South Korea commits to new investment funding for projects in Africa

The African Development Bank (AfDB) said South Korea has confirmed its replenishment of a grant of $18 million to support the bank’s largest trust fund – the KOAFEC Trust Fund.

The replenishment brings to $78m the total amount provided by the fund to the AfDB to date, the bank said. “The fund has supported capacity building, technical assistance to African countries, as well as promoting the sharing of South Korea’s economic development models with Africa. The fund has boosted a wide range of projects in transport, energy, water, agriculture and agro-industry.”

The AfDB said that “having transformed its economy through policy reforms in industrialisation, South Korea will strengthen Africa’s information and communications technology (ICT) capacities through training and skills transfer”.

South Korea will also “support regulatory framework development to woo private sector participation so as to enhance manufacturing and industrialisation in Africa”, the AfDB said.

Deputy prime minister and strategy and finance minister of South Korea, Il-ho Yoo, said: “We understand the challenges facing the continent. In order to ensure that African countries enjoy inclusive growth, we will share our knowledge on how we achieved transformation.”

Yoo said his country’s development support for Africa would reflect the AfDB’s aimed at transforming the continent in 10 years, including providing light and power and stepping up industrialisation of the region.

At a signing ceremony for the fund replenishment during the fifth KOAFEC conference in Seoul on 26 October, Yoo and AfDB president Akinwumi Adesina also reaffirmed their commitment to co-financing four projects in the water, energy and agriculture sectors across Kenya, Uganda, Tanzania and Ethiopia. The government of South Korea will provide a concessional loan of $155m to finance these projects through the Export-Import Bank of Korea’s (Exim Korea) economic cooperation development fund.

The AfDB said Kenya will receive up to $25m “to support development of multipurpose water resources, while Uganda’s share of $30m is expected to boost agriculture and forestry conservation programmes”. “For Tanzania, $50m will assist in the construction of power transmissions grids and Ethiopia’s $50m allocation will go to the development of agro-industrial parks,” the AfDB said.

More than 500 participants attended the KOAFEC conference including finance ministers representing the AfDB’s regional member countries, pan-African institutions, regional economic communities and CEOs from the private sector. 

Exim Korea president Lee Duk-Hoon told the conference that public-private partnerships had an important role to play in “steering growth” in Africa. “We need to hear the voice of the Korean and African private sector to be able to assess gaps and deliberate on how to move forward,” he said.

The first KOAFEC ministerial conference was held in Seoul in April 2006. In 2007, a KOAFEC technical cooperation agreement was signed between South Korea’s government and the AfDB for an untied grant of $5m. The bank said several supplementary agreements have since been signed.

In 2014, a South Korean aid agency was selected to help develop a blueprint to improve transport infrastructure in Ghana’s Greater Accra region. The Korea International Cooperation Agency was given the tasking of drawing up a ‘transport master plan’ for the Greater Accra region at a cost of $1.5m.