By Bert Jacobs, University of Antwerp (part of the ECDPM-theIDLGroup project on the Political Economy of Regional Integration in Africa)
With interest in African infrastructure investment at an all-time high, Africa’s regional institutions can play a key role in making the most of this historic opportunity through strategic priority setting and reinforcements to their institutional capacity. But technocratic fixes alone will not be enough to push the priorities of regional development plans forward. Only when political ownership and commitment of all stakeholders is guaranteed will they be able to accelerate investments.
During the final week of November, the 10th annual meeting of the Infrastructure Consortium for Africa (ICA) – a platform to catalyse donor and private sector financing of infrastructure projects and programmes in Africa – brought together more than 100 infrastructure specialists to Cape Town, South Africa. They came from a wide variety of G7 donor organizations, development banks, African regional bodies and many private sector organizations. South Africa hosted this year’s meeting because it recently became the first BRICS country that accepted the ICA invitation to join the consortium.
The meeting comes at a time of unprecedented investments in Africa’s infrastructure sectors. The latest ICA annual report, which was presented during the meeting, estimated that commitments for infrastructure investments during 2013 amounted to US$99.6bn, of which $53bn came from external sources and $47bn from internal African sources. This represented an increase of 12% from the previous year. But commitments from ICA members increased with an estimated 35% during this same period, from $18bn in 2012 to $25bn in 2013. China remained the largest single contributor with $13bn of confirmed commitments.
But despite these positive numbers, there was little reason to celebrate. The meeting focused specifically on the reasons behind the slow implementation of the Programme for Infrastructure Development in Africa (PIDA), the priority list that the African Union (AU) member states agreed to in January 2012. Almost 3 years after the programme was officially launched, it seems increasingly unlikely that many of the 51 proposed priority projects would meet their 2020 deadline. Especially the projects in the earliest stages of project preparation, about 40% of the total, are struggling.
High risks in the early project preparation process are dissuading private investors and even project preparation vehicles within regional development banks to commit resources. NEPAD and the African Union were using the meeting to promote two technocratic solutions to this problem: a PIDA Technical Assistance Facility (TAF) and a Virtual PIDA Information Centre (VPIC). While the TAF would become an institution that would be aimed at streamlining needs assessments and regulatory harmonisation, the VPIC has to become a detailed database to track project progress.
Together, NEPAD and the African Union believed that these two initiatives should be able to bring projects to bankability in 3 years.
This enthusiasm was however not shared by many of the participants who believed the timeframe was mainly determined to fit the PIDA deadline in 2020. These critical voices pointed to 5 additional stumbling blocks that stand in the way of PIDA implementation:
While external public finance to Africa’s infrastructure development has seen significant increases over the last decade, private finance has stood idle for most of the time. While private sector players confirmed during the meeting that they were keeping a very keen eye on Africa, they were not spending money because they prefer simple and low risk projects, the complete opposite of the PIDA priority list. Even in low risk Western markets, only 11% of finance is provided by the private sector. If Africa can get above 12%, it will be entering uncharted territory.
In the spirit of budgetary austerity, donors are eager to tout impressive numbers about the leveraging effect of their donor finance. But the risk reducing effects of leveraging, like technical assistance during early stage project preparation, have not (yet) attracted the large swaths of private sector actors that were predicted. More often, money is leveraged from regional development banks who are also partly funded with donor finance. The lack of a unified measuring method or estimate of the counterfactual makes leveraging a murky territory.
PIDA projects are huge and complex. They have to be cut into bite size chunks before they can be implemented. But cutting projects creates a risk that they would lose their regional character. Technical bodies that manage implementation but at the same time represent all member states can create a way out. The World Economic Forum has excelled at this by cutting the Central Corridor pilot project into 121 projects of which 18 are now supported.
During the meeting, participants sector actors away. Making sure that all stakeholders have their share of ownership eventually always resorted back to one single bottom line. It will only work when there is political will for it. Lack of political will among different actors along the chain of implementation is the main culprit for the very long gestation periods of many projects and the risks that scare private and that regional bodies have the necessary authority to fulltill their consigned mandate is essential for any additional technocratic fixes to work.
Even though part of the meeting was officially reserved for the African stakeholders, the bulk of the presentations were done by consultants and experts from Western donor organizations or project preparation vehicles. Most of the Regional Economic Communities and technical regional organizations only listened as passive observers. Of the African Union member states, only South Africa was present in their role as donor. Some participants stressed that this meeting therefore was preaching to the converted. With the previous point of political will in mind, organizers should look for more inclusive meetings that build on the rich experiences of African stakeholders.
Infrastructure development is not only about mobilising enough resources, but also about the quality of finance and the process that goes with it. Technical solutions can help, but cannot replace political drive, at national, regional and international levels.
This blog is the view of the author and not necessarily that of ECDPM
Pic: Addis Ababa Light Rail, Clem Silverman