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Eminent Speaker’s Series: President Mkapa in Tunis

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Date: 13/12/2006
Location: Tunis, Tunisia
Eminent Speaker’s Series: President Mkapa in Tunis

Governance and Investment in Africa: Experience after 40 Years

Tanzania’s former President, Benjamin Mkapa, was in Tunis on December 11 and 12 to make a presentation on "Governance and Investment in Africa: Experience After 40 Years" as part of the African Development Bank (AfDB) Group’s Eminent Speakers’ series. Mr. Mkapa, came to the Bank with a message: "The confluence of political and economic forces, internal as well as external to the continent, has set the stage for African countries to undergo major transformation and growth," he told a gathering of senior management and staff, adding that "this growth and development demand investment."

The former Head of State freely shared the experiences gained as a former journalist, diplomat, politician and statesman, saying that to successfully fight poverty and grow economies, investments must be directed at three key targets: infrastructure, small and medium-size enterprises, and agriculture. Mr. Mkapa made the case for country ownership of development programs. "There is no absolute political reform blueprint, and care must be taken to make sure that this conditionality does not emerge as a further obstacle to investment," he cautioned. He noted that the international community and development partners in particular "have come to accept the right of reforming countries to own the process of economic reform and development."

He advised that Africa needed to take the lead in creating an enabling business climate if poverty had to be eradicated across the continent. "By most economic and human development indices, Africa has the poorest people in the world and its continental economy is, at best, stagnating. Yet it may be the richest continent in terms of natural resources and its human potential. African countries face a huge challenge to organize their heritage and political will to transform this potential to generate goods and services for its people and the common humanity. It will require a great deal of investment and a strategic partnership between African governments, their people, their private sectors and the international community. Africa must take the lead to create the enabling environment. The pace of globalization warns that time is not on its side. But the opportunity can be seized," he emphasized.

In a presentation laced with historical facts, jokes, African proverbs and wise sayings, the pre-eminent statesman ended with a quote: "the time is ripe for change… To do nothing would be intolerable. To do something is not enough. To do everything we can is not only a requirement, it is our clear duty. Now is the time to act."

Electricity for Growth in Africa

Mr. Mkapa also attended a conference organized by the Infrastructure Consortium for Africa (ICA) in partnership with the AfDB on Tuesday in Tunis held on the theme "Financing Electricity for Growth in Africa". The objective of the conference was to sensitize key energy, investment and legal corporations to possible electricity infrastructure projects on the continent. The conference also served as a platform for knowledge-sharing on key energy issues and the promotion of dialogue between project sponsors and the private sector. Welcoming participants to the conference, AfDB Vice President for Infrastructure, NEPAD and Private Sector Operations,  Mandla Gantsho, said the Bank had been making smart partnerships in the infrastructure domain in order to support the continent’s development efforts, adding the Bank had been playing a greater role in infrastructure development financing. AfDB President Donald Kaberuka, for his part, commended ICA for its role in the continent’s efforts to deal with infrastructure challenges, adding that AfDB was pleased to be associated with the conference. Speaking on the occasion, Mr. Mkapa indicated that "access to energy is vital to Africa’s efforts at attaining any of the Millennium Development Goals pertaining to water and sanitation, gender equality in education, child malnutrition and mortality and other health targets."

He noted that bringing light to Africa would require huge financial resources. The Commonwealth Development Corporation (CDC) estimates that 36,000 megawatts additional capacity at US$20 billion will be required in Sub-Saharan Africa over the next four years, he said, adding that African governments did not have the resources to increase capacity. He advised that the best way to connect more people to electricity was by using private investment in partnership with public funds to build commercially viable and sustainable power generation where all stakeholders benefit.

"If governments are to secure the required investment, they must create the right climate for private sector power companies. This would require, inter alia, a fair and transparent negotiated case that allocates risks between public and private parties, and appropriate institutional, legal and regulatory frameworks supportive of private sector participation. This we have not done enough of and can do better. What also we have not done, as African governments, financiers or other local private stakeholders is to ‘think out of the box’ and become active players in the energy sector," he said. 

He urged Africans to embrace joint ventures in the energy sector as they would foster cross-border transportation of energy which will link low-cost production sites to high-cost markets. For this trade to be efficient, Mr. Mkapa advised, various power pools in SADC, EAC, ECOWAS and others must be regulated by regional regulatory authorities. Through these authorities, he said, scarce professional skills could be harmonized and commercial factors should take precedence over narrow national political considerations which would lead to larger markets.

"A regional approach to energy markets offers significant benefits. The interconnection of national petroleum, gas and power markets can help leverage private investment through expanded market size, allowing investors like yourself to reduce commercial and political risks. In the long term, these interconnections lower supply costs by reducing investments in redundant supply facilities, whilst increasing supply options. This has a very important implication for the debt burden of many African economies," he advised, adding that "energy demand management provides considerable opportunities for African entrepreneurs. There are today technologies from Asia, particularly India and Malaysia that assist with energy auditing, conservation and efficiency management. This can assist large public institutions – universities, hospitals, municipals lighting, etc – and high energy consumption private operations such as cement and breweries, cut cost considerably."

The conference, which brought together representatives from power utility management companies, financiers, transaction advisors, regional power pools and governments, was also attended by representatives of the African Union, NEPAD, as well as regional and international institutions interested in electricity projects in Africa.


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