Launching of NASP-USAID Partnership for Africa’s Infrastructure
In September, 2016, Bloomberg and the U.S. Department of Commerce co-hosted the 2nd U.S.-Africa Business Forum held in conjunction with the 71st United Nations General Assembly. Delegations from 44 African countries, including 29 African heads of state and hundreds of CEOs from the U.S. and Africa came together to recognize opportunities for investments and growth in both regions. In addition to announcing over $9 billion mobilized at the forum, USAID and the National Association of Securities Professionals (NASP) formally launched “MiDA”, to expose U.S. public plan sponsors and other institutional investors to opportunities to co-invest with African counterparts in Africa’s infrastructure.
NASP and USAID are joining forces as the global agenda for mobilizing institutional investors for Infrastructure is undeniably moving forward, with many high-level initiatives at the United Nations, World Bank, IMF, African Development Bank, and the G-20. The prevailing consensus suggests that the primary financing sources for filling the infrastructure finance gap are institutional investors, primarily pension funds, based on the alignment between the needs for enhanced yields and longer tenors to meet their liability structure, and infrastructure assets potential to provide predictable inflation-adjusted cash flows that have low correlations with existing investment returns. And nowhere is the lack of infrastructure more crucial, transformational, and potentially profitable than in sub-Saharan Africa, which needs about $93 billion per year to fill its infrastructure gap, mainly in energy, transportation, water, and telecommunications.
In the power sector for example, according to the McKinsey report “Brighter Africa: The growth potential of the sub-Saharan electricity sector”, Sub-Saharan Africa will consume nearly four times more electricity by 2040. With a projected fivefold increase in GDP, a doubling of population, and increased urbanization, sub-Saharan Africa will consume as much electricity by 2040 as India and Latin America combined did in 2010. To meet this demand, effective mobilization of greater amounts of capital is needed to support investments in infrastructure, echoing the mantra “from billions to trillions” adopted by the Multilateral Development Banks to supplement their financing capacity with new private capital. To succeed, the MDBs are redeploying their resources to support new co-investment platforms and improved credit enhancements specifically tailored to improve opportunities for institutional investors.
In conjunction, the NASP-USAID Investment Partnership will develop channels for U.S. institutional investors to co-invest with African institutional investors, and to partner with the MDBs to further de-risk investment opportunities.
Click here to read the factsheet from USAID.
Photo Credits:
A Ride to Give Legs a Rest: Esilalei, Tanzania – February 3, 2014: Through the creation of solar powered micro-grids, Maasai of the Moduli district in northern Tanzania are receiving power in their mud huts inside their bomas (corralled community). The solar power is providing life-saving water purification, a shared refrigerator for food and medicines, a computer for the community, and lights for the cow and goat corrals to frighten away the hyenas. The International Collaborative for Science, Education and the Environment (ICSEE) also manufactures and distributes a chimney stove for Maasai homes designed collaboratively with Maasai women and installed by teams of women from each participating village to reduce the intake of smoke and carbon dioxide when cooking over traditional fires inside the home. Footage by Morgana Wingard. For the story of a Tanzanian tribal village transformed by power visit USAID’s storytelling hub: go.usa.gov/3fpUB