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AFRICAAn Investment Destination
Conference
NEEDS FOR INFRASTRUCTURE DEVELOPMENT EXPENDITURE
Presented by:P Duncan Mbonyana
2
Contents
1. Current Arrangements and Roles2. Integrated Framework3. Study4. Public Financing Declined5. Aid for Infrastructure Declined6. Investment Requirements are High7. Africa was a late Starter8. Local Participation in Infrastructure9. Local Participation by Sector10. Cross-Border Participation11. Mindset Change – Donor vs Private Participation12. Project Integration13. Process Integration14. Conclusion
3
Current Arrangements and Roles
LEVEL ROLE RESPONSIBILITIESCONTINENTAL
NEPAD/AU
Parent •Political will•Facilitation•Resource mobilisation•Knowledge sharing
Sub-regions
RECs/Power pools
Building blocks
•Coordination•Prioritisation•Monitoring and review
Countries Nuclei owners •Ownership•Delegation of implementation
Sectoral organisations Regional implementing agencies
•Implementation•Technical support•Networking•Monitoring and evaluation
Bilateral and multilateral partner institutions (IFIs & DFIs)
•Capacity building•Resource mobilisation
4
Integrated Framework
NEPAD Business Foundation Secretariat and Executive
Programme
Management
Project Management
• Execution Management• Overall inter-sectoral co-ordination
and integration• Risk and Issue Nerve Centre
• Governance and Overall Framework • Strategic Issues
Risk Identifi-cation
Risk Analysis
Risk Response
Risk Response
Control
Risk Management
Feedback
• Governance• Process• Technology• Reporting
• Individual project management
Effective management of risks and issues at the project and programme level
Considerations for each level
Source: NBF
5
Study
Feasibility study by
PM Global Infrastructure Inc
for
African Business Roundtable
lead by Per Ljung
6
Public Financing Declined
0
1
2
3
4
5
6
7
% of GDP
1980-85 1986-90 1991-95 1996-01
Period
Infrastructure
Social Sectors
Source: World Bank
7
Aid for Infrastructure Declined
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
US
$ Billio
n
1980-84 1985-89 1990-94 1995-99 2000-03
Period
Annual ODA for Infrastructure
Source: World Bank
8
Investment Requirements Are High
0
10
20
30
40
50
60
US$ Billion
Present World Bank UN MillenniumProject
Annual Infrastructure Financing for Meeting MDGs
Source: Per Ljung
9
Africa was a late Starter
0.44%
2.56%
2.73%
0.23%
3.24%
2.97%
2.54%
2.91%
2.07%
7.00%
0%
2%
4%
6%
8%
10%
12%
1985-89 1990-94 1995-99 2000-04
North Africa South Africa Rest of Sub-Saharan Africa
(Share of Investments in New Private Projects)
Source: Per Ljung
10
Local Participation in Infra-structure
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Sub-Saharan Africaexcl. South Africa
Northern Africa
South Africa
Domestic firms Foreign lead with domestic participation No local firms participating
Source: Per Ljung
11
Local Participation by Sector
0 5 10 15 20 25
Number of Projects
Telecoms
Electricity
Ports
Railways
Water & Sewerage
Airports
Multi-Utilities
Toll Roads
Sole Sponsor ParticipatedSource: Per Ljung
12
Cross- Border Participation
0 5 10 15 20 25 30 35
Number of Projects (Out of 210)
South African Firms
North African Firms
Other African Firms
Sole Sponsor Participated
(In Sub-Saharan Africa excluding South Africa)
Source: Per Ljung
13
Mindset Change
• From donation driven to private sector driven investment.
• Philosophy for delivery of smooth value chain.
• Sustainability than once-off flagships.
14
Project Integration
• Seamless project value chain development.
• Pre-feasibility, feasibility, detail design, construction up to operation and maintenance planning.
• Avoid disjointed sectional expenditure of same project.
15
Process Integration
• Multi-dimensional needs satisfaction.
– Economic, social and environmental (e.g. 3 Gauges).
– Joint planning process across sectors in infrastructure.
16
Conclusion
• Local participation by Regional and National firms critical.
• Leadership by local private investment funds.
• Increase expenditure on infrastructure critical –– Ops and maintenance.– New build projects.
• Investment in infrastructure is a business with excellent social impact.