African union: a bank for Africa? Impatient at delays in promised development and aid capital from developed countries, the African Union (AU) will establish an investment bank in the next three years.

According to Maxwell Mkwezalamba, the AU's commissioner for economic affairs, Africa is becoming increasingly impatient with the rich countries' failure to deliver on their pledges to double aid for Africa by 2010. "It's frustrating to note that our partners have not lived up to what they have committed themselves to do, that's why we are going to develop some mechanisms to try and look for our own funding," he says.

The continent needs some $250bn in the next eight years to double the size of its economy and trade by 2015, while delivering increased domestic and foreign investment. Mkwezalamba says the money will lift tens of millions of people out of poverty, broaden access to primary school education, fight conflict and treatment for HIV/Aids by 2010.

24 countries have signed up

"We will start to explore our own resources instead of waiting for people from outside Africa, we need to engage our private sector in these processes so that we get a better quality of our product for export," he maintains.

The bank will likely be funded by AU members, accredited and monitored through the Africa Peer Review Mechanism (APRM). The process is a powerful checks-and-balance device at the AU's disposal, put in place as a means of both member country introspection and oversight by its peers. It is also the most innovative.

"It is a voluntary process by which, in theory at least, participating countries submit themselves for examination and then undertake to remedy any identified governance problems," says Ross Herbert, head of Nepad and governance programmes at the South African Institute of International Affairs. So far, 24 countries have signed up and are supposed to be reviewed every three years. "That means eight reviews must be completed annually to keep pace," says Herbert.

"We are in the process of establishing some financial institutions, one of which is the African Investment Bank, which will have resources coming from the member states of the AU and the private sector players who will look into financing regional infrastructure, and once we get there, we'll have little dependence on our partners," says Mkwezalamba.

The seeds of the new institution appear to have been sown at the AU summit in Ghana in June this year with the successful launch of the Pan African Infrastructure Development Fund. This Nepad initiative has already raised $625m of a targeted $1bn for investment in large-scale African development projects.

The initiative is supported by the South African government and the Public Investment Corporation, South Africa's state-owned pension funds manager.

The Government Employees Pension Fund is the biggest investor in the fund so far with $250m, followed by the Development Bank of Southern Africa with $100m and SA banking group Absa with $70m. Financial services group Old Mutual plc and the African Development Bank (AfDB) have invested $50m each, with other investors including South Africa's Standard Bank, Liberty Group and Metropolitan Holdings and Ghana's Social Security and National Insurance Trust.

The South African department of foreign affairs says that the Ghanaian government has made firm commitments to the fund, while other African leaders have expressed interest in making contributions

Africa watchers are quick to point out that the AU announcement is probably as much for the ears of Chinese funders and investors knocking at Africa's door as it is for the leaders of the G8 nations. In tackling a financial initiative of such magnitude, the AU takes a giant leap of faith which, if successful, could redraw the way and the pace at which the continent tackles its critically pressing infrastructure development programmes.

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