Transcript Business Delegation from Netherlands : 14

Regional Round Table on Financing
Infrastructure: Bank Experience
by
Shehu Yahaya and Sande Kanyarubona
African Development Bank, Tunis
30 September 2004
I African Trends and
Characteristics
Declining Trends in ODA
FDI only around 2.3% of global share
Private investment is about 12% GDP and
public investment had declined to about 5% in
the 1980s
Informal sector share of GDP is about 41% in
sub –Saharan Africa; share of employment
averages 75%
Estimated annual infrastructure needs about
US$20 billion in next 10 years in Africa
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ADB GROUP
II. Infrastructure Operations
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ADB is concerned about Infrastructure development as
a major factor in promoting sustainable development
and reducing poverty.
Infrastructure sectors include transport; energy and
power; WSS; Irrigation; educational and health
facilities; ICT
Economic Infrastructure accounted for 32.8% of total
Bank Group lending approvals in 1967-2003. The
figure rises to 40-45% if social infrastructure is
included.
ADB GROUP
II. Infrastructure Operations
Table: AfDB Group approvals (Million UA) in support of
Infrastructure, to End-2003.
1999
2000
2001
2002
1967-2003
573.44
(24.2%)
88.60
473.85
(23.2%)
68.30
11,139
(32.8%)
1,946
• Main Economic
Infrastructure
• Agriculture&Rural
Infrastructure
• Social
Infrastructure
305.26 294.68
(23.6%) (14.9%)
45.35
57.83
56.31
32.72
63.73
1,105
Total Infrastructure
Approvals
383.82 408.82
(29.7%) (20.6%)
694.76
(29.3%)
605.87
(29.7%)
14,190
(41.7%)
33.20
ADB GROUP
III. Orientation of Infrastructure
Operations
Since 1999 there has been a marked reduction in
Infrastructure’s share of Bank Group aggregate
approvals, notwithstanding a modest recovery
since 2000.
Explanations are related to Bank Group Experience
and the changed international paradigm:
ADB GROUP
III Orientation of Infrastructure
Operations
Lessons learnt from past operations as well as the new
international development agenda (e.g. the MDGs):
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Managerial weaknesses and financial difficulties have led to poor
maintenance, reducing potential impact on growth and incomes
Integrated Approach to infrastructure development is essential;
failure to implement this has caused enormous problems in Africa
In many cases, particularly with respect to subsidised tariffs, the rich
have benefited more, thereby enhancing inequalities
Soft dimensions of infrastructure are critical: skills; tariff
reform; corporate governance of responsible institutions;
environmental and resettlement issues, land rights etc.
Private investment is critical, provided there is an enabling
environment
ADB GROUP
III. Orientation of Infrastructure
Operations
Changed international paradigm:
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Greater focus on poverty reduction;
Increased focus on social infrastructure;
Promoting renewable energy sources;
Much greater concern on the environmental
impact of infrastructure developments
ADB GROUP
III. Orientation of Infrastructure
Operations
Changing Approaches of the Bank:Infrastructure still
critical but should be more strongly oriented towards
sustainable development and poverty reduction:
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Renewed emphasis on specific types of infrastructure (eg rural
infrastructure
Renewed emphasis on long term sustainability (promoting
financial sustainability, capacity,institutional building,
O&M, participatory approaches
Establishing the right balance between ensuring access to the
poor and cost recovery
Supporting private investment through PPP, improving
regulations, modernising laws, reforming property rights and
enforcement of contracts
Prioritising environmental protection; gender mainstreaming
Promoting Regional Cooperation and Integration in infrastructure
development
ADB GROUP
IV. New Initiatives on
Infrastructure
A number of initiatives on Infrastructure are under way
at the Bank
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Rural Water Supply and Sanitation Initiative;
African Water Facility
NEPAD Infrastructure Program
New Approach for the Private Sector Department
New Urban Development Policy
Non Sovereign Guaranteed lending; guarantees, lending in
local currencies
FINESSE Program (Financing Energy Services For SmallScale Energy Users)
Intensify collaboration with development partners
ADB GROUP
IV. Major Initiatives on
Infrastructure
 Rural Water Supply and Sanitation Initiative:
 Goal: To accelerate access to sustainable water
supply and sanitation for rural populations within the
framework of the Africa Water Vision and MDGs.
 Targets: to provide access to drinking water supply and
sanitation to 66% of the rural population by 2010,
increasing this to 80% by 2015, from the present 34%.
 Initiative has commenced on a pilot basis in a limited
number of countries (five ). It will be up-scaled up to
additional RMCs, incorporating lessons learnt from the
pilot country programs. Focus on building initiatives at
the local community levels
ADB GROUP
IV. Major Initiatives on Infrastructure
African Water Facility
 An Initiative of AMCOW being hosted and
implemented by the Bank
 Aims at strengthening the enabling
environment to attract investments in the
water sector in Africa
 Will mobilise USD 615 m to implement
medium term programme of facilitation
activities and investment programs
 Implementation Under way; local level
emphasis
ADB GROUP
IV. Major Initiatives on Infrastructure
Technical Support to NEPAD on Infrastructure:
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Goal: To bridge the infrastructure gap in the region
as an important element in the promotion of growth,
trade and regional integration
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ADB as lead agency, has developed and is already
implementing a STAP for facilitation, capacity building;
physical capital investments and studies
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It is developing the MLTAP to prepare regional
overview, establish Africa infrastructure data base;
establish infrastructure for effective coordination, define
monitoring framework
AfDB GROUP
IV. Major Initiatives on Infrastructure
New Approaches in OPSD
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2003:Lending to public sector without sovereign guarantee
2002: PPP Initiative to promote efficient infrastructure by
supporting governments to better conceptualise, prepare and
negotiate infrastructure projects for private investment/mngt
2003: New Initiative on franchising to support SMEs on rapid
transfer of know-how and best practices: a study done;
toolkit developed;pilot programmes being developed
Less direct lending to SMEs; support thro fin intermediaries
Prioritising enabling env; strengthening financial systems by
supporting fin interms to enable them to lend long to SMEs
ADB GROUP
IV. Major Initiatives on
Infrastructure
 FINESSE Program:
 Goal: Formulation of policy, institutional framework
and capacity development to provide technically
feasible and economically viable renewable energy and
energy efficiency services to residential, commercial
and industrial energy users.
 Targets: to create conditions and mechanisms that will
allow the credit sector to lend capital to small-scale
energy users.
 Activities will focus not only on technology
demonstration, but also on the institutional, commercial
and legal mechanisms to ensure dissemination and
maintenance of proven cost-effective technologies.
ADB GROUP
IV. Major Initiatives on Infrastructure
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Strengthened collaboration with UN
Habitat on the Water For African Cities
Programme
Discussion on possible collaboration
with USAID on supporting local bank
credit for infrastructure
ADB GROUP
IV. Major Initiatives on
Infrastructure
 Non-Sovereign Guaranteed Lending to Public-Sector
Enterprises:
 Goal: To finance viable investment activities in a
distinct group of public enterprises in African
middle-income countries that are commercially run,
following the implementation of public-sector
reforms.
 The proposal is for the Bank to finance up to 30% of
the investment or working capital of individual viable
projects, at market interest rates, including objective
credit risk pricing.
 Public enterprises expected to benefit are mostly
Infrastructure authorities and public utility service
providers.
AfDB GROUP
V. Conclusion
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The Bank is now increasing its emphasis on infrastructure
through a variety of instruments designed to increase public
sector effectiveness; strengthen the enabling environment;
support private sector development particularly SMEs
It has embarked on a number of initiatives which embody its
new approaches
In view of the tightness of resources, the Bank will seek to
increase its leverage by strengthening its technical capacities in
project syndication, promotion of public-private partnership
(PPP) and joint ventures involving African public and private
enterprises and foreign direct investor
Greater Collaboration with development partners