Private sector called upon to put a stake in making infrastructure projects in Africa bankable for financing and investment
Public-sector policy-makers, regional development banks, development finance institutions, investors and the private sector met at the Project Finance Roundtable held in Abidjan, Côte d’Ivoire, on November 22, 2016 at the headquarters of the African Development Bank (AfDB). The gathering was part of PIDA Week – the week dedicated to the review of the Programme for Infrastructure Development in Africa (PIDA) – involving a cross-section of stakeholders.
During discussions at the Project Finance Roundtable organized by the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF), participants called upon the private sector to be more pro-active and put a stake in making infrastructure projects in Africa bankable for financing and investment instead of lamenting that there are not enough bankable projects and the enabling environment is not conducive. Governments, they said, should be given credit for positive progress thus far. To achieve this, participants called for a paradigm shift by the private sector in three key areas.
The first was a call for the private sector to share the cost of project preparation and development with governments on a 50-50 basis because, oftentimes, governments have to source grants from institutions such as NEPAD-IPPF for project preparation without the private sector making a meaningful contribution. This was considered by the roundtable participants to be a fair way for the governments and the private sector to share early stage project development risks and would ensure that both sides had a stake in the project.
The second was that project preparation facilities such as NEPAD-IPPF should not continue to give grants for early-stage project preparation and development, particularly for projects with potential for public-private partnerships (PPP) and private-sector financing. Instead, it was argued, that project preparation facilities should seek to recover some of the preparation costs. This would create a revolving fund, which would put such facilities on a path to sustainability instead of total dependence on donors as is currently the case. Again, the private sector were called upon to pay back grants when a given project reaches financial close. This would allow these funds to be redeployed to support the development of more projects, a win-win situation for all.
The third was that the private sector needs to be more engaged in ensuring that issues that are of interest to them in terms of bankability. Viability of projects should also be factored in earlier on in the preparation of feasibility studies and once the project studies were completed. The private sector was called upon to be more pro-active.
Symerre Grey-Johnson, Head of the NEPAD Agency’s Infrastructure, Regional Integration and Trade Department, informed the Project Finance Roundtable that the creation of the Continental Business Network under the aegis of the NEPAD Agency was to ensure that the private sector had a platform to engage effectively with the public sector and that tangible results were already being realized.
In turn, the private sector called upon governments to uphold and honour the sanctity of contracts, as investments in infrastructure were long-term and financiers and investors wanted the assurance that contracts or concessions would not change as soon as governments changed. Transparency, predictability and trust were considered the key ingredients in this regard, based on open and constructive dialogue.
Cheikh Bedda, the newly appointed Director of Infrastructure and Energy at the African Union Commission, said that continental bodies such as the AUC and NEPAD Agency as well as regional economic communities and governments were ready to engage in a results-driven partnerships with the private sector given the urgent need to deliver on Africa’s infrastructure. These partnerships were seen to be anchored on PIDA, as the living conditions of Africans can only be improved if access to infrastructure services are improved.
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