a reality. The finance corporation modeled along the lines of the World Bank's private sector arm, International Finance Corporation is the brainchild of the Nigerian Central Bank Governor Professor Chukwumah Soludo.

The AFC is expected to fill the yawning gap between African's development needs and inadequate resources, explains Economist Kwame Pianim who heads the New World Investment Company based in Accra.

It will be both private & public sector funded with about 51 percent of the institution being owned the private sector, and will be managed by experts of international repute who will be selected through international competitive bidding.

The AFC will source funds from all over the world for onward lending to the private sector in particular to invest in key areas within the continent.

Mr. Pianim has lauded the initiative, arguing that it will enable the private sector to access enough funds from an African institution to invest in areas that have become the preserve of foreign investors.

According to him, with the economic climate improving across the continent, it is time for Africa to have an institution to support the continent's growth agenda. He bemoans the situation where key sectors such as electricity, water, and port will be in the hands of foreign investors.

Zeroing in on Ghana, Mr. Pianim said the country requires some two to three billion dollars to fix its entire electricity problem and he believes such an amount could be sourced by the private sector from an institution such as the AFC if it is made to succeed.

He also believes that the private sector now has the expertise to adequately source funding and invest in big deals in so far as there will be an institution to provide them with the necessary funding.

The African Finance Corporation, he says, will complement existing donor institutions such as the World Bank and its subsidiaries, the International Monetary Fund IMF, and the African Development Bank. He noted that while the exiting institutions have been helpful, they are owned largely by non-African states and are saddled with bureaucracies because they have to conform to the dictates of the shareholders who are non-African nations.

On the contrary he believes the African Finance Corporation will better meet the needs of the continent because it better understand the terrain.

Also the promoters of the institution want to focus on the private sector, “it will be managed by the private sector and will be providing funds to the private sector which is a good initiative".

The economist wants the initiative to be supported by governments across the continent to enable it to succeed.

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