Africa can take the lead in financing its infrastructure

Dakar, 15 June 2014 (ECA) - During the weekend’s opening of the Dakar Financing Summit for Africa’s Infrastructure Carlos Lopes, Executive Secretary of the Economic Commission for Africa stressed the need to boost Africa’s infrastructure challenges by addressing existing divergence in legal systems, harmonize policies and tap into the hundreds of thousands of qualified Africans in the Diaspora. The two-day Summit aims to lend momentum to efforts geared towards mobilizing resources and begin the implementation of some 16 key regional infrastructure projects that reflect the needs of the Continent in the areas of: energy, transport and Information and Communication Technologies.

In his keynote address, Lopes said that the lack of harmonized legal systems at the regional level “has implications on infrastructure finance and development,” and that transparency concerns in the procurement process need to be addressed for they act as a disincentive to foreign investors.

The Executive Secretary decried the loss of indigenous capacity to undertake heavy engineering projects. He stated: “Estimates suggest that Africa spends as much as US$ 4 billion annually to employ over 100,000 non-African experts for its projects when there are over 300,000 highly qualified Africans in the Diaspora, with up to 30,000 of them having doctorate degrees.”

He called on the gathering of infrastructure experts, government representatives and private sector to address the need for strong regional arrangements to coordinate and harmonize policies to effectively mobilize resources for infrastructure development.

According to Lopes, a good starting point is to identify the issues and enact rules, including public-private partnerships, deregulation and streamlining of administrative processes and simplification of related procedures.

“Key to this an integrated dispute resolution system is also a critical requirement,” he added.

It is estimated that closing Africa’s infrastructure deficits will increase the continent’s per capita economic growth by 2 per cent a year and increase productivity of firms by as much as 40 per cent. In Lopes’ view, boosting investment in infrastructure “is critical to the success of Africa’s economic transformation agenda, which is articulated in the African Union Agenda 2063.”

The meeting will look at 16 out of 51 major infrastructure projects that have been pre-selected under the Programme for Infrastructure Development in Africa – PIDA. The selection was done at a recent COMESA-driven expert group meeting held in Lusaka. PIDA is Africa’s comprehensive long-term development plan for its infrastructure development and serves as a coherent platform for action at the national level in addition to engagement with the private sector and development partners. 

According to the Lopes, African countries are financing a significant share of their infrastructure projects, with domestic resources accounting for almost half of the total of US$90 billion spent on infrastructure projects in Africa.

Cape Verde he said, spends a significant share of its own resources to finance its infrastructure (44%). While Namibia, Uganda and South Africa spend 39%; 28%; and 24% respectively. On Saturday, Mr. Lopes had underscored that while Africa's infrastructure needs, vision and plans are evident, we still need to attract the investment, as well as builders and operators of the infrastructure. The options under discussion include the use of infrastructure and diaspora bonds, pension and sovereign wealth funds and foreign exchange reserves. In addition, the meeting will discuss the proposed Africa 50 Fund of the African Development Bank.

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