With developing countries increasingly tightening the grip on foreign aid amidst uncertainties in the global economy, a host of African countries seek to issue bonds to raise money to finance their development.
Experts project a sharp fall in foreign aid to Africa in the next couple of years.
Rwanda, Kenya, Angola, Tanzania and Nigeria are some of the countries that plan to borrow money in domestic and international markets by issuing bonds.
William Kalema, country Managing Director BDO East Africa said during the recent Africa Economic Conference that took place in Kigali that with uncertainties in the global financial and the current economic situation, African countries should exhaust resources like increasing remittances and issuing domestic and international bonds.
"This is the time when foreign money is cheap to borrow. High remittances and appetite for bonds represent vote of confidence to our governments and improves transparency; thus we need to build good governance, political and economic stability," said Kalema.
Experts also say that for African bonds to be attractive to investors, the issuing countries need to sort out their macroeconomic fundamentals like containing inflation.
Minister of Finance and Economic Planning, John Rwangombwa, said that Rwanda is in the final stages of issuing its first Eurobond.
"We have been doing so many ratings and we know there is high appetite (for Rwanda government bonds), our focus should be to strengthen institutions and debt management," said Rwangombwa.
Zambia recent $750 million Eurobond got a special mention as one of the successful bonds in Africa. The ten year Diaspora bond has an interest rate of 5.37 per cent per annum.
The continent is said to lack well-defined strategies to take advantage of the present commodity boom.
Africa was also urged to increase domestic tax base and tax compliancy and remove all barriers to trade as well as give incentives to attract investments and identify innovative projects.
Rwangombwa shared the Rwandan experience, citing the recently launched solidarity fund where Rwandans freely contribute money to support the country's development agenda. The fund has so far attracted $30 million.
The Minister said the country's tax reforms increased its tax base while the nine year basic education initiative where Rwandans have collectively participated in building classrooms is paying off.
"We just need to design the right strategy and get the right financing; there is no luck of financing but we lack bankable projects," said Rwangombwa.