AFRICA An Investment Destination Conference

NEEDS FOR INFRASTRUCTURE DEVELOPMENT EXPENDITURE Presented by: P Duncan Mbonyana

Contents

1.

2.

3.

4.

5.

6.

7.

Current Arrangements and Roles Integrated Framework Study Public Financing Declined Aid for Infrastructure Declined Investment Requirements are High Africa was a late Starter 8.

9.

Local Participation in Infrastructure Local Participation by Sector 10. Cross-Border Participation 11. Mindset Change – Donor vs Private Participation 12. Project Integration 13. Process Integration 14. Conclusion

2

Current Arrangements and Roles

LEVEL

CONTINENTAL

NEPAD/AU

Sub-regions

RECs/Power pools

Countries Sectoral organisations Bilateral and multilateral partner institutions (IFIs & DFIs)

ROLE Parent Building blocks Nuclei owners RESPONSIBILITIES •Political will •Facilitation •Resource mobilisation •Knowledge sharing •Coordination •Prioritisation •Monitoring and review •Ownership •Delegation of implementation Regional implementing agencies •Implementation •Technical support •Networking •Monitoring and evaluation •Capacity building •Resource mobilisation 3

Integrated Framework

• Governance and Overall Framework • Strategic Issues • Execution Management • Overall inter-sectoral co-ordination and integration • Risk and Issue Nerve Centre

NEPAD Business Foundation Secretariat and Executive

Considerations for each level • • • •

Governance Process Technology Reporting Programme Management Project Management

• Individual project management

Risk Management Risk Identifi cation Risk Analysis Risk Response

Feedback

Risk Response Control

Effective management of risks and issues at the project and programme level

Source: NBF

4

Study

Feasibility study by PM Global Infrastructure Inc for African Business Roundtable lead by Per Ljung 5

Public Financing Declined

% of GDP 4 3 2 1 0 7 6 5 1980-85 Source: World Bank Social Sectors Infrastructure 1986-90 Period 1991-95

6

1996-01

Aid for Infrastructure Declined

Annual ODA for Infrastructure 2.0

1.5

1.0

0.5

0.0

4.5

4.0

3.5

3.0

2.5

1980-84 Source: World Bank 1985-89 1990-94 Period 1995-99 2000-03

7

Investment Requirements Are High

Annual Infrastructure Financing for Meeting MDGs US$ Billion 60 50 40 30 20 10 0 Source: Per Ljung Present World Bank UN Millennium Project

8

Africa was a late Starter

(Share of Investments in New Private Projects) 12% 10% 7.00% 8% 6% 4% 0.23% 2.73% 2.54% 2.97% 2.07% 2% 0% 2.56% 0.44% 1985-89 North Africa 1990-94 South Africa 3.24% 2.91% 1995-99 2000-04 Rest of Sub-Saharan Africa Source: Per Ljung

9

Local Participation in Infra structure

South Africa Northern Africa Sub-Saharan Africa excl. South Africa 0% 10% 20% 30% 40% 50% Domestic firms Source: Per Ljung Foreign lead with domestic participation 60% 70% 80% 90% 100% No local firms participating

10

Local Participation by Sector

Telecoms Electricity Ports Railways Water & Sewerage Airports Multi-Utilities Toll Roads 0 Source: Per Ljung 5 10 15 Number of Projects Sole Sponsor Participated

11

20 25

Cross- Border Participation

(In Sub-Saharan Africa excluding South Africa) Other African Firms North African Firms South African Firms 0 Source: Per Ljung 5 10 15 20 25 Number of Projects (Out of 210) Sole Sponsor Participated 30

12

35

Mindset Change

• From donation driven to private sector driven investment.

• Philosophy for delivery of smooth value chain.

• Sustainability than once-off flagships.

13

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.

14

Process Integration

• Multi-dimensional needs satisfaction.

– Economic, social and environmental (e.g. 3 Gauges).

– Joint planning process across sectors in infrastructure.

15

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.

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