Ben Eguzozie, with wire report
- Global infrastructure demand rises $3.7trn through 2035
- Africa, developing countries account for two-thirds
- Africa’s infrastructure needs at $170bn, with $108bn gaps
Millennium Impact for Infrastructure Accelerator development partnership (MIIA), the about to be launched global investment platform, is to spur and attract impact investments in Africa by developing bankable infrastructure deals with measurable social and economic impacts, Allain Ebobissé, chief executive of Africa50 has said.
This is the outcome of a Memorandum of Understanding (MoU) signed on Wednesday October 21 in Washington D.C., USA, between the Millennium Challenge Corporation (MCC) and Africa50, to develop and launch the MIIA in Washington DC.
Investments through the new MIIA entity will cover projects across sectors such as water and sanitation, health, education, transportation, power, and telecommunications.
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Checks by Business A.M. indicate that the Millennium Challenge Corporation is a bilateral United States foreign aid agency established by the U.S. Congress in 2004, that is designed to use a new approach toward foreign aid. With a budget of $905 million as of this year, the aid agency provides time-limited grants promoting economic growth, reducing poverty, and strengthening institutions.
Africa50 is an infrastructure investment platform that contributes to Africa’s growth by developing and investing in bankable projects, catalyzing public sector capital, and mobilizing private sector funding, with differentiated financial returns and impact. Africa50’s investor base is currently composed of 28 African countries, the African Development Bank, the Central Bank of West African States (BCEAO), and Bank Al-Maghrib.
MIIA will be launched in Africa jointly with Africa50 which has experience as a project developer and investor with deep regional knowledge and influence. Depending on the success of the initial effort in Africa, the MIIA could seek similar partnerships in Asia, Latin America, and Eastern Europe.
The MIIA is part of MCC’s blended finance strategy to mobilize private capital to create better opportunities and maximize the impact of projects that spur economic growth and reduce poverty. As an independent U.S. government agency, MCC works around the world with the best-governed developing countries, providing grant funding to unlock economic potential. Approximately two-thirds of the agency’s portfolio is in Africa.
According to Sean Cairncross, MCC’s chief executive officer, “both MCC and Africa50 have a strong institutional commitment to mobilizing capital for impactful projects in Africa.”
He said the new collaboration will unlock economic opportunities on the continent, and is excited to see what their work together will achieve.
For Africa50 chief executive officer, Alain Ebobisse, it is satisfying to partner with the MCC to develop and launch the MIIA. “This important initiative will enhance our efforts to develop bankable projects across Africa with significant development impact. This will also help encourage capital flows into infrastructure, which is one of our core mandates,” said Ebobisse.
According to McKinsey & Co, the global management consulting firm and trusted advisor and counsellor to many of the world’s most influential businesses and institutions, annual global demand for infrastructure development is $3.7 trillion through 2035, and the developing countries are expected to account for roughly 2/3 (two-thirds) of all infrastructure spending.
On its part, the African Development Bank (AfDB) also estimates that Africa’s funding needs gobble between $130 billion to $170 billion a year, with a gap of $68 billion to $108 billion.
Impact investing in infrastructure is limited, often due to the lack of bankable projects and the difficulty of measuring the development impact of investments. The MIIA will help overcome these challenges with features such as a certification process for the social and environmental impact of infrastructure projects, resources to prepare bankable projects with certified impact, and the framework to match these projects with impact investors who can provide capital.