The African Development Bank (AfDB) is in talks with the Exim Bank of India over a $5 billion dollar fund that will support a project aimed at improving the state of the agriculture sector by increasing productivity and providing more jobs to propel the continent’s economy to more holistic growth.
The Exim Bank of India published a paper last May underling a goal to infuse a sum of $5 billion to be sourced from the country's foreign exchange reserves.
"The country's reserves are in the region of $375 billion. The proposed amount of $5 billion constitutes less than 1.5 per cent of the reserves, and would not dent the foreign exchange reserves position."
"This approach would mitigate the risks associated with upfront investments of the Indian investors. The lease rentals could serve as cash-flow to service the debt," Exim Bank said, adding, "Indian investors would require funds to pay upfront lease rentals, besides sourcing of agricultural inputs and implements."
"This would entail setting in place an appropriate institutional mechanism for the management of this fund. It is here that the role of the country's apex export finance institution, viz., Exim Bank, could gain significance since it has been actively financing overseas direct investment through its flagship programme," Exim Bank said.