By Antonio Guerrero
The African Development Bank (AfDB), which plans to increase its capital base to $100 billion, launched a $600 million fund to strengthen African banks. The fund was created through a partnership with the European Development Bank, the World Bank’s International Finance Corporation, OPEC’s Investment and Development Fund, and the Abu Dhabi Development Fund. It will buy shares in African banks active in boosting trade and supporting regional integration. AfDB surpassed the World Bank as Africa’s largest multilateral lender in 2009.
Building blocks: AfDB grows its capital base
Kenya will increase its budget deficit to 6.8% of GDP for fiscal year 2010-2011, which begins in July. The widening will be prompted by wage hikes for teachers and the finance ministry’s plan to increase its accounting staff. According to finance minister Uhuru Kenyatta, government expenditures will increase 10%, to $12.4 billion. While analysts say the move will force Kenya to increase borrowing, Kenyatta says the government will contain the growth in public sector debt. Most of the gap will be financed domestically, including $392 million in infrastructure bonds.
Nigerian finance minister Olusegun Aganga, a former Goldman Sachs banker, faces opposition from influential state governors to his proposed creation of a sovereign wealth fund. Aganga’s proposal, supported by president Goodluck Jonathan, would use the fund to boost reserves and infrastructure investments. However, governors want to maintain the current Excess Crude Account (ECA), which holds oil windfall profits.
South Korea’s state-run Korea Resources Corporation plans to use part of the proceeds from its recent $300 million bond issue to finance mining sector acquisitions in Africa. According to Kores president Kim Shin-jong, the company is interested in mining sector investments in South Africa, Mozambique, Namibia, Congo, Niger and Zambia.