Local Sources of Financing for Infrastructure in Africa : A Cross-Country Analysis

With the exception of South Africa, local financial markets in sub-Saharan Africa remain underdeveloped and small, with a particular dearth of financing with maturity terms commensurate with the medium- to long-term horizons of infrastructure projects. But as financial market reforms gather momentum, there is growing awareness of the need to tap local and regional sources. Drawing on a comprehensive new database constructed for the purpose of this research, the paper assesses the actual and potential role of local financial systems for 24 African countries in financing infrastructure. The paper concludes that further development and more appropriate regulation of local institutional investors would help them realize their potential as financing sources, for which they are better suited than local banks because their liabilities would better match the longer terms of infrastructure projects. There are clear signs of positive change: private pension providers are emerging in Africa, there is a shift from defined benefit toward defined contribution plans, and African institutional investors have begun taking a more diversified portfolio approach in asset allocation. Although capital markets remain underdeveloped, new issuers in infrastructure sectors-particularly of corporate bonds-are coming to market in several countries, in some cases constituting the debut issue. More than half of the corporate bonds listed at end-2006 on these countries' markets were by companies in infrastructure sectors. More cross-border listings and investment within the region-in both corporate bonds and equity issues-including by local institutional investors, could help overcome local capital markets' impediments and may hold significant promise for financing cross-country infrastructure projects.

Bibliographic Details

Main Authors:	Irving, Jacqueline, Manroth, Astrid
Language:	English
Published:	2009-03-01
Subjects:	ACCESS TO BANK, ACCOUNTING, ASSET HOLDINGS, AVAILABILITY OF BANK CREDIT, BALANCE SHEET, BANK ASSETS, BANK BONDS, BANK CREDIT, BANK DEPOSITS, BANK FINANCING, BANK LENDER, BANK LENDING, BANK LOANS, BANKING SECTOR, BANKING SECTOR ASSETS, BANKING SYSTEMS, BILATERAL TRANSACTIONS, BOND ISSUES, BORROWER, BROAD MONEY, CAPITAL FLOW, CAPITAL FLOWS, CAPITAL MARKET, CAPITAL MARKET DEVELOPMENT, CAPITAL MARKETS, CAPITAL MARKETS DEVELOPMENT, CENTRAL BANK, CENTRAL BANKS, COLLATERAL, COMMERCIAL BANK, COMMERCIAL BANK LENDING, COMMERCIAL BANKS, COMMERCIAL CREDIT, CORPORATE BOND, CORPORATE BOND MARKETS, CORPORATE BONDS, CREDIT DISCIPLINE, CREDIT RATING, CREDIT RATINGS, CREDIT RISK, CREDIT RISK EVALUATION, CREDITORS, CREDITWORTHINESS, CREDITWORTHY BORROWERS, CURRENCY, CURRENCY MISMATCH, DEBT BURDENS, DEBT FINANCING, DEBT RELIEF, DEMAND FOR CREDIT, DEPOSIT, DEPOSIT MONEY BANK, DEPOSIT MONEY BANKS, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT BANK, DEVELOPMENT FINANCE, DIVERSIFIED PORTFOLIO, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKETS, DOMESTIC DEBT, DOMESTIC FINANCIAL MARKETS, EMERGING MARKET, EMERGING MARKET ECONOMY, EQUITIES, EQUITY ISSUES, EQUITY MARKETS, EXPENDITURE, EXPORTERS, EXTERNAL DEBT, FINANCES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL LIBERALIZATION, FINANCIAL MARKET, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FISCAL POLICIES, FOREIGN CURRENCY, FUND MANAGERS, GOVERNMENT BOND, GOVERNMENT BOND MARKETS, GOVERNMENT BONDS, GOVERNMENT BORROWING, GOVERNMENT GUARANTEES, GOVERNMENT SECURITIES, GROSS DOMESTIC PRODUCT, HOLDINGS, HOLDINGS OF GOVERNMENT SECURITIES, INCOME LEVELS, INFLATION, INFLATION RATES, INFRASTRUCTURE DEVELOPMENT, INFRASTRUCTURE FINANCE, INFRASTRUCTURE FINANCING, INFRASTRUCTURE INVESTMENT, INSTITUTIONAL INVESTOR, INSTITUTIONAL INVESTORS, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INSURANCE COMPANY, INSURANCE POLICIES, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL BANKS, INTERNATIONAL DEVELOPMENT, INTERNATIONAL FINANCIAL STATISTICS, INVENTORY, INVESTING, INVESTMENT ALLOCATION, INVESTMENT ALLOCATIONS, INVESTMENT ALTERNATIVES, INVESTMENT BANK, INVESTMENT CLIMATE, INVESTMENT INSTRUMENTS, INVESTMENT PORTFOLIO, INVESTMENT STRATEGY, INVESTOR BASE, ISSUANCE, LIQUIDITY, LOAN, LOAN MATURITIES, LOAN PORTFOLIOS, LOCAL BANK, LOCAL BANKS, LOCAL CAPACITY, LOCAL CURRENCIES, LOCAL CURRENCY, LOCAL FINANCE, LOCAL FINANCIAL MARKETS, LOCAL INFLATION, LOCAL INFRASTRUCTURE, LOCAL MARKET, LONG-TERM FINANCE, MACROECONOMIC CONDITIONS, MACROECONOMIC DATA, MACROECONOMIC POLICIES, MACROECONOMIC STABILITY, MARKET ANALYSTS, MARKET CAP, MARKET CONDITIONS, MARKET REFORMS, MARKET RETURNS, MATURITIES, MATURITY, MAXIMUM MATURITIES, MAXIMUM MATURITY, MONETARY FUND, MORTGAGE, MORTGAGE LOANS, MUTUAL FUNDS, NONPERFORMING LOANS, OUTSTANDING BANK LOANS, OUTSTANDING CREDIT, OUTSTANDING LOANS, PAYMENT OF INTEREST, PAYMENT SYSTEMS, PENSION, PENSION ASSETS, PENSION FUND, PENSION FUND ASSET, PENSION FUND ASSETS, PENSION FUNDS, PENSION SYSTEM, PENSION SYSTEM REFORMS, PENSION SYSTEMS, PENSIONS, POTENTIAL INVESTORS, PRICE RISK, PRIVATE BANK, PRIVATE CREDIT, PRIVATE FINANCING, PRIVATE INVESTMENT, PRIVATE INVESTORS, PRIVATE SECTOR CREDIT, PUBLIC BORROWING, REAL INTEREST, REAL INTEREST RATES, REGULATORY FRAMEWORKS, RETURNS, RISK EVALUATION, RISK PREMIUMS, SAVINGS INSTRUMENTS, SAVINGS RATE, SAVINGS RATES, SECURITIES, SECURITIES EXCHANGES, SHAREHOLDER, SHORT-TERM BANK DEPOSITS, SHORT-TERM FINANCE, SHORT-TERM GOVERNMENT SECURITIES, STOCK EXCHANGE, SUPERVISORY AUTHORITY, TELECOMMUNICATIONS, TERM DEPOSITS, TIME DEPOSITS, TIMELY PAYMENT, TRANCHE, TRANCHES, TRANSACTION, TRANSACTION COSTS, UNDERDEVELOPED CAPITAL MARKETS, VALUE OF COLLATERAL, VARIABLE RATES,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090327160051 https://hdl.handle.net/10986/4076
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