Pan-African infrastructure projects to galvanise growth

A PAN-African initiative involving multilateral institutions, governments and the private sector is on the verge of identifying two enormous “transformational”, regional infrastructure projects for development. Source, Business Day. Click here for a link to the article.

A decision on the two projects — selected from a short list of 15 — is expected by July.

They are the initiative of the Programme for Infrastructure Development in Africa (Pida), which was set up by the African Union Commission, in partnership with the United Nations Economic Commission for Africa, the African Development Bank and the New Partnership for Africa’s Development.

Pida’s aim is to unlock the constraints imposed on African growth by the lack of basic infrastructure such as roads, ports, energy, and water supply and to accelerate infrastructure development. The lack of infrastructure acts as a grave impediment to the continent’s growth.

Pida has identified 15 priority infrastructure projects from an initial list of about 50 but has to choose one or two it will focus on. They will be multigovernment, regional, and transformational projects of huge cost which will be undertaken in collaboration with the private sector.

Discussions of the Pida steering committee, together with representatives of multilateral organisations and 26 leading local and international business executives, took place in Cape Town on the sidelines of the World Economic Forum on Africa on Friday to discuss the next stage of the project.

South Africa’s team at the talks was led by President Jacob Zuma and included National Planning Minister Trevor Manuel, Economic Development Minister Ebrahim Patel and Water and Environmental Affairs Minister Edna Molewa.

Companies participating in the initiative include AngloGold Ashanti, Sasol, African Rainbow Minerals, Transnet, Rio Tinto, ArcelorMittal and Old Mutual.

Boston Consulting Group MD Philipp Gerbert, who is the project adviser for the initiative, said in an interview that the two selected projects would contribute to regional integration, would probably be related to cross-country trade corridors, and would be “quick wins” to build confidence among investors in the capacity of African countries to undertake such projects.

Mr Gerbert said the 15 short-listed projects were selected not because they were the most important, but because “there is greater opportunity to accelerate them”.

The huge Inga hydroelectric project in the Democratic Republic of Congo was not on the short list, Mr Gerbert said, because while it was critical for the continent, it was too vast and complex to be accelerated within two years.

Mr Gerbert did not envisage difficulty in finding finance for well-prepared projects. He anticipated that the two first projects would probably be chosen by July.

He said the steering committee had discussed putting in place an inter-country implementation council to drive the projects and overcome obstacles such as laws and regulations that differ between countries. This proposal had won support by African heads of state present at the World Economic Forum (WEF) on Africa discussions in Cape Town last week, Mr Gerbert said.

The World Bank has calculated Africa’s annual infrastructure investment need at $93bn over the next 10 years, of which it can only generate $40bn.

African Development Bank president Donald Kaberuka said at a press conference on strategic infrastructure investment in Africa that the selected projects would be undertaken by both the public and private sectors. The next stage was to bring the chosen projects to bankability.

South African Finance Minister Pravin Gordhan said it was important to demonstrate that Africa could implement its plans. He said there was new vigour about Africa’s development and the basis had been laid to start implementing Pida’s infrastructure plans.

General Electric Africa CE Jay Ireland said the planned inter-country, regional projects would be “catalytic” and “transformational” as they would give a huge boost to economic activity. But he highlighted the complexities involved in executing them and stressed the need for the right processes and procedures to deal with them.

Pida was established last year by business and government leaders under the auspices of the WEF with the aim of providing strategic long-term planning for infrastructure development in a coherent way for all African stakeholders.

At the heart of Pida is the Priority Action Plan (PAP), a list of 51 immediately actionable programmes across the four main infrastructure sectors, all to be initiated by 2020 and all promoting regional integration that will unlock enormous economic growth potential.

Specifically, Pida aims to increase energy access and reduce power generation costs. According to its plans, access to power in Africa will rise from 39% in 2009 to nearly 70% in 2040, reaching an additional 800-million people.

Other objectives are to reduce transport costs and boost intra-African trade; ensure greater access to water and food security; and increase global connectivity.

According to documents of the WEF, increasing broadband penetration in Africa by 10% by 2018 will increase African aggregated gross domestic product by 1% through strengthening connections between goods and markets and between people and jobs.

Pida links with the Business Working Group on African Infrastructure, which comprises 35 companies, multilateral development banks, nongovernmental organisations and regional experts and organisations. The aim of the working group is to accelerate private sector involvement in infrastructure in Africa and provide a model that can be replicated and scaled up across other continents.