The African Union is setting up a fund to finance the construction of much-needed roads, railways and power plants on the continent, its infrastructure head said, turning to new sources of cash due to donor fatigue and higher debt levels.
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The continent has an estimated annual infrastructure financing deficit of $60 billion-$90 billion, the AU says, making it hard for the body to advance its goal of integrating the disparate individual markets into a single, free trade area.
"Africa is financially starved as far as the need for infrastructure development is concerned," Raila Odinga, who is the AU's high representative for infrastructure, told Reuters.
The 55-nation AU is now turning to sovereign wealth funds, insurance and retirement funds in countries like South Africa, Angola, Nigeria Morocco, Egypt and Kenya, to raise the cash.
The funds will be invited to invest about 5% of their holdings, Odinga said, "which is actually going to be more lucrative for those institutions, rather than having funds lie idle."
