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Jun 19, 2012

$500bn infrastructrue plan to be presented to SADC leaders in August

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A Southern African Development Community (SADC) Regional Infrastructure Master Plan (RIMP), which could involve cross-border projects with a combined investment value of up to $500-billion, has been finalised and will be presented to the subregion’s heads of State for offical sanction at an upcoming summit, scheduled for Maputo, Mozambique, in August.

The plan proposes the development of regional power, transport, water, communications, tourism and metrology infrastructure over the 15-year period, from 2012 to 2027.

The RIMP has been broken down into its respective subcomponents, with deployment expected to be pursued over three five-year intervals, with the first implementation period having been outlined for 2012 to 2017.

SADC secretariat deputy executive secretary for regional integration João Caholo says the master plan is the product of ‘deep’ stakeholder consultation and will be presented to regional infrastructure ministers in Luanda, Angola, next week and then to a gathering, in the same city, of the bloc’s finance ministers in July.

Chaolo and his team also hope to convince the finance ministers to align the implementation of the plan with the establishment of a SADC development fund, or bank, with an initial capitalisation of between $600-million and $1-billion.

He stresses, though, that the master plan is not dependent on the creation of such a regional financing mechamism. “But we need leadership and commitment from the 15 SADC member States,” he avers, explaining that these countries are the “sole custodians” of the RIMP.

The initiative is based on an assessment that intraregional trade is currently constrained by a lack of ‘connectivity’ and that the development of transborder infrastructure could stimulate further growth and development, as well as facilitate a transition away from the current over-reliance on mineral and agricultural resources within SADC economies.

At present, intraregional trade comprises less than 20% of total trade and the bulk of that trade takes place between South Africa and the other 14 member States. Recent research published by Standard Bank shows that South Africa’s trade with the rest of Africa rose to R220-billion, or 17% of the country’s total trade with the world. But the bank concludes that “South Africa does not trade enough with Africa” and that the country’s “weak economic diplomacy” on the continent means that full commercial value is not being gained.

“One of the critical missing links is infrastructure,” Caholo asserts. But he acknowledges that far more also needs to be done to reduce the red tape and improve standards harmonisation so as to facilitate greater intraregional trade and investment.

Power interconnector projects feature prominently in the plan, including transmission network proposals that move beyond the SADC boundaries into East Africa, such as the Zambia–Tanzania–Kenya Interconnector.

BEYOND SADC

In fact, Caholo stresses that there has been a deliberate effort to align the RIMP with moves to foster the so-called Tripartite-Free Trade Area, or T-FTA, involving the SADC, the Common Market for Eastern and Southern Africa and the East African Community blocs.

The T-FTA negotiations began last year and should they be concluded, the area would span from Cape to Cairo, include 27 countries, 533-million citizens, and represent a combined gross domestic product of $833-billion. A preliminary date of 2013 has been set for the T-FTA’s launch.

Caholo reports that the RIMP has also be aligned with the 51 priority infrastructure projects identified by the African Union, under the Programme for Infrastructure Development in Africa, or Pida, which includes the much-vaunted Inga hydropower project, of the Democratic Republic of Congo (DRC), as well as the proposed North-South transport corridor, linking Lubumbashi, in the DRC, to Durban, in South Africa.

The Pida is also likely to receive support from the World Bank, whose newly appointed VP for the Africa region Makhtar Diop is on record as saying that infrastructure projects that promote further regional integration are likely to be prioritised by the bank in the coming years.

Once the plan has been officially endorsed, the SADC secretariat will conduct road shows in Brazil, China, Europe, India, Japan, the UK and the US to expose potential investors to the opportunities available within the RIMP.

Caholo says that, while the member States will be the primary drivers, the challenge is too large for the countries to tackle alone and there will be scope for foreign participation, as well as for the private sector. The investment need in the energy sector alone over the coming five years is estimated to be $42-billion.

The immediate priority, though, is to undertake technical, environmental and financial feasibility studies for the project so as to prepare them for presentation to investors.

A Project Preparation Development Facility (PPDF) has already been established at the Development Bank of Southern Africa, but Caholo says additional resources are required to enable it to carry out the feasibility investigations.

The PPDF has already received some grant funding from KfW, of Germany. The member States will be asked to inject further capital to enable it to prioritise, select and progress projects to a bankable stage.


 

Edited by: Creamer Media Reporter
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