Infrastructure experts deliberate on Africa’s Infrastructure deficit and risk mitigation

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Infrastructure experts deliberate on Africa’s Infrastructure deficit and risk mitigation

According to the AfDB’s African Economic Outlook 2018, the annual infrastructure deficit in Africa is currently estimated at $108 Billion!

With committed leadership, political will and a Private Sector actively involved in Infrastructure development, this gap can be closed.

It is with this approach at the core of its mandate, that the NEPAD Agency Regional Integration, Infrastructure and Trade Programme convened a two-day Strategic Dialogue on Advancing Infrastructure Development in Africa.

The meeting held in Zimbabwe’s Victoria Falls from 26-27 June 2018, brought together representatives of development finance institutions, private sector experts, Regional Economic Communities, infrastructure project authorities, and Project Owners.

“We convened this dialogue mainly to define concrete policy recommendations for Africa’s leadership which can advance infrastructure projects implementation under the umbrella of the Programme for Infrastructure Development in Africa (PIDA)” said Symerre Grey-Johnson, Head of Regional Integration, Infrastructure and Trade Programme.

Mr. Grey-Johnson who spoke on behalf of the NEPAD Agency’s CEO, Dr Ibrahim Mayaki, highlighted that the Agency deems the dialogue as crucial in order set the scene for exploring innovative measures and instruments to close the $108 billion infrastructure gap in Africa.

In order to address this challenge, the dialogue was structured on three key areas, namely: mobilising African institutional investment through the NEPAD 5% Agenda Campaign; addressing risk mitigation and operationalising an effective African Guarantee Scheme for African infrastructure projects and enhancing the bankability of transboundary projects through the PIDA Service Delivery Mechanism (SDM).

Through the NEPAD 5% Agenda campaign, there will be an increase in investment allocations by African institutional asset owners, like Pension and Sovereign Wealth Funds, into African infrastructure from its current 1,5% of assets to a more impactful 5%.

On Risk Mitigation, the infrastructue experts agreed that the support given to Project Owners at the early stage of project preparation will aid greatly in making the projects “appealing” to potential investors. This support, along with backing from a credible African Guarantee Scheme will go a long way in securing funding for major African Infrastructure Projects and thereby reducing the Annual Infrastructure deficit.

The African Development Bank which has over the years provided financial support for many Infrastructure projects, was also represented at the Dialogue. Mike Salawou, AfDB Head of Infrastructure Partnerships, indicated that the Bank remains aware of the increasing Infrastructure deficit and will continue to work jointly with the NEPAD Agency to address this threat to Africa’s development.

The following proposals were made for the conceptualization of an African Guarantee Scheme: to pool together all existing risk mitigation instruments, select only certain PIDA projects which were highly likely to be attractive to investors, through the G7 and G20, mobilize new resources into the African Guarantee Facility through the G7 and G20 process and to create a ‘Blended scheme’ which combines both sovereign guarantee and an aggregated guarantee or a combination of partial guarantees

“ We (AfDB) have been at the forefront of supporting Africa and hence our strategy has been to support in the implementation of AfDB’s High 5’s Agenda, namely, “Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of the life of the people of Africa” he said.

The dialogue featured a robust session on the NEPAD Agency PIDA Service Delivery Mechanism (SDM) and its role in providing technical support to PIDA projects throughout the project preparation cycle.

“The NEPAD SDM has been especially beneficial to the Zambezi River Authority, specifically on the Batoka Gorge Hydropower Project which is at preparation stage now. We continue to work with the SDM for technical support which will help in attracting investors to fund the project” said Munyaradzi Munodawafa, ZRA CEO.

The Strategic Dialogue on Infrastructure has once again brought to the forefront, the premise that there is a need to make Infrastructure a tradable commodity.


Notes for Editors:

About the 5% Agenda:

The NEPAD Agency’s 5% Agenda campaign by the Continental Business Network (CBN), aims to increase investment allocations by African institutional asset owners, like Pension and Sovereign Wealth Funds, into African infrastructure from its current low base of about 1,5% of assets under management to a more impactful 5%.

About the PIDA Service Delivery Mechanism:

The PIDA Service Delivery Mechanism (SDM) was developed and established by the African Union Commission and the NEPAD Agency as a specific instrument to address the bankability constraints of regional projects. The SDM instrument tackles the lack of technical and financial capacity during the project preparation phase by providing technical advisory services to PIDA Projects in the project preparation cycle. SDM’s core mission is to make Africa’s cross-border infrastructure projects technically sound, economically feasible, and politically acceptable.