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CONDITIONS FOR USE OF INFRASTRUCTURE
PROJECT BONDS
African Development Bank
FINANCING THE FUTURE:
INFRASTRUCTURE DEVELOPMENT IN CENTRAL AFRICA
Regional Conference
Yaoundé, Cameroon, March 10, 2014
by Cédric Mbeng Mezui
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
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Goodbye “QE”
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Hello “Tapering”
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Impact on emerging economies
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Sensitivity of domestic yields to external shocks (source, IMF)
• Capital flight; • Higher bond yields; • Equity price drops; • Exchange rate depreciation against the
USD; • Etc.
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
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Global Needs
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The 51 PIDA Priority Projects: (Timeframe 2020)…
ENERGY US$40 BILLION
TRANSPORT US$25 BILLION
WATER US$2 BILLION
ICTs US$0.5 BILLION
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Infrastructure deficit: what are the implications for Africa?
US$40 billion in lost annual growth every year
15 million young people entering the labor market every year in the years ahead
The annual infrastructure deficit is around US$93 billion
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
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Need for Innovative Solutions
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Bond Markets
Banking Sector
Governments &
MDBs
FDI
Infrastructure Funds,
Pension Funds
Stock Markets
Infrastructure Financing
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Opportune time for Project Bonds
Sovereign issuances
Corporate issuances
Project Bonds
Public
Private
Issuer
Para public
Recourse to sponsor Total Limited None
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Situation in the pioneer markets
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
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Main Challenges
Infrastructure
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2
3 4
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1. Regulatory Framework
2. Macroeconomic Stability
3. Bond Markets
5. Project Preparation
4. Institutional Investors
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
3/9/2014 16
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Participation by all is a must!
• The banking system; • The financial market; • Governments; • Institutional Investors; • Development partners; • The private sector • Etc.…
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• International Financial Environment • Infrastructure Deficit • Project Bonds • Main Challenges • Role of Stakeholders • Multilateral Development Banks
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The MDBs
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Operations Construction Development
Technical Assistance
Capital/Consultancy Equity Participation
Loans/Guarantees
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• Financial Sector Department • African Financial Markets Initiative (AFMI)
http://www.africanbondmarkets.org/en • Africa 50 • MFW4A
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The ADB
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Bibliography
Article/WP 1. Mbeng Mezui, Cédric Achille (2012), Accessing Local Markets for Infrastructure:
Lessons for Africa, Working Paper Series N° 153 African Development Bank, Tunis, Tunisia.
2. --------------------------------------. 2013. Unlocking infrastructure development in Africa through infrastructure bonds. GREAT Insights, European Centre for Development Policy Management, Volume 2, Issue 4. May-June 2013
3. --------------------------------------. 2013. How Africa can plug Infrastructure Fund Gap. African Banker Magazine, 4th Quarter 2013, London.
4. --------------------------------------. 2013. Holding Excess Foreign Reserves versus Infrastructure Finance: what should Africa do? Working Paper Series No 178 African Development Bank, Tunis, Tunisia.
Book: Mbeng Mezui, C.A, and B. Hundal, (2013) Financement structuré-conditions pour les obligations d’infrastructure en Afrique, Banque Africaine de développement, Tunis, Tunisie.
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MERCI, THANK YOU, AKIBA,OBRIGADO, شكرا
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CONTACTS: Stefan NALLETAMBY, Director Financial Sector Department [email protected] Cédric MBENG MEZUI, Coordinator of the African Financial Markets Initiative (AFMI) [email protected] Twitter: @mbengmezui
Building today, a better Africa tomorrow