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Africa Fund Promoted By The Commonwealth Reaches US$100 Million

2 December 2004

Dr Mukherjee
"Since the launch of the first Africa Fund by Nelson Mandela in 1996, there has been more interest in these emerging markets in Africa..."
The Pan-Commonwealth African Partners Fund has reached more than US$100 million with the injection of US$35 million worth of investment from Kingdom Holdings of Saudi Arabia. The Fund came into being at the Commonwealth Heads of Government Meeting in Coolum, Australia, in 2002. It was also endorsed by Commonwealth finance ministers. The International Finance Corporation (IFC) of the World Bank Group teamed up with the Commonwealth Secretariat to launch this Fund in collaboration with the Development Bank of Southern Africa (DBSA) and FMO, the Dutch development agency. The Fund is managed by Zephyr Management LLP.

The latest investor, Kingdom Holdings is headed by HRH Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud, a member of the Saudi royal family. Kingdom Holdings' investment has raised the Fund to US$103 million currently. The other investors are IFC ($25.7 million), FMO ($15 million), DBSA ($25 million) and Zephyr Management LLP ($2 million). 

Commonwealth Secretary-General Don McKinnon said the Fund represents a significant success for the Commonwealth in helping to build a powerful global partnership which mobilises resources and expertise to develop the private sector in Africa. He stated: "The $100 million worth of investment capital raised so far is a vote of confidence in Africa's potential. It reflects the increasing recognition of the need for greater support for the courageous reforms that are being implemented by several African governments."

The Fund is targeted at investment opportunities in multi-country enterprises to facilitate their growth and capacity to compete regionally and internationally. This Fund is a second-generation private investment fund for Africa established under the aegis of the Commonwealth Private Investment Initiative (CPII) which has raised over US$300 million for private investment in the four regions of the Commonwealth to date. CPII was launched by Commonwealth finance ministers and Heads of Government in 1995 with the objective of promoting long-term commercial investments in private sector companies in Commonwealth developing countries.

Dr Bishakha Mukherjee, Chief Programme Officer in the Secretariat's Economic Affairs Division, noted: "Since the launch of the first Africa Fund by Nelson Mandela in 1996, there has been more interest in these emerging markets in Africa and private investment flows have also increased with greater efforts to strengthen corporate governance and due diligence. But the acceleration of globalisation and its impact on political and economic liberalisation in Africa has created volatility in its emerging markets. The Secretariat has aimed to build confidence in these markets by floating instruments to facilitate their access to private capital to enable them to improve their competitiveness and share the benefits of integration." 

Dr Mukherjee said the Commonwealth has promoted 'contrarian' investment (which goes against market trends) by venturing into high-risk/high-return scenarios and acting to change conventional perceptions of risk. She stated: "Through various initiatives, investment capital has been provided to sustainable and competitive companies on which commercial returns are anticipated. These efforts help to catalyse South-South and North-South co-operation and public/private partnerships to promote development among Commonwealth member countries. Our goal is to help these countries to adjust to the changing international environment and reap the benefits of global trade and investment.

"The CPII funds have demonstrated that it is possible to make positive returns in US dollar terms in difficult markets. With the increasing synchronisation of movements in the major markets, emerging and even pre-emerging markets offer attractive opportunities to diversify."

 

CNIS - the Commonwealth News and Information Service Issue 212 1 December 2004

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