PPP critical to bridging Africa’s infrastructure gap, say experts
Fostering partnerships between the private sector, infrastructure agencies and regional economic communities is critical to solving the problem of Africa’s vast infrastructure gap according to an expert panel which gathered at the Annual Meetings of the African Development Bank Group (AfDB) in Lisbon on 7 June.
Currently the infrastructure gap on the continent is a major impediment to economic growth, with research suggesting that dealing with infrastructure inefficiencies could boost annual growth by an average of three percent.
Addressing a seminar organized under the theme “Regional Infrastructure for Africa’s Transformation and Growth”Dr Antonio Estache, Professor of Economics at the Universite Libre de Bruxelles highlighted economic integration as a key factor in improving shared growth in Sub-Saharan Africa.
Professor Estache noted that the cost of meeting Africa’s infrastructure needs is increasing, with an extra US$50 billion needed to bridge the gap over the next 10 years. “Transport costs in Sub-Saharan Africa are two to three times higher than they need to be, and this is hindering trade and slowing growth.”
Other panellists underlined the importance of strengthening Public-Private Partnership arrangements (PPPs) as vital to infrastructure development, arguing that PPPs provide an effective alternative source of finance to financially constrained governments. The private sector needs to be involved not just in project finance and implementation but also as stakeholders in policy formulation and in the enforcement of rules and regulations, they argued.
Describing Korea’s infrastructure development experience, Professor Okyun Kwon of the Graduate School of Finance and Accounting at KAIST, said that PPPs were key to providing solutions to the inefficiencies of government monopoly supply and lack of capital.
“Countries need not they reach wait until a country reaches middle income level,” he said. “Foreign suppliers with domestic partners will provide opportunities to learn.”
He stressed that governments need to establish a strong planning organization with full power in economic policy coordination and strong hold on finance to facilitate the live space implementation of PPPs.
Sharing the Chilean PPP experience, Professor Eduardo Bitran Colodro of University Adolfo Ibanez in Chile and a former Minister of Public Works, noted that with private participation, Chile was able to increase infrastructure investment quality as well as coverage.
“Chile enjoyed a period of very rapid growth between 1986 and1998 without infrastructure bottlenecks, raising investment from two percent of space GDP in the early eighties to over six percent in the late 90's. Chile ranks first in Latin America for quality of infrastructure,” he said.
For countries to get value for money from PPPs Professor Bitran emphasized the need for governments to set clearly defined standards and agreements to avoid unexpected changes in the specifications of the product or service during implementation.
Mr Yaw Ansu, the Director of ATEC, highlighted the need for African countries to develop and build their own capacity to implement infrastructure projects. To achieve this he suggested that countries should consider creating centres of excellence for engineering students. In addition to improving transparency in the procurement process this would provide an incentive for the private sector to get involved in infrastructure development.
In recognition of the role of regional economic integration in infrastructure development, in July 2010 the AfDB launched a new regional infrastructure programme – the Programme for Infrastructure Development in Africa (PIDA) , focusing on regional and continental infrastructure policies to prioritize development programmes and implementation strategies.
The specific objectives of PIDA are to enable African decision-makers to establish and implement a strategic framework for the development of regional and continental infrastructure based on a development vision, strategic objectives and sector policies.