Why infrastructure development is critical

Why infrastructure development is critical
  • PublishedMay 8, 2014

Furthermore, a recent World Bank study found that the poor state of infrastructure in many parts of Africa reduced national economic growth by two percentage points every year and cut business productivity by as much as 40%, making Africa – in spite of its enormous mineral and other natural resources – the region with the lowest productivity levels in the world.

In order to boost intra-African trade, we need to improve infrastructure. That is why Nepad designed PIDA – the Programme for Infrastructure Development in Africa, a 30-year strategy by Nepad, the African Union and African Development Bank (AfDB),  focusing on regional trans-boundary projects. The good thing about PIDA is that it was designed from the bottom up. The priorities are consensual.

Given our global context, some of the minimal conditions for structural economic transformation require a less top-down approach in our planning processes. The 4,500km highway from Algiers to Lagos, for example, would not have been possible without the political and technical support of each of the affected countries. Ten years ago, a private sector operator who wanted to discuss a regional project with two governments would be lacking a rational framework. PIDA is that rational framework. 

Jointly coordinated by the African Union Commission (AUC), the Nepad Agency, Regional Economic Communities (RECs) and the AfDB, PIDA provides the strategic framework for priority projects to transform Africa, through the construction of modern infrastructure, into an interconnected and integrated continent that is competitive domestically and in the global economy.

PIDA also forms the basis for the Dakar Financing Summit for Africa’s Infrastructure (DFS), which will take place in Senegal next month.

To be hosted by Senegal’s President Macky Sall, who is also the chair of the Nepad Heads of State and Government Orientation Committee (HSGOC), the Summit aims to accelerate the mobilisation of both domestic and international financial support for the implementation of high-impact regional infrastructure projects in Africa.

We have picked 16 out of 51 largely programme-based PIDA projects to be discussed at the Summit. The objective of this Summit is to create a dialogue between policy makers, heads of government and private sector operators. Financing will develop from public-private partnerships. 

The 51 projects require an estimated $68 billion for their implementation up until 2020 whilst an additional $300 billion is envisaged as a requirement for the PIDA projects to be implemented through to 2040.

With such quantum resource requirements in the long term, there exists a huge financing gap, which needs to be addressed for the successful realisation of PIDA projects. 

When high-level politicians, business entrepreneurs, industry experts and researchers meet in Dakar, it will not be just another “talking shop” on Africa’s development. The DFS is about producing results in terms of new approaches to project preparation, that will lead to an increased level of funding being directed to PIDA projects within a shorter time-frame. 

The Dakar Summit highlights the need to scale up Africa’s domestic financial resource mobilisation and will provide a unique high-level platform to convene and engage African decision-makers on specific aspects that have hampered the roll-out of transformative regional projects across the continent.

Working closely with the private sector, the DFS will produce tangible outputs that will, over time, contribute to regional transformation. The DFS marks the beginning of a strong collaboration between public and private capital, based on effective project risk mitigation and project structuring to match different investor groups with a range of investment securities. 

The expected significant outcomes will be an opportunity for Nepad to be a key point for investment in Africa. The DFS will be a new approach to tackling the changing landscape of Africa’s shifting development paradigm.

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