ACP : A historical move !
Posted by Ghislain Zobiyo on December 10, 2019
After almost 45 years, the ACP group of States finally demarcates itself from its dependence on grants and launches its own Development Fund, the ACP Trust and Endowment Fund.
BRUSSELS, December 10 (BIPMedia) —
"It is truly historic ! For the first time, the group of African, Caribbean, and Pacific States (ACP group) will be at the service of its Member States not only for the distribution of very limited grants out from official development assistance mainly from the longstanding cooperating partner, the European Union, but also, for the first time, for the mobilisation of finance for large projects ”, reacted Mr.Krish Bissoonauthsing, the architect of the Endowment and Trust Fund of the ACP group, coming from Mauritius, and the ACP Expert in Development Finance at the Macroeconomics, Development Finance and Intra-ACP Programming department of the ACP Secretariat in Brussels. Mr. Krish was speaking a few minutes after the launch of the said Fund on Tuesday, December 10, 2019, by the 9th Summit of the ACP Heads of State and of Government meeting in Nairobi, Kenya since December 9.
Brussels Information Press has taken the initiative to request a reaction from the ACP Secretariat in Brussels, in particular from Mr Krish Bissoonauthsing, who is the Officer-in-charge in the Department responsible for ACP Development Finance. Mr. Krish spontaneously exposed the origins of the ACP Group’s Endowment and Trust Fund (ACP ETF, the operational aspects of this Fund and its scope, with the long term objective to become one of the main instruments for mobilizing the ACP group’s financial resources.
"It is under the leadership of the Secretary General of the ACP Group, H.E. Dr. Patrick GOMES, of H.E. Mr. Henrique BANZE, Assistant Secretary General in the Department of Macroeconomics and Development Finance, and supported by H.E. Daniel EVIVA ABE’E, Ambassador of the Republic of Cameroon to the Kingdom of Belgium and the European Union, the latter in his capacity as Chairman of the Working Group on the setting up of the ACP Endowment and Trust Fund, which I got down to, since taking my post in mid-October 2019, to reframe the efforts and the technical orientation, aiming at the creation of an ACP Endowment and Trust Fund, which will undoubtedly be a cornerstone of the financial viability of the ACP Group ", he underscored.
Mr. Krish reminds for this purpose that the will to create an ACP ETF dates from the 7th Summit of ACP Heads of State and of Government held in Malabo in 2012, resulting in the Sipopo Declaration which states it, I quote : "The ACP Heads of State and of Government stressed the urgency of mobilizing resources and sufficient funding to achieve the sustainable development to which all peoples aspire". Subsequently, he continues, the report of the Group of Eminent Personalities (GEP) published in 2016, stresses that "the ACP Group must work for its financial viability in terms of financing itself and its projects, and to stand out gradually from the overdependence on grants and development aid, notwithstanding the significant developmental benefits of the past forty years from the various European Development Funds made available by the European Union ”.
Mr Krish also mentioned an important fact, namely that a certain number of ACP countries are no longer, and further more will no longer, be eligible for development aid, since these countries are gradually migrating to the category of upper middle-income country.
“It thus became imperative for the ACP group to forge its new added value vis-à-vis its Member countries, by innovating on sustainable and viable access to the new development financing mechanisms, in resonance with the evolution of the financial markets, also increasingly digitalised."said Krish.
In light of the various design and feasibility studies done on the Fund, Mr. Krish re-oriented the architecture of the Fund towards a multi-window mechanism, using the concept of tracking shares, in consultation with a specialist firm Hance-Law of Luxembourg.
This made it possible, explains Mr Krish, to satisfy the desire expressed by the ACP Governing instances to have, on the one hand, an endowment fund, therefore a window which will be fed by voluntary contributions from the Member States and, among others, a window dedicated to investments to finance large projects. Between these two there are different other possibilities such as the establishment of ACP Guarantee Fund, ACP Emergency Fund, etc. ; such Funds may eventually be combined with those of our usual cooperation partners, such as the European Union, to increase leverage.
On the other hand, the Fund’s innovation lies, he says, with the unlimited capacity of possible windows that we can open on demand ; for example, these can be windows that can accommodate ready-to-finance bankable development projects, and each project having its own structure of tracking shares. The innovation goes further in the blending of both traditional and digital financing mechanisms (including blockchain technology), which we intend to put in place so that these projects can confidently raise finance on the global financial markets.
" It is truly historic ! For the first time, the group of African, Caribbean, and Pacific States (ACP group) will be at the service of its Member States not only for the distribution of very limited grants out from official development assistance mainly from the longstanding cooperating partner, the European Union, but also, for the first time, for the mobilisation of finance for large projects , infrastructure and others, by availing itself of the location of the Fund’s Headquarters in Luxembourg”, rejoiced Mr. Krish.
From its aura of G-79 - Group of 79 States - and innovative mechanisms in phase with the current possibilities of traditional and digital financial markets, while addressing factors such as risk perception when it concerned investments in projects in the ACP regions, the ACP group is giving itself the means through this ACP ETF, to meet the huge needs of its Member States to sustain socio-economic development and deliver a better life for their populations.
"I think that the moment is optimal and that the appetite of the global financial markets is adjusting favorably to the countries of the South ; suffice it to consider what happened recently during the 2019 Africa Investment Forum, organized by the African Development Bank : USD 40 billion in project funding was raised in three days. It was an undeniable success in view of the tabled demand for project funding which totalled USD 67.7 billion. 52 agreements have been concluded. These agreements concerned 25 African countries in sectors as diverse as infrastructure, agriculture, energy and transport. The ACP Fund can really go even further and I am very confident of the success of the first operations in 2020 ”, concluded Mr Krish Bissoonauthsing.
With the Fund just officially born on December 10, 2019, some ACP countries, namely Papua New Guinea, Ghana and Kenya already responded positively to the launch of the ACP Group’s Endowment and Trust Fund. These 3 countries have pledged to contribute to the ETF, respectively 500,000 USD for each of PNG and Kenya and 100,000 USD for Ghana, according to the sources from the 9th Summit of ACP Heads of State and Government in Nairobi. This impulse augurs well for a promising future for the ACP ETF, and signals strongly that the transformation of the ACP group is under way. Ghislain ZOBIYO