New business approach of linking project preparation to financing approved

02/12/2015
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Stakeholders from the African Union Commission (AUC), the New Partnership for Africa’s Development (NEPAD), Regional Economic Communities, Project Preparation Facilities, and development partners, met recently to validate NEPAD Infrastructure Project Preparation Facility’s (NEPAD-IPPF) Strategic Business Plan.

The November 18, 2015 validation workshop took place at the African Development Bank (AfDB) headquarters in Abidjan, Côte d’Ivoire. NEPAD-IPPF is hosted by the Bank.

Its operations are guided by Strategic Business Plans (SBPs) which cover a five-year period. The current SBP (2011-2015) comes to an end in December 2015, paving way for a new SBP for the period 2016-2020, which is being developed.

NEPAD-IPPF is a multi-donor funded facility, whose mandate is to prepare regional infrastructure projects in energy, transport, ICT and trans-boundary waters. The Facility is supported by development partners including Canada, Germany, United Kingdom, Spain, Denmark and Norway.

Shem Simuyemba, NEPAD-IPPF’s Manager, gave an overview of the main features of the new NEAPD-IPPF SBP. He noted the significant contribution of NEPAD-IPPF to the development of regional infrastructure across Africa since its establishment in 2004. He said that over the last ten years, donors and the Bank had provided US $110 million to the Facility. “Of this amount, US $73 million had been committed to grants for the preparation of 60 projects. Half of these projects had been completed, leveraging US $7 billion in investment financing, which meant that every US $1 committed to project preparation had catalyzed US $100 in downstream financing,” he said.

He explained that the vision and mission of NEPAD-IPPF over the next five years was to be a leading catalyst in Africa’s socio-economic transformation. “This will be achieved through the preparation of viable and sustainable regional and continental infrastructure projects with a target of preparing about 60 to 80 projects with a resource outlay of between US $150-200 million to leverage between US $15-20 billion in investments,” Simuyemba noted.

Also present at the event was Solomon Asamoah, the AfDB’s Vice-President for Infrastructure, Private Sector and Regional Integration. He cited the Bank’s new five priorities (the High 5s), whose realization, he said, would require translating projects into bankable and viable propositions to attract financing. The priorities are: “Light up and Power Africa”; “Feed Africa”; “Integrate Africa”; “Industrialize Africa”; and “Improve the quality of life for the people of Africa”.

Moono Mupotola, the Bank’s Director for NEPAD, Regional Integration and Trade, described NEPAD-IPPF as a game-changer. “It is a catalyst for unlocking financing and implementation of important infrastructure projects.” She echoed the words of the African Development Bank’s President Akinwumi Adesina: “The Bank was not built to do small things.” Mutopola stressed that NEPAD-IPPF was a core pillar of the Bank’s regional integration operations.

NEPAD-IPPF’s new business approach seeks to link more directly, project preparation and development to potential financiers. This will ensure that at the end of the preparation period, projects are bankable and investment-ready in order to attract financing, before moving to implementation.

Stakeholders welcomed NEPAD-IPPF’s focus on regional and continental infrastructure projects. This, they agreed, was an area with a growing demand driven by deepening regional integration arrangements in Africa, and the need to link markets, enhance competitiveness and reduce the cost of doing business.

Aboubakari Baba-Moussa, the AUC Director of Infrastructure and Energy, emphasized the strategic role NEPAD-IPPF played in accelerating implementation of the Programme for Infrastructure Development in Africa (PIDA), a continental infrastructure initiative. He observed that while it was common to view regional projects as complex, “the aim should be to make them simpler through well-prepared projects”. According to him, regional projects are critical to Africa’s connectivity as well as in achieving Agenda 2063, the blueprint for Africa’s socio-economic transformation.