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LAGOS. — To bridge infrastructural gaps existing in a major African cities and local council, a new financial vehicle dedicated to the funding them is afloot. It is the African Cities Development Fund. When operational, the fund will enable councils or national institutions interested in financing local co to borrow to finance development projects over a term of seven to 15 years is under way.

The fund aims at enabling cities to issue bonds on the national and international capital markets. The Guardian gathered that the adoption of the idea came out of deliberation of 20 top level experts including specialists of fundraising on the financial markets; officials of development banks, funds or development banks dedicated to local governments; asset managers in international private banks; officials of rating agencies; and representatives of national and local administrations.

The workshop agreed that the fund will have a dual role; to sell the destination of African local governments to investors; and to prepare the capacity for absorption and debt management of these local governments. The exchange of views and experiences and the contributions of participants helped to establish that there is a pressing need to set up a specialised vehicle for fundraising and access to funding in favour of African local governments.

The take off for the fund should be mobilised before the end of 2019, while It was further agreed that during the preparation phase for the launch of the African Cities Development Fund, UCLG Africa should mobilise two million Euros; the objective being to mobilise 10 central governments and 30 local governments, each contributing 50 000 Euros.

As a starting point, the vehicle should aim to achieve approximately $2 to $3 billion as its first fundraising goal. This should take place quickly (deadline 2020) and should target local governments that have a proven repayment capacity. In this respect, a roadmap was worked out that would, define the structure of the capital, the risk portfolio, cooperate with existing national tools and present the benefits of the vehicle.

It should also involve central governments to obtain their non-objection opinion, produce an information note on the vehicle, prepare and organise a communication campaign and a road show for the vehicle. The intention, The Guardian learnt is to finalise this roadmap in order to present the African Cities Development Fund as a vehicle of credible funding at the 2018 Africities Summit. — Guardianng.