East African Presidents welcome private sector participation in infrastructure

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President Jakaya Kikwete of Tanzania told public and private stakeholders that the “Government of Tanzania welcomes private-sector participation in the new standard gauge railway (SGR) from the port of Dar-es-Salaam to Isaka and onward to Kigali in Rwanda and Musongati in Burundi”.

He said his government also welcomes private-sector investments in toll roads where traffic volumes will offer meaningful returns for the private sector.

President Kikwete was speaking to project developers and potential financiers, development finance institutions (DFIs) including the African Development Bank (AfDB) gathered at the Julius Nyerere International Conference Center (JNICC) in Dar-es-Salaam, Tanzania on March 26 for the Central Corridor Presidential Roundtable and High-Level Industry Forum. The goal of the Forum was to present priority projects on the Central Corridor to potential investors.

Other Heads of State in attendance were Presidents Paul Kagame of Rwanda, Pierre Nkurunziza of Burundi and Yoweri Museveni of Uganda. Presidents Uhuru Kenyatta of Kenya and Joseph Kabila of DRC sent high-level representation. The Heads of State at the meeting echoed President Kikwete’s call for the private sector to be proactive in working with governments to find much-needed finance to support accelerated development of East Africa’s infrastructure.

The Central Corridor from the port of Dar-es-Salaam in Tanzania to the hinterland countries of Burundi, Eastern DRC, Rwanda and Uganda is the second-busiest trade and transport corridor in East Africa after the Northern Corridor from the port of Mombasa in Kenya. With discoveries of oil and gas in East Africa, the need for upgrading and modernizing infrastructure has become urgent. Both the Central and Northern Corridors in East Africa are an integral part of the Programme for Infrastructure Development in Africa (PIDA), approved by African Heads of State and Government in January 2012 as an African and global partnership to integrate and interconnect Africa through modern infrastructure.

The Forum was jointly organized by the World Economic Forum (WEF), the AfDB, the NEPAD Agency, the Development Bank of Southern Africa (DBSA) as well as the Central Corridor Transit Transport Facilitation Agency (CC-TTFA), an inter-governmental body which brings together five countries – Tanzania, Burundi, Eastern DRC, Rwanda and Uganda – to improve competitiveness on this strategic corridor as part of the overall Africa Strategic Infrastructure Initiative (ASII). Under this initiative, a partnership between the Bank and the WEF, as well as the NEPAD Agency and African Union Commission (AUC), three corridors have been prioritized for acceleration during 2015/2016 – the Central Corridor in East Africa, the Beira-Nacala Corridor in Southern Africa and the Abidjan-Lagos Corridor in West Africa.

The aim is to prioritize projects on these corridors and identify specific opportunities for the private sector. On the Central Corridor, for example, specific opportunities for private-sector investment include the development of additional berths at the port of Dar-es-Salaam; the new railway, Dar-Isaka-Keza-Kigali-Musongati (involving Tanzania, Rwanda and Burundi) with an investment cost of US $5 billion; and the Dar-Chalinze Toll Road. The AfDB has engaged a transaction advisor, Canadian Pacific Consulting Services (CPCS) to advise the three governments on how best to structure the railway project which will be standard gauge.

Speaking at the same function, Gabriel Negatu, AfDB Regional Director for Eastern Africa, informed the Heads of State that the AfDB’s financial and technical assistance support to the EAC region consists of 133 ongoing projects with a total commitment value of US $4.75 billion of which about 60% (US $2.82 billion) has been allocated to infrastructure with US $406 million being from the Bank’s private-sector window. 

He also informed the forum that the Bank is increasingly blending its lending for hard infrastructure projects with the need to provide financing to address “soft infrastructure” around enabling environment issues, market reforms, economic governance, project preparation to ensure availability of bankable projects, technology and skills development and maintenance to ensure the sustainability and productivity of infrastructure assets.

In very open and frank discussions, the private sector representatives welcomed the commitment of the Presidents to embrace the private sector in infrastructure development in East Africa and called for continued dialogue to ensure that an enabling environment was created for effective private-sector participation.