Jul 21, 2010 By Babajide Komolafe

 

The Board of Directors of the African Development Bank (AfDB) has approved a $25 million equity investment in the second New Africa Mining Fund.New Africa Mining Fund II (NAMF II) is an equity fund that invests in mining projects throughout Africa.

 

Like its predecessor New Africa Mining Fund I (NAMF I), NAMF II focuses on the upstream stages of the mining investment cycle where value creation is highest, i.e. primarily exploration and pre-development activities by junior and intermediate companies. The Fund will invest over 5 years and will have a life of 8 years.The role of mineral resources in Africa’s economic development is undisputed, particularly in the context of the favorable market outlook as a result of strong commodity demand. The African junior mining market remains capital constrained and unable to fully harvest prevailing opportunities.

 

NAMF II therefore intends to mobilize capital for this sector in order to take advantage of the market potential. The Fund is targeting a net return in excess of 20%.From a development perspective, the Fund is expected to positively influence private sector development, create local permanent and short-term jobs, support balanced revenue sharing, increase government revenues  (+USD900 million per year), ensure compliance with environmental standards and promote transparency through the Extractive Industries Transparency Initiative (EITI). The Fund will be guided in its governance strategy by a comprehensive Governance Codex developed in collaboration with the AfDB.

 

The Bank’s Private Sector Strategy emphasizes provision of equity capital to catalyze the resources necessary to develop assets.The Fund’s investment will facilitate growth and expansion in Greenfield projects across the continent, thus developing African companies in the private sector and promoting growth in a sustainable manner through its Governance Codex and Environmental and Social Management System (ESMS). NAMF II is therefore well aligned with Bank strategy and regional priorities.

 

In another development  The Board of  the Bank  Group has approved   12-million senior loan with a 15-year tenor, including a 5-year grace period, to finance the Dakar-Diamniado toll highway  in Senegal.  The project comprises the construction of the 20.4-km section of the Dakar-Diamniado toll highway from Pikine to Diamniadio and the tolling and operation of the toll highway from Patte d’Oie to Diamniado (including the 4.2-km section between Patte d’Oie and Pikine, which was constructed under a separate contract). The motorway will be built as a dual carriageway with three lanes in each direction from Patte d’Oie to Thiaroye and two lanes in each direction from there to Diamniadio with six intermediate junctions.

 

The project’s main beneficiaries are road users who will save significant amounts of time and vehicle operating expenditures. It will also help stimulate local economic activity and facilitate the movement of goods and services through this regional hub, thereby strengthening intra and inter-regional trade.

 

The toll road forms part of Senegal’s infrastructure development program, which includes the extension of the Dakar port, the new airport as well as a number of other transport projects.These new infrastructure will stimulate economic activity in the manufacturing, industrial and tourism sector as well as more generally support trade and mobility. The country will benefit from these projects in terms of increased competitiveness through reduced cost of doing business.

 

Source:Vanguard