by Abwao Oluoch

The African Union (AU) is on track to forming one of its three foremost financial institutions to spearhead regional integration and put the continent's industrialization agenda on a fast-track, a senior AU official has affirmed.

AU Commissioner for Economic Affairs Maxwell Mkwezalamba exclusively told the East African Business Week last week that efforts to create three premier financial institutions within the AU were making major progress in order to conquer industrial underdevelopment in Africa. The AU plans to work out a strategy and a legal framework for setting up the Investment Bank of Africa to become the continent's premier investment banking institution.

Plans are on track to a formal launch within 24 months to provide the much-needed capital to finance the construction of cross-border highways and the creation of telecommunication links.

The AU has signed a formal agreement with the host of the proposed African Investment Bank, to be headquartered in Libya, to commence technical studies on the institutional and organization aspects of the proposed financing vehicle for Africa, Mkwezalamba said.

The AU is also spearheading efforts to deepen Africa's economic integration through the creation of a pan-African stock exchange, all of which were included in its establishment treaty, known as the constitutive act, essentially aimed at marketing Africa's unity.

Mkwezalamba said the new investment bank would complement the work of the African Development Bank (AfDB), which has been at the forefront of financing national infrastructure projects. It would also offer financial support to the private sector.

"Within one to two years, it should be possible to have the protocol for the setting up of the bank signed and ratified by the various African countries," Mkwezalamba said.

The continental organization is working side by side with the African Private Sector Forum to seek ways of injecting private capital in the continent's infrastructure development.

Africa's private sector players gathered in Addis Ababa, the Ethiopian capital late January to explore ways of effectively utilizing the private sector to drive Africa's industrialization agenda.

"Issues of investments in Africa are weak in Africa due to poor infrastructure. There are institutions mostly addressing infrastructure issues but at national level. This (investment bank) would finance highways that cater for several countries," Mkwezalamba said.

The AU has set up a technical steering committee to spearhead studies leading to the setting up of the bank, including working out the fine-print details of its sources of funding, management and institutional framework.

Mkwezalamba said the AU signed a Memorandum of Understanding with the government of Libya two weeks ago to commence the studies.

"The team will go into the specific details, including where the bank's branches would be located," he added.

The investment bank will finance private sector developments within the continent as part of efforts to put the continent on a sound growth path towards its industrialization.

Mkwezalamba, who has been re-elected for a second term in office, said talks on the formation of the continental development bank were underway to give the continent's investors access to much-needed capital to finance development initiatives.

"Africa's industrialisation dream would be unthinkable in the absence of the private sector," Mkwezalamba.

Speaking separately, Ethiopia's Industry Minister Tadesse Haile welcomed the formation of the African Investment Bank and the plans to create the pan-African bourse, saying they offered a chance to drive Africa's economic transformation further into the future.

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