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

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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

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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

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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

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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

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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

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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

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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.

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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.