It is against this background that the AIP will mobilise political support and action for the establishment of an Africa Water Investment Guarantee Fund. The rationale is to provide sorely needed assurances to boost investors’ confidence in overcoming the political and other non-commercial risks with which the long-term nature of water and related environmental management investments are perceived and or associated. The fund will thus serve as an investment insurance facility to release Africa’s development potential and support economic growth.
The establishment of such a fund at the African Development Bank (AfDB) – or any other favourably inclined multinational development bank, endorsed by an AU Assembly decision affirming Member States’ commitment, should encourage increased participation of the private sector in water and environmental management activities,. The bank, with the political support of the African Union, would be responsible for both mobilisation and the provision/channelling of financial assistance for the said activities, particularly those with transboundary benefits.
A key aspect for consideration in the process of instituting mechanisms for resources mobilisation for the fund will be the question of how to bring the private sector on board in water and environmental policy formulation as a means of building the appropriate investment safeguards into the legal and policy environment.