The African Water Facility, a vital unit of the African Development Bank (AfDB), is embarking on a mission to establish a $500 million Urban-Sanitation Fund.
The fund’s creation comes in response to the escalating demand for water and sanitation projects across the African continent. Spearheading this ambitious initiative is Mtchera Chirwa, the facility’s coordinator, who has unveiled a vision of tapping into private investors to achieve long-term sustainability in the region.
Since its inception in 2004, the African Water Facility has solely functioned as a provider of grants. However, as donor funding begins to wane, the facility is adapting its approach by incorporating debt financing in some cases.
Chirwa explains, “We plan to scale up, and the facility’s new sanitation fund will begin to lend for longer-term sustainability.”
Africa faces a substantial challenge, as the World Bank estimates that it requires a staggering $114 billion in global investment annually, with half of this amount allocated to the continent. Shockingly, one-third of Africa’s 1.3 billion people still lack access to water supplies, and one-sixth are without basic hygiene services.
To address this pressing issue, the Urban Sanitation Fund aims to raise the full $500 million over the course of a decade. The fund is expected to draw contributions from the AfDB, generous donors, and forward-thinking private investors.
Chirwa envisions a comprehensive approach, targeting the improvement of sewerage systems in African cities, providing sanitation services to unconnected areas, and financing projects that harness waste for use as fertilizer or in biomass-based energy plants.
While water projects in rural regions will continue to benefit from grant funding, these grants are projected to increase significantly within two years, from the current €21 million to an estimated €50 million ($55 million) to €60 million annually.
Remarkably, for each euro invested by the African Water Facility, up to €29 can be leveraged from other sources, as these grants effectively reduce risk for additional investors.
Since its formal inception in 2006, the African Water Facility has actively participated in 133 projects across 52 of Africa’s 54 countries. The positive impact of its work is evident, with considerable funding already secured, amounting to €205 million.
While Libya and Mauritius have yet to benefit from the facility’s support, Chirwa remains optimistic about the future. He emphasizes that the Urban Sanitation Fund is not only an investment in infrastructure but also a commitment to the well-being of the continent’s growing population.
With the African Water Facility taking the lead in pioneering this urban-sanitation fund, it sets a precedent for other regions to follow.
By combining public and private efforts, Africa moves closer to bridging the gap in water and sanitation services, creating a cleaner, healthier, and more sustainable future for its people.
The opportunity for private investors to join this transformative journey signifies a collaborative approach to meeting the challenges of the present and building a brighter tomorrow.
Nigerian Banks’ Borrowings from CBN Surge 835% in a Month, Raising Liquidity Concerns
The Nigerian banking sector has witnessed an unprecedented 835% surge in borrowings from the Central Bank of Nigeria (CBN) in the span of just one month, igniting concerns over the nation’s liquidity stability.
Data reveals that banks’ dependence on the CBN has reached new heights, with their borrowings skyrocketing from a relatively modest N323.97 billion in August to N3.03 trillion in September. This remarkable increase underscores a growing reliance on the CBN’s support in times of financial stress.
This surge in borrowing activity has primarily been attributed to the CBN’s stringent monetary policies aimed at curbing inflation and managing the demand for foreign exchange. These policies have, in turn, squeezed commercial banks, compelling them to tap into the CBN’s Standing Lending Facility (SLF) for immediate liquidity needs.
Despite the escalating dependence on CBN funds, the Monetary Policy Committee (MPC) of the apex bank insists that the Nigerian banking sector remains fundamentally robust. MPC member Adenikinju Festus highlighted key indicators, including Capital Adequacy Ratio (CAR) and Non-Performing Loan (NPL) ratios, which still align with prudential standards. Furthermore, liquidity ratios have improved, and returns on equity and assets have risen.
However, the banking industry’s persistently high operating costs are raising alarms. In comparison to international standards, Nigerian banks are grappling with substantially higher operating expenses, prompting concerns about their long-term sustainability.
In a parallel development, the CBN’s Development Finance Department has disbursed a total of N9.714 trillion to various sectors of the economy over the past three years, with manufacturing and industries receiving the largest share at 32.6%.
Other sectors, including energy, agriculture, services, micro, small, and medium enterprises (MSMEs), export, and health, have also benefited significantly from these disbursements.
While the CBN remains committed to fostering sustainable economic growth, the surging dependence of Nigerian banks on short-term borrowings from the central bank is casting shadows on the sector’s long-term stability.
As Nigeria grapples with these liquidity concerns, the financial industry and regulators face the challenging task of charting a course towards a more resilient and sustainable banking environment.
Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting
The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.
Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.
In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”
While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.
President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.
The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.
The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.
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