Joseph Bonyo
7 October 2008
Nairobi — Development projects funded by private capital inflows on the continent risk being postponed due to the financial crisis being experienced in the US.
"The last five years have seen the continent benefit a lot from private capital flow, but in view of the crisis facing the US economy and now spreading to Europe, the inflow stands to be postponed," said World Bank chief economist Shanta Deverajan.
The cut back on private capital, Mr Deverajan added, would dampen the prices of securities in some African countries.
By 2007, private capital to the continent amounted to about $50 billion.
This spans loans, portfolio investments and foreign direct investments.
"Most countries were using these inflows to finance much-needed infrastructure investment, which may have to be postponed. If the cutback spreads to official development assistance, the lives of hundreds of millions of Africans, including the two million on AIDS treatment, may be threatened," he said.
Planned Eurobonds by Kenya and Tanzania also stand to be affected by turmoil in the global financial market.
Kenya was to raise Sh35 billion through the bond to finance various infrastructural programs in the country. Finance minister John Michuki has indicated that the planned bond was still on course.
Other centres of African economics like remittance by the Diaspora are also expected to be affected by the slump being experienced in the West.
Mr Deverajan was addressing journalists across the continent in a videoconference organised by the bank ahead of its annual meeting. Kenya's delegation at the meeting is headed by acting Finance minister Mr John Michuki.
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