As calls for pension fund to finance local infrastructure development continue to make echoes, asset managers argue that few bankable infrastructure projects are popping up.Speaking at the first-ever Botswana Infrastructure Investment (BII) Summit, asset managers said the challenge is not only peculiar to Botswana but the continent at large. Local capital markets industry’s licensed players rose from 12 in 2008 to 64 in 2018 and 60 percent of the players are asset managers and investment advisors.
Non-Bank Financial Institution Regulatory Authority’s (NBFIRA) recent reports says the total assets under management grew from 38 billion pula in 2010 to 52 billion pula in 2017, while the domestic market capitalisation recorded was 29 billion pula in 2009 compared to 44 billion end of 2017, representing a 55.6 percent increase. Dialogue at the inaugural forum organised by MNCapital Group and African Alternative this week highlighted that political and commercial risks are tainting Africa infrastructure development chances. Ashwin West, Investor Director at African Infrastructure Investment Managers said the continent do not have capital challenges but bankable projects. “We have lots of capital chasing small number of projects,” said West.
Sharing his sentiments Hellen Goussard, Head of Unlisted Investment Services at Riscura said the limited infrastructure funding by the continent’s pension fund is a supply issue. “There is a lot of qualitative understanding of what the risk is but very little quantity,” said Goussard highlighting that risks associated with some of the infrastructure project are mainly limited to perceptions. She said foreign exchange rate and political risk make most project on the continent un-bankable. She however urged nation to consider the route of public private partnerships (PPPs) which has a lot to offer and are normal backed by international laws giving investors some security.
Meanwhile, Ahmed Attout, Chief Capital Markets Officer at the African Development Bank (AfDB) said the continent should improve on governance and expressed optimism that most nations are already adhering to such calls.“Thing are changing to the right direction, what is missing is more efforts towards an enabling environment,” said Attout adding that the continent should leverage on the bank for capacity building on infrastructure financing. “We are very optimistic that we are moving into a new Africa.
Capital markets are keen to grow the African infrastructure,” said Attout, adding that the narrative should change from mobilising aid for Africa to investment dialogue. Meanwhile AfDB has announced that it has kickoff dialogue with Botswana to understand the local market for a potential financing of some of the country’s infrastructure development. “We have limited exposure on Botswana and have started bilateral discussions,” said Kazuhiro Numasawa, Principal Investment Officer at Africa Development Bank.