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Nene says private sector key to roll-out of Africa’s 51 priority infrastructure projects

South Africa’s Finance Minister Nhlanhla Nene

South Africa’s Finance Minister Nhlanhla Nene

27th November 2014

By: Terence Creamer

Creamer Media Editor

  

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South Africa’s Finance Minister Nhlanhla Nene has emphasised the role of the private sector in delivering the 51 Programme for Infrastructure Development in Africa (Pida) projects, collectively valued at $68-billion, being prioritised for implementation by 2020.

Speaking at the Infrastructure Consortium for Africa’s (ICA’s) yearly conference, being held in Cape Town, Nene said it “cannot be business as usual” if implementation was to be fast-tracked.

“Integration and development of the African continent will not succeed if we ignore the contribution of the private sector and the citizenry,” he said.

Encouraging greater private sector investment was emerging as a key theme for Nene, who had consistently warned that government could no longer delay efforts to rein in debt and expenditure and that economic growth and development would, thus, depend more heavily on private investment.

African governments, he told the ICA, had limited resources and there was “ample space” for the private sector to participate in the implementation of projects.

The continent’s infrastructure backlog was holding back growth, development and intra-regional trade, with Africa, on average, investing only 4% of its gross domestic product (GDP) in infrastructure – China, by comparison, invested 14% of GDP.

“The benefits of closing the infrastructure gap are very high, with some estimates showing that closing the gap could boost GDP growth by 2 percentage points a year.”

To mobilise the private sector to support infrastructure development in South Africa, a Task Team on Private Sector Financing of Infrastructure – comprising government, business and labour representatives – had been established.

The task team had narrowed its focus to encouraging private financing and participation in infrastructure and steering development finance institutions to focus more on ‘crowding in’ private-sector investment.

“As African countries pursue more trade opportunities, they will also require a dynamic private sector to promote a cohesive approach to addressing the challenges to regional economic integration and intra-African trade. Therefore, private sector participation and support through human and financial resources development, investment in infrastructure and technology transfer should be further encouraged and strengthened,” Nene argued.

There was also a need to improve project preparation, with the absence of so-called ‘bankable’ projects viewed as a major constraint to investment. Even many of the Pida infrastructure projects remained at a “conceptual stage”, which was stalling implementation.

Nene, therefore, welcomed the establishment by the ICA of a Project Preparation Facilities Network, which aimed to improve communications and cooperation among project preparation facilities in Africa.

“We believe that this will go a long way in addressing some of the shortfalls in the financing and preparation of projects. However, more needs to be done in mobilising capacity and financing for the early phases of the project preparation cycle.”

Edited by Creamer Media Reporter

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