The Programme for Infrastructure Development in Africa (Pida) has proposed the flotation of a Diaspora Bond to raise part of the funding for the construction of the $4 billion Batoka Gorge hydro power project.
The power scheme — which will generate 2 400MW to be shared equally by Zambia and Zimbabwe — is a top priority project under Pida, a strategic continental initiative which has the buy-in of all African countries, for mobilising resources to transform Africa through modern infrastructure.
According to the Pida Progress Report 2017, opportunities in 2018 include “exploring the potential for domestic resource mobilisation for the project through a diaspora bond”.
The report said an exchange visit to Ethiopia was planned for next month to enable the Zambezi River Authority (ZRA) gain insight on how the Grand Ethiopian Renaissance dam was financed using domestic resources and there was need to assist ZRA to “raise the 5% counterpart funding required for the preparation of the transmission lines”.
The progress report said there was need to adopt an integrated corridor approach for the development of the dam, which takes into account urban planning, tourism development, agriculture and fisheries development, industrial development and the inter-dependence/synergies between the Batoka Gorge and other Pida projects such as the Grand Inga, Inga Transmission lines into Zambia, Zimbabwe and South Africa and the ZTK interconnector.
The power project is billed to increase the use of renewable energy in Zambia and Zimbabwe to 80% from the current 42%.
In the proposed structure the dam would be owned by ZRA and financed by debt and grants raised by the two countries; and the power plants would be developed under a project finance structure and owned by a special purpose vehicle with equity being provided by the private sector and possibly each country’s utility, and debt being raised from the private sector as well as development finance institutions.
The proposed Diaspora Bond comes as Pida estimates that its infrastructure projects will cost about $360 billion between 2011 and 2040, with significant investments required by 2020. It said such costs are beyond the financing capacities of African governments, development finance institutions and multilateral development banks.
Last week, Mamady Souare, divisional manager (Regional Integration Operations) at the African Development Bank (AfDB) said there was need to think outside the box to access funding for infrastructure projects under Pida.
Pida was developed by the African Union Commission, Nepad Agency, AfDB, United Nations Economic United Nations Commission for Africa and regional economic communities to promote regional economic integration through building mutually beneficial infrastructure, strengthening the abilities of countries to trade and establishing regional value chains for increased competitiveness.
The 51 Pida priority action plan programmes and projects are spread across the four sectors of energy, transport, information communication technology and trans-boundary water.