06 June 2015, Sweetcrude, Houston – There’s a huge demand for infrastructure in Africa and yet the money coming from donors and governments is not sufficient. As a result, African governments need to look at innovative ways to finance the infrastructure gap, including engaging in more public-private partnerships (PPPs).
This was the overriding message conveyed during a panel discussion on “Financing Infrastructure – Raising the bar” that took place on Thursday, May 28 at the African Development Bank’s Annual Meetings in Abidjan.
Speaking on the panel, Steve Kayizzi-Mugerwa, Acting Vice-President and Chief Economist of the African Development Bank (AfDB), said governments can do more to finance their own infrastructures, through taxation, for instance; and to make sure that the infrastructure built is effective and well maintained; and to ensure that people, especially in the rural areas, benefit from these developments.
“We often think of global, regional infrastructure that opens up borders, which is very good. But we need to think local as well,” said Kayizzi-Mugerwa, who added that more emphasis needs to be placed on urban development, particularly what goes underground, as the urban infrastructure often does not take into account the impact of building upon the drainage, sewage systems, water systems.
“In a lot of cities in Africa today, Abidjan included, when you have one day’s heavy rain, everything’s flooded. That never used to be the case. It’s a new phenomenon.”
If African cities are to be places of advancement, this infrastructure needs to be revisited, he said.
In her contribution, Neside Tas Anvaripour, Director of Africa50, said Africa needs $100 billion for infrastructure, and power alone takes about 40 percent of the investments in infrastructure.
“The AfDB has supported 49 public-private partnerships (PPP) in the power sector, and the way to go in infrastructure development is the private sector,” she said.
She also argued that the continent’s infrastructure challenges are not just a matter of financing gap, but about project preparation.
She therefore called for a new approach, and it must be the commercial approach, she said, adding that countries should also “co-develop projects.”
The Deputy Finance Minister for South Africa, Mcebisi Hubert Jonas, said it is important to use public finance for infrastructure development, adding that it should however be guided by legal and policy framework.
Patrick Achi, the Minister for Economic Infrastructure, Côte d’Ivoire, noted that African countries must have the political will to invest in infrastructure.
Another creative solution raised was regarding diaspora bonds to help finance infrastructure in Africa. “People still love their countries, even if they live in America or Europe,” said Steve Kayizzi-Mugerwa, adding that many investors in the diaspora aren’t necessarily seeking a return on such an investment. “They just want to see that something is happening on the ground.”