Nairobi — A programme to spearhead economic development in Africa has been transformed into an agency to be funded by the African Union.

The New Partnership for Africa's Development (Nepad) will now implement the union's development programmes, according to an agreement reached during last month's summit in Addis Ababa.

Following its transformation, the agency will no longer be funded by individual countries. The union will inject $3 million (Sh234m) to boost Nepad's capacity to implement continental development strategies.

Under the new arrangement, key economic growth projects, including the Kenya-Uganda oil pipeline, upgrading of the container terminal at the port of Mombasa, and maritime projects around Lake Victoria, will be boosted.

The agency will draw from the statutory budget of the union, but it will continue receiving voluntary contributions from member states.

Previously, individual states were required to contribute to Nepad depending on their gross domestic product. Kenya has been paying about Sh7.8 million ($100,000) annually.

"The Nepad coordination agency now becomes a technical body of the African Union, whose core mandate is to coordinate the implementation of regional and continental development programmes," Planning minister Wycliffe Oparanya said at a briefing of the new mandate of the agency on Tuesday.

Another project that will receive backing from the agency is the expansion of Djibouti port, which will profit Kenyans as the East African Common Market opens in June this year.

The minister said Kenya had now been relieved of funding the agency programmes, but that the country would determine whether it will continue funding the agency voluntarily.

He was briefing the Press at his office at the Treasury Building together with Nepad (Kenya) boss Grace Ongile.

"We welcome the transformation of Nepad as it is a way of strengthening the agency and promoting development in the region," said Ms Ongile.

Nepad was established in July 2001 with the primary objective of eradicating poverty and promoting economic prosperity.

The new agency will be coordinated from Midrand, South Africa.