US Treasury and Infrastructure Consortium for Africa Host Africa Power Symposium
Washington, 13 October 2008 - The US Treasury Assistant Secretary, Clay Lowery, and the African Development Bank (AfDB) Group President, Donald Kaberuka, addressed on Monday, 13 October 2008, in Washington, a group of African finance ministers, power project developers, and financiers at a seminar on attracting private investment in Africa's power sector. The seminar, which was hosted by the Treasury Department and the Infrastructure Consortium for Africa (ICA), follows up on discussions during Secretary Paulson’s trip to Ghana, Tanzania and South Africa last November.
Underinvestment in infrastructure, particularly in the power sector, constrains economic performance in Africa, and major investments in infrastructure are needed to boost productivity and competitiveness. The World Bank estimates that, to meet demand in the power sector alone, sub-Saharan Africa would need to invest over $30 billion a year, or around 4.5 percent of the continent’s GDP, for ten years. Mobilizing private financing is essential given the magnitude of investment needs and the constraints on public finance.
Addressing the seminar's participants, Assistant Secretary Lowery, stated, "African economies have made great strides in recent years. But to truly unlock Africa’s economic potential, we must address infrastructure bottlenecks, particularly in power generation. African businesses must have clean, reliable, affordable energy to be competitive in world markets."
Participants discussed the financing constraints on private investment in many sub-Saharan African countries and ways in which to address those constraints. The discussion highlighted the primary role of African governments in creating an environment conducive to private investment, including critical regulatory and legal reforms.
In addition to the primary role of governments, participants also discussed the important supporting role of donors to help catalyze private investment.
- The United States Agency for International Development (USAID) announced the establishment of the Africa Infrastructure Program (AIP). Through AIP, USAID is committing over $25 million to provide African governments with specialized project finance transaction experts to help expedite the financial closure of commercially and financially viable electricity projects in the Sub-Saharan region. By providing project finance, legal, technical, and environmental expertise to support the contract negotiation progress on targeted projects, AIP seeks to leverage more than $1 billion of new investments within Sub-Saharan Africa with the next two years.
- The Infrastructure Consortium for Africa (ICA) unveiled a new guide, "Attracting Investors to African Public-Private Partnerships," that will help the public sector in Africa to attract private sector investment through effective project advertising, management, and implementation. The guide, prepared with a grant from the multi-donor Public-Private Infrastructure Advisory Facility, will enhance the chances of developing effective public-private partnerships by overcoming major obstacles to project delivery by having the right information, on the right projects, for the right partners, at the right time.
- ICA also announced that it would continue its outreach to the private sector through the formation of a new working group that will strengthen communication between the public and private sectors on key issues surrounding infrastructure finance. ICA aims to develop a workplan for the group and convene its first meeting by the time of the AfDB Annual Meetings in May 2009. For more information about ICA, please contact Mr. Andrew Roberts at firstname.lastname@example.org or visit ICA’s website at: www.icafrica.org
In his closing remarks the AfDB Group Vice President for Infrastructure, Private Sector and Regional Integration, Mandla Gantsho, thanked the US Treasury for having hosted the seminar and noted that it had met its objective of highlighting the opportunities and challenges for private investment in Africa’s power sector. He concluded by offering the Bank’s support to the working group that ICA will convene.