Finance Minister, Dr Mohammed Amin Adam, has kicked against African governments investing significantly in foreign financial institutions using money earned from its most resource-rich sectors.
Rather, he called for the establishment of Regional Funds to draw financial resources for infrastructure development to propel intra-Africa trade, and help solve the recurring economic crisis on the continent.
The Minister, while indicating that the country had enough resources, bemoaned the rate at which many countries saved money in international financial institutions, depriving the continent of needed funds for development.
He was speaking with the media on the margins of the just ended 2024 African Development Bank (AfDB) Annual Meetings in Nairobi, Kenya.
“Some of our African countries are holding our reserves in international banks; Ghana’s Petroleum Holding Funds are invested in US bonds, Nigeria is keeping their oil money in foreign accounts, but why?” he quizzed.
“We need to create regional Funds, so that beyond the African Development Fund and what we get from the international financial world, we also pull resources together to set up Regional Funds,” he said.
The Regional Funds, he said, could be sector-specific, like having an African Fund for Energy Development, which would draw resources, including pension funds, to support direct investment in infrastructure.
That, Dr Amin Adam, said would significantly improve the weaknesses in infrastructure and connectivity and catapult the success of the African Continental Free Trade Area (AfCFTA) agreement.
Reflecting on the state of trade on the continent, he stated that there was room to improve on intra-continental trade, which figures from the African Growth and Opportunity Act (AGOA) implementation is estimated at 15 per cent of global trade.
In the energy sector, for example, he said those funds could be used to develop the energy pools by connecting the West, East and Central African power pools, to make power cheaper and available to people and businesses.
“It doesn’t make sense when Ghana has 90 per cent access to electricity and the next-door neighbour has 30 per cent, Ghana’s Finance Minister said, and called for a swift change in that regard.
While indicating that there was the need to trade petroleum products within the continent, he asked, “how do you trade in petroleum products if you don’t have the ports?.”
He called on African governments to deepen collaborations to develop ports, roads, railway infrastructure, focused on interconnectedness, saying, “that’s how we can boost trade amongst ourselves.”
In 2007, the Pan African Infrastructure Development Fund (PAIDF) was launched in Accra, Ghana during a summit by the African Union to mobilise resources to finance the continent’s infrastructure development.
The latest on the PAIDF as cited on the website of the African Development Bank, only provides information on the nature of the Fund.
It states that the Fund would have a 15-year life, with investment period of eight years from the date of the launch, and a seven-year time horizon per investment to build, develop, and grow each investment before exit.
It noted that the regional investment would be in securities of companies that own, control, operate of manage infrastructure, and infrastructure-related assets, and may also participate in joint ventures with corporate and government partners.
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