Regional infrastructure is key to NEPAD objectives for Africa’s growth

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    Infrastructure — energy, water and sanitation, transport, information and communications technology (ICT) — stands at the heart of NEPAD objectives of poverty reduction through economic growth and full participation in the world economy.

    The goal of NEPAD is to develop infrastructure services that are adequate, efficient and of minimum cost and are, therefore, able to support the development of trade and economic growth needed for achieving the NEPAD aim of reversing Africa’s marginalisation in the global economy.

    Because African economies considered individually are typically too small, the coordinated development of regional infrastructure has been identified as a critical element in fostering regional integration and trade competitiveness.

    Collaboration and joint action at the sub-regional and regional levels are, in turn, necessary for the development of regional infrastructure to allow economies of scale through pooling and joint facilities, and to overcome the limitations of small markets and enhance competition.

    The NEPAD Infrastructure Short-Term Action Plan (STAP), produced in May 2002, has evolved and today the project portfolio constitutes a selection of infrastructure programmes or projects that support regional integration, with a value estimated to be $20bn.

    It does not contain all the projects proposed by the Regional Economic Communities (RECs). The mandate of the Short-Term Action Plan ends in 2007 and will be replaced by a Medium to Long-term Strategic Framework (MLSTF), expected to be finalised at the end of 2007.

    The RECs are considered as the “pillars of integration”, and the driving forces for helping to implement regional programmes.

    To speed up preparation and implementation of regional infrastructure projects improvement is required in two main areas:

    Clear roles, task assignment and coordination between the various actors and;

    Selective capacity strengthening of the individual actors, keeping in mind the overall goal of simplification and efficiency improvement.

    Largest economies must help poorer countries
    Africa’s Ten Largest Economies (ATLEs) contribute 77% of Africa’s GDP which indicates that the rest are too small to survive on their own. These Ten Largest Economies (ATLEs) (South Africa, Algeria, Egypt, Nigeria, Morocco, Libya, Tunisia, Sudan, Angola, and Cameroon) are important destinations for exports and sources of imports and their physical connectivity will feature prominently in Africa’s infrastructure development plans.

    There is need to put in place strategies that will use the economic activity in the ATLEs to catalyse development in the poorer smaller countries for which improved access to regional markets will be key to economic success.

    The efficiency of cross-border infrastructure will be an important determinant of Africa’s prospects for economic growth, employment creation, poverty reduction, and social improvements.

    The regional projects, because of their large scale, usually require high up-front project preparation costs. The NEPAD Short Term Action Plan requires an investment of over US$ 7 billion and 10% of this figure for preparation of these projects calls for US$700 million.

    NEPAD is tackling the problem through the establishment of the Infrastructure Project Preparation Facility at the African Development Bank, but the support for the facility has been very slow from cooperating partners.

    The private sector, particularly the South African, has a significant role to play in the delivery of cross-border infrastructure on the continent. The private sector brings additional financial and technical resources for cross-border infrastructure and shares the risk with governments.

    Presently, the majority of African countries are considered International Development Assistance (IDA) or African Development Foundation (ADF) countries by the World Bank and African Development Bank respectively, limiting them to soft loans. This condemns these countries to perpetual poverty since they cannot borrow bank resources.

    There are many Public Private Partnership (PPPs) projects successfully implemented in South Africa which are being duplicated elsewhere in Africa. It is NEPAD’s hope that South African business will take a longer-term view and continue to invest in other African countries in infrastructure development despite the huge investment in the run up to the 2010 World Cup.

    Both the African Development Bank and the World Bank have responded positively to NEPAD through their increase in resources for regional projects and putting in place internal institutional arrangements in response to NEPAD. In the last three years, they have mobilised financing amounting to US$2.2 billion of which they have provided about US$900 million with a pipeline of projects under consideration.

    Progress with regional projects
    Three regional projects – a collaboration of the African Development Bank and the World Bank under the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF) – are well under way:

    Togo-Benin-Ghana power interconnection

    Date of IPPF approval: 27 October 2004
    Physical project costs estimate: USD118 million
    The objective is to support the Governments of Benin, Togo and Ghana through their power utilities to update the feasibility study and detailed designs of the Benin-Togo-Ghana electricity interconnection, and the development of a detailed environmental impact assessment for the project.

    Kenya Uganda oil pipeline

    Date of IPPF approval: 5 November 2004
    Physical project estimated costs: USD 75 million
    The objective of the grant for which the NEPAD-IPPF was approved is to support the Governments of Uganda and Kenya in the solicitation process for a private sector investor in the project.

    This entailed the preparation of the tender process leading to bidding, evaluation, negotiation, award and contract for a joint venture with a private sector investment partner, and assistance to the Governments of Uganda and Kenya in securing financing for the project.

    Zambia-Tanzania-Kenya power interconnector

    Date of IPPF approval: 17 December 2004
    Physical project estimated costs: US$860 million
    The scope of activities of the Zambia-Tanzania-Kenya electricity interconnection supported by the NEPAD-IPPF Special Fund consists of four distinct phases: pre-development phase, investor selection phase, concession negotiation phase and financial closure phase.

    The IPPF support is to facilitate the engagement of a private sector participant in the project and achievement of financing for physical implementation.

    Gas pipeline completed in West Africa
    The $1.1billion West African gas pipeline covering 1,000km onshore and offshore from Nigeria’s Niger Delta region to its terminus in Ghana has been completed.

    Four nations, Nigeria, Ghana, Togo and Benin signed a 20-year agreement on the implementation of the pipeline which provides for a comprehensive legal, fiscal and regulatory framework, as well as a single authority for the implementation of the project.

    And in the Democratic Republic of Congo, the NEPAD Secretariat has hosted an international roundtable seeking ways to make progress on the Inga hydro-electric development.

    It attracted some 120 participants from African and regional institutions in the public and private sectors, electricity companies, non-governmental organisations, civil society and the media.

    The speakers stressed the integrating nature of the Inga project, as well as the need to find the best ways of determining the options for updating and finalising the feasibility study on the development of the Inga site, including Inga 3 and Great Inga.

    Great Inga will have a generation capacity of 39 000 megawatts, offering the DRC the possibility of exporting electricity to the sub-region and North Africa. It will accelerate regional integration by providing adequate power supply to many African countries.

    The DRC currently obtains its electricity supply from the Inga 1 and 2 stations built in 1972 and 1982, respectively. It currently has 1,775 megawatts of generating capacity at its Inga hydroelectric facility.

    The Inga 3 site if implemented could supply the whole sub-region, especially countries of the Southern African Development Community.

    The NEPAD Spatial Development Programme
    For the future, 12 new Spatial Development Initiatives (SDIs) that could form the initial core of a NEPAD Spatial Development Programme have been identified in an assessment report prepared by the Regional SDI Programme Support Unit and MINTEK, a South African-based global consultancy.

    Using Spatial Development methodology, the report covers an investigation of potential development corridors in Africa with the greatest prospects for success — economically, socially and politically.

    By focusing on defined geographic areas, usually along existing transport or development corridors, the Spatial Development methodology allows for the creation of a critical mass of integrated private sector and infrastructure development necessary to kick-start a sustainable economic development process.

    In identifying a portfolio of 12 possible new SDIs the report gives an overview of each SDI reflecting its name, location, geographic description, underlying rationale and the main infrastructure and economic drivers that justified its inclusion:

    North Africa
    The Magherb Coastal DC (Morocco, Algeria, Tunisia, Libya, Egypt) focused on enhancing regional economic co-operation and integration through clustered industrial development based on abundant hydrocarbon and other mineral deposits

    The Red Sea-Nile DC (Egypt, Sudan) focused on promoting integrated economic development through the development of natural resources along the Nile River valley and Red Sea coast

    West Africa
    The Niger (Dakar-Port Harcourt) DC (Senegal, The Gambia, Mali, Niger, Nigeria) focused on integrating minerals development and the utilisation of diverse sources of energy for the development of heavy industry as a platform for multi-sectoral economic growth across the interior of West Africa

    The Sekondi/Takoradi-Ouagadougou DC (Ghana, Burkino Faso) focused on providing viable transport choices to enhance the competitiveness of the land-locked Burkino-Faso economy

    The Conakry-Buchanan DC (Guinea, Liberia, Cote D’Ivoire) focused on improving transport links and integrating economies based on the mineral potential of the region

    The Gulf of Guinea DC (Nigeria, Benin, Togo, Ghana, Cote D’Ivoire and Liberia) focused on promoting the integration of West African economies through the development of a transport and energy orientated economic development corridor

    Central Africa
    The Douala-N’djamena DC (Cameroon, Chad) focused on promoting access to the coast for landlocked Chad

    The Libreville-Lomie DC (Gabon, Republic of Congo, Cameroon) focused on achieving economic and regional integration through complementary minerals developments

    The Bas-Congo DC (Democratic Republic of Congo, Angola) focused on harnessing energy potential for Africa’s development and supporting mining and industrial development in the Bas-Congo region

    East Africa
    The Djibouti DC (Ethiopia, Djibouti, Eritrea and Somaliland) focused on providing Addis Ababa access to the coast to facilitate trade and investment and integrating Ethiopia with its southerly East African neighbours

    The Mombasa DC (Kenya, Uganda, Democratic Republic of Congo, Sudan) focused on utilising established infrastructure links to unlock stranded natural resources in DRC and southern Sudan

    Southern Africa
    The Madagascar DC (Madagascar) focused on unlocking natural resources as a platform for sustainable economic growth and development
    Of the 12 possible new Development Corridors/SDIs that were evaluated, seven were identified as having the greatest aggregate economic potential and it is proposed that these should form the core of a first phase of a NEPAD SD Programme.

    * From the outset, the overall task of evaluating the prospects for a NEPAD SD Programme was expected to be a two-phase process. Phase 1(a), the indicative assessment of the scope for such a programme has now been completed. In order to define the full scope and extent of the programme a more detailed scoping study will be carried out as Phase 1(b) of the overall assignment. Once this is complete it will be possible to proceed with Phase 2, the establishment and operationalisation of the NEPAD SD Programme.

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