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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
• 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.
• 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
• 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
Opportune time for Project Bonds
Sovereign issuances
Corporate issuances
Project Bonds
Public
Private
Issuer
Para public
Recourse to sponsor Total Limited None
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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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
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
• Financial Sector Department • African Financial Markets Initiative (AFMI)
http://www.africanbondmarkets.org/en • Africa 50 • MFW4A
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The ADB
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.
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