ACP countries to establish own development bank

The African, Caribbean and Pacific countries (ACP) have launched a study to examine the feasibility of opening a trade and investment bank to service 79 member states. The idea is to open an ACP Bank for International Trade and Investment (BITI) that would address the existing gaps in financing methods which tend to prevent valid projects from being realised. In an article released by The Observer Hurricane Guide, The IPA newsletter quoted the ACP Secretariat stating that the six month study funded by the European Union (EU) would end in December.  

Following the outcome of the survey , a team of experts will analyze financing gaps, conduct a further market survey in ACP regions, and propose an implementation framework for the bank including its structure, membership and location. 

The team will also do a proposal on the sources of capital, operational activities and financial instruments. "The global objective is to ensure that ACP countries can carry out key projects that can boost development, but are unable to be financed by the existing channels, for various reasons. "Research already shows there are significant gaps in trade financing and SME (small to medium business) financing, for instance - areas which are absolutely essential to ACP economies," said Chef de Cabinet of the ACP Secretariat Dr Obadiah Mailafia, who is coordinating the BITI project.

The Secretariat said that ACP countries will be the dominant shareholders in the institution, although investors may include European countries, international banking firms such as the European Investment Bank (EIB) and the BRICs partners. The ACP Secretariat said that the original idea for such a bank stemmed from an ACP Council decision taken in 1980, which called for an exploration of the issue, but had lost steam. "The initiative was recently revived at the ACP ambassadorial level and a Concept Note was prepared detailing the rationale, principles and context of setting up such an institution. 

The technical study and analysis will help to outline the conceptual framework, methodology and timelines for the project," the statement said. Mailafia said there was more to the creating a major bank. "There will be value added, it will cater for ACP countries and have thorough knowledge of our financing environments,” he said. “It will also address current gaps in financing mechanisms,” he said. Mr Mailafia said Africa evidently has had huge economic potential, and so did countries in the Caribbean and the Pacific. “The BITI is therefore linked to the future of the ACP group as a whole," he said.

Source: Post Courier Online