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On 4 May 2011 at the World Economic Forum on Africa in Cape Town, the African Development Bank (AfDB) participated in a session entitled “One Region: Africa – Three Challenges. From Insights to Action”.
The following is some AfDB information regarding the subject.
Africa can transform through progress on investment and regional integration, and ensure investment reaches the right places.
The private sector’s interest infrastructure investment is growing. But regional investments carry increased commercial and political risk that act as a barrier to entry.
Political economy issues – particularly sovereignty issues - are a major obstacle to investment. Africa can learn from initiatives made in other regions such as the European Union, Asia and Latin America.
The focus should be on issues such as harmonization of standards, legal and regulatory frameworks, enforcement, and build capacity with regional regulators to leverage investment.
African partners must tackle difficult reforms and mobilize more domestic resources.
The AfDB can use aid innovatively to help facilitate and address market failures, particularly legal and regulatory issues, or political and commercial risks.
Private sector, infrastructure and regional integration are the AfDB’s core business. We can offer independent expertise, knowledge and finance to help design and implement difficult reforms.
We can also increase infrastructure financing, particularly for cross-border investments. Additionally, the AfDB can use existing and emerging instruments to leverage resources, and use its influence and ability to mobilize partnerships for development policy, financing and coordination on priority projects at national and regional level.
The general consensus is that regional cooperation and economic integration are an integral part of a development strategy aimed at boosting economic growth, structural transformation, and poverty reduction. Integration is vital to overcome the problems of fragmentation and small markets, promote intra-African trade, boost Africa’s export competitiveness, and promote diversification and inter-linkages among production units in various countries and promote industrialization and economic growth and job creation.
The G20 Action Plan is discussing certain areas. One is the development of PPP policy, legal and institutional frameworks and e-procurement rules. Another is debt sustainability and a review of credit policies.
Development partners can play a catalytic role in financing projects, but developing Africa’s infrastructure will require substantial financing from domestic sources, both from the state and the private sector.
Processes include: Innovative structuring of projects to address investor’s needs, particularly commercial risks Amending MDB credit policy resources. Use of local and foreign currency bonds Private equity participation. Sovereign wealth funds. Participation by emerging South partners.
Mitigation of commercial and political risk. First loss portfolio guarantees.
The Middle Income Countries (MICs) have the potential to serve as catalysts for regional integration, and in line with the Bank’s MIC Strategy.
In the island countries, the promotion of financial integration and the development of infrastructure projects have regional dimensions and impact, especially on trade.
Fragile States will also be given special capacity building support and other assistance through grants and technical assistance to facilitate their participation in regional integration initiatives.