LACK OF programmes by donors and international financial institutions to raise funds from within Africa became a thorny issue at the Financial Times-International Finance Corporation Investment Conference held in Nairobi last week.

Nairobi Stock Exchange chief executive officer Kibuga Kariithi complained that representatives from African stockmarkets had not been invited to make presentations on the current potential for raising funding through equity and bonds issues in African bourses.

"We at the NSE have been able to raise $300 million for the government of Kenya in Treasury bonds and Treasury bills within the past couple of years," said Mr Kariithi. "We have deepened the stock market instruments here in Kenya and in Nigeria, in addition to the Johannesburg Stock Exchange. We would like to see foreign investors raising funds from these markets."

The Central Bank of Kenya bond programme has seen the government shift the bulk of its domestic debt from 91-day and 182-day Treasury-bills to longer term (Two to 10-year Treasury-bonds). The longer-term bonds cost less interest, at the same time easing debt repayment pressure from 3-month repayments to as long as 10 years. Nigeria and Uganda are now copying the Kenyan programme. The chairman of the Pan-African mobile operator, Celtel International BV (formerly called MSI Cellular BV), Mohammed Ibrahim, admitted that borrowing money locally was sometimes cheaper and reduced foreign exchange risks. Celtel intends to list in African bourses later, he said.

"I am funded by the International Finance Corporation, and the World Bank, and such investors in Europe and in the US. But in reality, the big and quick money is with the private sector," Mr Ibrahim said.

According to MTN Group managing director Phuthuma Nhleko, his mobile phone operation is a publicly quoted company at the JSE. "We are just about the eighth or tenth company in terms of market capitalisation. Last year, we made a profit of about $300 million," Mr Nhleko told the delegates.

But investors said they were concerned about the rate of entry and exit into African economies as a whole, and not just into open economies like Kenya and South Africa – and their obviously advanced bourses. They complained that African governments were changing investment rules – such as banning importation of certain spare parts – without consulting them.

Econet Wireless managing director Strive Masiyiwa said the privatisation momentum seen earlier in Africa had now stalled. He said investors in infrastructure were keen on political developments since they wanted the continuity that political stability. It was, for instance, he quipped, impossible to pack transceiver base stations and power generators in a briefcase if a hostile government took over.

The International Finance Corporation, the private-sector financing arm of the World Bank Group, and the Financial Times of London, sponsored the two-day international conference at the Nairobi Intercontinental Hotel on "Developing Business and Infrastructure in Africa: Enhancing the Role of the Private Sector."

The high-profile meeting, which was officially opened by President Mwai Kibaki of Kenya on May 5, and closed by President Marc Ravalomanana of Madagascar, was also intended to examine the regulatory framework for lowering the cost of doing business in Africa.

Michael Klein, chief economist and vice-president for private-sector development at the World Bank Group, noted that the IFC and World Bank recognise that the key to creating wealth, jobs, and economic growth in Africa is to make it easier to start, operate, and expand a business. This requires improving the regulatory and physical infrastructure and removing barriers to doing business.

IFC finances private-sector investments in the developing world, mobilises capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through to 2003, IFC had committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries.

The IFC director for infrastructure Francisco Tourreilles, told the delegates "World Bank Group has been at the forefront of structuring public-private partnerships in infrastructure for nearly two decades now," adding, "IFC is here to listen and discuss our experience as IFC and the World Bank Group generally believe there is real potential to transform the infrastructure landscape in Africa."

President Ravalomanana, an entrepreneur himself, said Madagascar had now opened up its economy to foreign investors. "As a result, the economy grew by 10 per cent last year."

He said investors were looking a secure investment climate. "We must eliminate corruption and ensure we have fair tax systems where the rule of law prevails. We must cut down on red tape, and make visa applications easy," he said.

The chairman of the conference and international editor of the Financial Times Quentin Peel, announced that President Mwai Kibaki was the Foreign Direct Investment Africa publication's winner of the African Personality of the Year award. He said President Kibaki had won the award due to his determination to promote of Kenya as a key investment location in the region. The president's commitment to shaking off the country's image of poor governance and corruption was outstanding, he said.
 

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