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Feb 25, 2011

SADC mulls infrastructure fund, as it finalises master plan and embraces PPPs

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The Southern African Development Community (SADC) secretariat has started work on an ‘infrastructure development master plan’ to deal with an estimated $100-billion deficit in the region’s roads, railways, ports and inland waterways, power, communications and water infrastructure.

The region’s Finance and Economic Plan-ning Ministers also agreed in early February to proceed with a workshop in March to strategise the development of a new SADC fund to support the direct financing of infrastructure projects in the territory.

The SADC has already moved to strengthen the financial capacity of regional institutions to undertake regional infrastructure projects, through the establishment of the Project Preparation and Development Facility, which will seek to take projects to a bankable level.

Deputy executive secretary for regional integration João Caholo reported last week that the plan – the finalisation of which was being accelerated, following the inaugural meeting of the SADC’s infrastructure Ministers in Zimbabwe last year – would seek to leverage private-sector funding and partnerships to alleviate public financing constraints.

Speaking at the inaugural SADC Public–Private Partnerships (PPPs) Forum and Net-work, which was held in Midrand last week, and involved 130 PPP practitioners from across Southern Africa, Caholo said that there was broad-based recognition that such partnerships could assist governments in closing material financial, managerial and technical gaps, while supporting further regional integration.

The partnership model would be extended to cross-border economic infrastructure, in line with the recently ratified protocol on Finance and Investment, which called for a greater economic policy convergence and regulatory harmonisation so as to remove the restrictions to greater economic integration. But PPPs could also be deployed on social infrastructure projects, such as those emerging in education and healthcare.

The Southern African master plan would also feed into the African Union’s Plan for Infrastructure Development in Africa, or Pida, being designed to foster both intra- regional and extraregional coordination and resource mobilisation.

A recent World Bank-initiated study estimated Africa’s yearly infrastructure deficit at $91-billion, while the yearly infrastructure gap (that which could not be funded by governments) stood at $31-billion.

For that reason, African governments were increasingly keen on PPPs, with the Development Bank of Southern Africa’s (DBSA’s) international division head Admassu Tadesse reporting that partnerships had already been widely embraced in the communications sector.

There were also currently 34 independent power producers with a combined generation capacity of 3 000 MW, as well as 26 container terminals, 14 railways and four airport concessionaires. There were also toll road projects either under construction or being given consideration.

World Bank Institute vice-president Dr Sanjay Pradhan told delegates that a recent study found that the infrastructure deficits in 24 African countries were cutting yearly growth rates by up to two percentage points and reducing productivity by 40%.

He said that PPPs could aid the continent in its delivery of much-needed infrastructure, but stressed that not all such projects were well designed and implemented.

Therefore, practitioner networks, such as the one being developed in the SADC, could prove crucial in facilitating peer learning and spreading best practices.

The SADC forum and network, which Pradhan described as representing the “new frontier” for development practitioners, had been created with the support of the African Capacity Building Foundation, the DBSA, the German Agency for International Cooperation, the SADC Development Finance Resource Centre, South Africa’s National Treasury and the World Bank Institute.

Edited by: Martin Zhuwakinyu
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