1

Financing African Infrastructure:Can the World Deliver?

Amadou SyDirector, Africa Growth Initiative at BROOKINGS

Presentation at Financing the Sustainable Development Goals International Conference

Accra, March 18, 2015.

2

Financing African Infrastructure

Forthcoming report from BROOKINGS (Gutman, Sy, and Chattopadhyay, 2015)

• Background and Key Questions

• Recent trends: Highlights and Concerns

• Recommendations

3

Recent trends: Highlights

• Surge in financing: external and internal

• Growing importance of PPI and non-traditional sources

• Traditional multilateral banks still relevant in certain sectors / sub-sectors

• Domestic (budget) financing remains the largest source

• Wide distribution of financing across countries, although there are micro-patterns in sectors

4

Surge in external financing

0

5000

10000

15000

20000

25000

30000

3500019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

US$ millions

PPI China ODF

Source: Gutman, Sy, and Chattopadhyay (2015).

5

External financing concentration (2009-12)

Source: Gutman, Sy, and Chattopadhyay (2015).

17%

11%

10%

8%7%

47%

South Africa

Nigeria

Ghana

Kenya

Ethiopia

Other (46)

6

Energy expanding, telecom maturing

0

5000

10000

15000

20000

25000

30000

35000US$ millions

Energy Telecom Transport Water Supply & Sanitation

Source: Gutman, Sy, and Chattopadhyay (2015).

7

PPI dominant in telecom (2005-2013)

19%

2%

64%

0%

4%1%

10%

0% 0%Electricity

Natural Gas

Telecom

Airports

Railroads

Roads

Seaports

Water Treatment

Water Utility

Source: Gutman, Sy, and Chattopadhyay (2015).

8

PPI: Top recipients

0

5000

10000

15000US$ millions

2005-2008 2009-2012

Source: Gutman, Sy, and Chattopadhyay (2015).

9

PPI less prevalent in non-ICT sectors

21

40

31

12

0% 20% 40% 60% 80% 100%

All SectorsExcluding ICT

All Sectors

Count of Countries

Receiving PPI Not Receiving PPI

Source: Gutman, Sy, and Chattopadhyay (2015).

10

ODF still relevant (and growing)

0

2000

4000

6000

8000

10000

12000

14000US$ millions

World Bank AfDB OECD-DAC, EC

Source: Gutman, Sy, and Chattopadhyay (2015).

11

ODF particularly relevant in non-ICT

0

2000

4000

6000

8000

10000

12000

14000US$ millions

Energy Telecom Transport Water Supply & Sanitation

Source: Gutman, Sy, and Chattopadhyay (2015).

12

Chinese financing growing significantly

0

2000

4000

6000

8000

10000US$ millions

Energy Telecom Transport Water Supply & Sanitation

Source: Gutman, Sy, and Chattopadhyay (2015).

13

Chinese financing strong in transport and energy

34%

8%

53%

5%Energy

Telecom

Transport

Water Supply &Sanitation

Source: Gutman, Sy, and Chattopadhyay (2015).

14

Chinese financing shifting emphasis

0%

25%

50%

75%

100%

2005-2008 2009-2012

Average Resource Rich Average Non-Resource Rich

Source: Gutman, Sy, and Chattopadhyay (2015).

15

Chinese financing favouring stable economies

0%

25%

50%

75%

100%

2005-2008 2009-2012

Fragile Low Income Non-Fragile Low Income

Source: Gutman, Sy, and Chattopadhyay (2015).

16

Recent trends: Concerns

• Sub-national/urban infrastructure ignored (both in accessing needs and in financing)

• Emphasis on facilitating projects have ignored governance, coordination, and efficiency gains

• Complementarity in financing across sources, countries, sectors is purely serendipitous

• Traditional coordination mechanisms ill-suited in new economic environment with new and multiple stakeholders

17

Traditional financing matrix now in flux

Source: Gutman, Sy, and Chattopadhyay (2015).

Sectors Government ODF China PPIEnergy Telecommunication Transport Water

Transport Government ODF China PPI Airports Railroads Roads Seaports

18

Domestic fiscal space (Revenue/GDP)

0%

5%

10%

15%

20%

25%

30%

35%

Oil Exporting Countries Non-Oil Exporting Countries

Source: Gutman, Sy, and Chattopadhyay (2015).

19

Recommendations:

Build on existing institutional structures and functions, rather than invent new institutions

• Enhance collaboration and coordination across traditional and non-traditional sources of finance

• Regional guidance of investment practices for economic, social, environmental sustainability

• Extend opportunities for private investment

• Improve public financing support including sub-national/urban finance and investment

• Focus on broader sectoral governance reform opportunities