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)…

c.mbengmezui@afdb.org

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

c.mbengmezui@afdb.org 12

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

c.mbengmezui@afdb.org

Infrastructure

1

2

3 4

5

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

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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 s.nalletamby@afdb.org Cédric MBENG MEZUI, Coordinator of the African Financial Markets Initiative (AFMI) c.mbengmezui@afdb.org Twitter: @mbengmezui

Building today, a better Africa tomorrow