African infrastructure development strategies

African leaders have made infrastructure development a pillar of the development strategy of the continent which is anchored on regional integration and the realisation of the African Economic Community enshrined in the 1991 Abuja Treaty. More recently, several blueprints and initiatives emphasised the importance of infrastructure for the continental transformation, as captured with the launch of the New Partnership for Africa’s Development (NEPAD) in 2001, the adoption of the integrated strategic blueprint for continentalinfrastructure transformation for 2012-2040, also known as the Programme for infrastructure Development in Africa (PIDA) in 2012, and the adoption of the African Union Agenda 2063 and its first 10-year implementation plan in 2015. Agenda 2063 envisions the development of world class, integrative infrastructure to support Africa’s accelerated integration and growth, technological transformation, trade and development through the implementation of PIDA.

PIDA envisages the development of 37,200km of highways, 30,200km of railways and 16,500km of interconnected power lines by 2040. It also plans to add 54,150 megawatts of hydroelectric power generation capacity and an extra 1.3 billion tons throughout capacity at the ports.   Africa has adopted a number of strategies, at the regional level to develop infrastructural facilities, both global and regional initiatives and blueprints have been formulated and launched to support and facilitate Africa’s infrastructure development.

(a)  Salient Global Initiatives Support for Africa’s Infrastructure Development

 The Infrastructure Consortium for Africa (ICA)

The Infrastructure Consortium for Africa (ICA) was established in July 2005 as a recommendation to the G8 Summit in Gleneagles (UK) by the Commission for Africa, in order to help improve the lives and economic well-being of millions across the continent, by supporting the scaling up of investment in project development from public and private sources, through both regional programmes and country-specific initiatives.

ICA is not a funding agency. It however, provides a platform to catalyse a step-charge in the financing of infrastructure projects and programmes across the continent. The ICA also helps to overcome technical and political challenges to building more infrastructure, and improve understanding of Africa’s infrastructure development needs through the provision of better information. In this regard, ICA has established a Project Preparation Facilities Network to help address problems associated with project preparation. It provides a study on best practice and lessons learnt in coordinating project co-financing, information sharing and resource mobilisation. In addition, ICA, through its annual flagship report, monitors resource flows to infrastructure.

Sustainable Energy for All Initiative

The UN Secretary-General’s Sustainable Energy for All (SE4ALL) initiative was launched in September 2011 with the aim of achieving three main goals by 2030; first, ensure universal access to modern energy services; second, double the global rate of improvement in energy efficiency; and third, double the share of renewable energy in the global energy mix.

Africa has been at the forefront of the implementation of the SE4ALL Initiative with 42 countries that opted into the initiative. Since May 2013, the African Development Bank has been hosting the SE4ALL Africa Hub in partnership with the African Union Commission (AUC), the NEPAD Planning and Coordination Agency (NPCA) and the United Nations Development Programme (UNDP)32.

Among the key instruments to implement SE4ALL, the Sustainable Energy Fund for Africa (SEFA) was established in 2011 at the African Development Bank with Denmark’s commitment of USD 56 million to allow the Bank to scale-up its engagement in the small to medium-sized renewable energy and energy efficiency space. In 2013, SEFA was transformed into a multi-donor facility with an initial USD 5 million commitment from the United States as part of a multi-year engagement under President Obama’s Power Africa Initiative.

SEFA operates through three financing components all focused on unlocking private investments in small to medium sustainable energy projects: (i) grants to facilitate the preparation of bankable projects; (ii)  equity investments to bridge the financing gap and infuse managerial capacity and (iii) support to public sector in improving the enabling environment.

Since its inception, SEFA has played a key role in structuring the first truly Pan-African USD 150 million private equity fund focused on renewable energy, African Renewable Energy Fund (AREF), for which it will also be an anchor investor with up to USD 35 million.

Salient African Initiatives for Infrastructure Development Presidential Infrastructure Champion Initiative (PICI)

PICI was established in 2010 following a proposal made by President Jacob Zuma to speed up regional infrastructure development, empowered through political championing of projects. The key roles of the initiative are to increase visibility, manage resource mobilisation, unblock bottlenecks, and ensure implementation35.

Nine projects, meeting specified criteria, were identified for the initiative each overseen by a political “champion”. Selected champions are responsible for bringing visibility to projects, clearing political bottlenecks; providing leadership, leading resource mobilisation for project implementation, and ensuring project implementation within five years (implementation in this case meaning the projects have progressed from pre-feasibility to feasibility phases, feasibility to construction or have demonstrate evidence of progress).

Programme for Infrastructure Development in Africa (PIDA)

Adopted by African Heads of State and Government in July 2012, PIDA aims to facilitate the physical and economic integration of the continent and achieve the aspirations of African people as encapsulated in the transformative AU Agenda 2063.

PIDA uniquely ties together existing infrastructure project on the continent with a well-analysed, evidence-based list of bankable future projects. The vision of PIDA is to strengthen Africa’s regional integration, promote intra-African trade and improve the competiveness efficiencies of African markets and the development of multimodal corridors to link hinterlands to ports. As such, PIDA has short –, medium – and long-term strategies for infrastructure projects through 2040. The short-term projects are part of the Priority Action Plan (PAP) which includes the first set of feasible projects that are ready for implementation with immediate effect towards achieving the outcomes of PIDA.

The African Strategic Infrastructure Initiatives

To promote the contributions of the private sector into the implementation of PIDA Priority Action Plan, in May 2012, the African Strategic Infrastructure Initiatives was launched at the World economic Forum on Africa. The PIDA Business Working Group was then established to facilitate the integration of the private sector concerns to fast-track the implementation of PIDA. More than 40 public and private institutions are member of the BWG which was endorsed by the 20th African Union Summit of January 2013.

Dakar Financing Summit (DFS) for Africa’s Infrastructure

On June 15, 2014, President Macky Sall of the Republic of Senegal and Chair of the NEPAD Heads of State and Government Committee, NEPAD Heads of State and, the NEPAD Agency, the AUC, AfDB, ECA, World Bank and other partners convened for the Dakar Financing Summit (DFS) for Africa’s Infrastructure in Senegal. The summit’s objective was to identify sustainable and innovative financing mechanisms for 16 high-impact and actionable infrastructure projects. The summit consisted of high-level discussions with decision makers and subject-level experts. The outcome of the summit, entitled: the Dakar Agenda for Action (DAA), contained momentous declarations and endorsements. Prominent among these are (i) The DAA endorsement of the African Development Bank’s Africa 50 initiative, to serve as an African infrastructure investment platform. (ii)The DAA call for the creation of more African-owned private equity funds to increase Africa’s ownership of its own development. (iii) The DAA urge on African nations for domestic mobilisation of resources, as well as increased private sector involvement and innovative financing mechanisms through financial markets such as infrastructure bonds, diaspora bonds and sovereign  baked pension funds.   (iv) The DAA  highlighted the need for strong political will by African governments and corresponding Regional Economic Communities (RECs) in implementing and investing governments to increase awareness of PIDA by all stakeholders and to prioritise the financing of the selected 16 infrastructure projects.

The DAA endorsement of the establishment of the Continental Business Network (CBN) on Infrastructure Financing, organised by the NEPAD Agency and other partners. The CBN will comprise finance and business institutions from throughout the world for joint planning on capacity building, project preparation and implementation.

The DAA emphasis on the need to improve the capacity of the NEPAD infrastructure Preparation Facility (IPPF) to develop well-organised projects, the urgent need for energy infrastructure and ICT technology to boost industrialisation and the importance of strong financial and legal procedures to promote PPPs40.

Continental Business Network

As an outcome of the Dakar Agenda for Action, the Continental Business Network on Infrastructure Financing was launched in June 2015 to provide African Heads of States with an Infrastructure Investment Advisory platform and drive infrastructure investments through improved project preparation, capacity development and overall project implementation.

Challenges to infrastructure development

There is low level of participation by lawyers in project financing and infrastructure development.

There is the challenge of conveying complex issues across time zones, languages and cultures in a manner that will make project participants understand the issues, resolution of such issues, without expense and delay.

As regards the challenge arising from ICT, there is the question or challenge of digital divide, ‘information rich’ and ‘information poor’.

There is the challenge of the relationship between human rights and transnational privatised infrastructure projects (or public-private partnerships, ppps). Human rights issues, as a result of the effect of infrastructure projects, may arise. Human rights related infrastructure risks are inevitable.

Infrastructure development may, paradoxically, sometimes be ‘infrastructure as battlefield’ and suffer economic infrastructure terrorism as in the bombings of some infrastructures in some African countries and the examples of September II World Trade attacks in the U.S, the United Kingdom tube/bas  networks highest and Spanish commuter trains.

Among the challenges to infrastructure development in Africa are challenges impeding the financing of infrastructure. These include –  (a) High transaction cost, (b) multiplicity of regulations, permits and licenses required, (c) various government agencies and institutions which investors have to deal with in a typical infrastructure project, (d) limited number of “bankable” projects, (e) illicit financial flows,  (f) the banking sectors emphasis on short term loans and deposits (These two impede potential funding sources).

Another challenge is that which is related to lack of skills for project preparation and implementation.

Divergence in legal systems constitute a major challenge especially in the context of regional projects.

Conclusion

It is imperative to accelerate the implementation of infrastructure projects in Africa, particularly through mobilising adequate financing from domestic, private and innovative sources of funding. This is a feat that cannot be achieved on a gold plater. There are preconditions for successful mobilisation of financial resources. One very indispensable precondition is a functioning and effective government who must be committed to creating conducive environments for investment and creating private sector friendly policies. The latter responsibility of good governance involves strong institutions to implement the rule of law, transparency and space for political participation and ICT-based human capacity building that creates a skilled labour force.

Multi-stakeholders nteraction is inevitable in infrastructural development. Africa must leverage private sector investment through new models of public-private partnerships (PPS).

by Prof. A. D. Badaiki at the African Bar Association (AFBA) yearly conference in Nairobi, Kenya

 

Source : thenationonlineng.net