Status of Implementation of STAP and MLTSF Study: The Potential for Private Participation in Infrast

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Status of Implementation of STAP and MLTSF Study
The Potential for Private Participation in
Infrastructure

• Accelerating Implementation of Multi-Country
  Infrastructure Projects and Programs under NEPAD
• Lusaka, Zambia, June 26 - 27, 2007
• Motelisi Lebesa
• African Development Bank Group

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Agenda

• NEPAD Infrastructure - mission and approach
• STAP Project Portfolio
• African Priorities Addressed
• Overarching themes
• Achievements
• Constraints to implementation
• Medium to Long Term Strategic Framework
• The Africa Infrastructure Country Diagnostic
  Study
• Conclusion

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The NEPAD Infrastructure Mission and Approach

• The Mission
• To promote regional integration by bridging the
  infrastructure gap
• The Approach
• Short Term Action Plan (STAP)
• Medium to Long Term Strategic Framework (MLTSF)
• The Benefits
• Overcome lack of economies of scale
• Reduce economic marginalisation
• Sustainable economic growth and trade

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NEPAD Short Term Action Plan (STAP)Project
Portfolio

• STAP projects and Programmes are mainly of four
  types
• Facilitation establishment of policy,
  regulatory and institutional framework to create
  a suitable environment
• Capacity Building initiatives to empower
  particularly the implementing institutions
• Physical/Capital Investment projects and
  programmes and
• Studies to prepare new priority projects and
  Programmes.

50 of Physical/Investments projects to be
financed by Private Sector
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STAP - Energy Sector Program

• Power Systems Initiatives
• Interconnection of Electric Grids
• Development of new generation systems through
  gas, hydro, and renewables
• Gas/Oil Transmission Initiatives
• Gas Pipelines
• Oil pipelines
• Studies to Prepare New Initiatives
• Regional Capacity Building Initiatives
• Regional Facilitation Initiatives

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STAP Transport Sector Program

• Trade Corridors Without Borders and Barriers
• Better and Safer Roads to Bring Africa Together
• Competitive and Seamless Railways
• Efficient Ports
• Safe Seas and Ports
• Inland Waterways
• Safe, Secure and Efficient Skies and Airports

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STAP - ICT Sector Program

• ICT infrastructure development and Roll-Out
• EASSy Project
• Regional Trans. Backbones
• RASCOM Project
• Facilitating the ICT infrastructure deployment
  process
• ICT Policies at Regional levels
• Harmonisation of ICT Policies
• Capacity Building initiatives
• Facilitating the exploitation and utilization of
  the ICT infrastructure
• e-Schools Initiative
• e-Government

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STAP - Water Sector Program

• Creating an Enabling Environment for Regional
  Co-operation
• Support for the Development of National
  Integrated Water Resources Management (IWRM)
  Policies
• Meeting Urgent Water Needs
• Improving Water Wisdom, and
• Strengthening the Financial Base for the Desired
  Water Future
• Trans-boundary Water resource Management

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NEPAD STAP Some Overarching Themes

• Need for consistent support for better
  preparation and definition of projects and
  programmes
• Introduction of capacity building measures to
  strengthen project preparation
• Clear definition of roles to be played by key
  stakeholders

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NEPAD Short Term Action Plan (STAP)Project
Portfolio

• Sectoral Breakdown
• 54 in the energy sector
• 35 in water sector
• 99 in transport sector
• 16 in ICT sector
• 1 intra-sectorial

• 2006 Review
• 62 facilitation
• 17 capacity building
• 62 studies
• 64 investment

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STAP Financing Achievements2002-2007

• 79 projects are currently under implementation
• ADB
• Funds committed for investment US
  1.025billion (for 33 projects/studies) as at May
  2007
• Co-financing mobilisation about US1.6 billion
• Established a NEPAD IPPF and approved financing
  for fifteen projects totalling US8.2m
• World Bank committed funds to date US1 billion
• Funds also committed by EU, DBSA and JICA

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NEPAD STAP Energy Sector Achievements

• West Africa Gas Pipeline Completed
• Inter-connection of national grids now widely
  accepted and recognised as basis for full energy
  utilisation
• Number of Electricity Inter-connections financed
  and/or at advanced stage of preparation.
• WAPP Master Plan developed Project pipeline
  prepared- Regulatory body established
  Interconnections being made
• SAPP 5 year Business Plan Prepared WestCor
  formed Project pipeline prepared
• UMA Development of generating and transmission
  capacity
• Kenya Uganda Pipeline Commercial partners on
  board
• Inga Hydro Power Project back on the framework
  studies to be commissioned

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NEPAD STAP ICT Sector Achievements

• Pivotal Role of ICT for socio-economic
  development accepted and widely acknowledged on
  the continent.
• Regional Adoption of Harmonisation Models
  enabling liberalisation with good implementation
  in some regions
• SAT 3 implemented with Landing Points in a number
  of countries
• RASCOM launch September 07
• EASSy
• MOU signed by Operators in the region
• Financial closure (July/August 07)
• Processing of Contract for Construction of system
  completed final award pending financial closure

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NEPAD STAP Road Transport/Trade Facilitation
Achievements

• Corridor concept is generally accepted throughout
  the regions
• A number of road corridor programmes currently
  being implemented - PR1, Mombassa Nairobi
  Addis corridor / EAC road network programme
• One Stop Border Post pilot studies
• Some innovative approaches to cutting border
  transit times

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NEPAD STAP Air Transport Achievements

• Mixed progress across regions in implementation
  of reforms to ensure compliance of the
  Yamoussoukro Decision including application of
  monitoring mechanisms
• Good progress towards implementing regional
  COSCAP programmes
• Studies and coordination between regions on GNSS

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STAP - LIMITED PRIVATE SECTOR PARTICIPATION

• OBSERVATIONS
• Private sector participation below expectations
• Substantial participation in the areas of energy,
  mobile telephony and toll ways in South Africa
• Participation especially in railroad and maritime
  concession projects, with rather satisfactory
  results
• Need to harmonize the regional regulatory
  framework
• Provide attractive conditions (tax incentives)
  and guarantees to cover political risks
• Designate a single contact party mandated by the
  States to negotiate contracts

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STAP - LIMITED PRIVATE SECTOR PARTICIPATION
Macro Level - Constraints

• Perception of poor investment climate
• Partially liberalised, poorly regulated sectoral
  markets
• Risk and reward trade-off
• Low availability of instruments and structures to
  mitigate risk
• Limited development of local capital markets
• Non-African externalities e.g. capital following
  high growth opportunities

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STAP - LIMITED PRIVATE SECTOR PARTICIPATION

• Project Level Constraints
• High cost and risk of project development
• Poverty ability and willingness to pay
• Weak and/or unclear sectoral environments
• Appropriate allocation of risk
• Complex interdependencies and multiple
  stakeholders
• Shortage of risk capital for early stage
  development work
• Capacity and institutional weaknesses of the
  public sector when acting as project sponsor
• Low quality of sponsorship
• Vested interests and political priorities
• Need for a transparent bidding process
• Institutional weaknesses
• Inappropriate allocation of public policy
  obligations

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STAP - LIMITED PRIVATE SECTOR PARTICIPATION

• Project Level Constraints
• Perception by private sector of MFIs and other
  Africa infrastructure specific funds
• Inadequate capacity with respect to PPI deals
• Cumbersome and lengthy decision-making processes
• Insufficient flexible and innovative financial
  instruments to support PSP

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MLTSF - INTRODUCTION

• The Medium-Long Term Strategic Framework
    (MLTSF) study complements and supplements the
  Short-Term Action Plan (STAP).
• To prepare a medium to long term strategy for
  Africas infrastructure development for each
  sector and sub-sector
• To develop medium term programs to implement the
  strategy
• Study to be implemented in two parts.
• Financing from
• Nigerian Technical Co-operation Fund
• ADF resources

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MLTSF PART ONE DELIVERABLES

• Action Plans/Programmes Proposals for
  Accelerating implementation of regional
  infrastructure projects specifically, NEPAD
  STAP
• Compendium of Africas Infrastructure Gaps
• Africa Infrastructure Database
• First Part Nearing Completion
• Regional Consultations on First part completed
• Sectoral Consultations 26 -27 July 07
• Completion September 2007

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MLTSF PART TWO DELIVERABLES

• Infrastructure Development Targets for Africa
• Sub-regional and Continental Infrastructure
  Strategies
• Sub-regional and Continental Infrastructure
  Development Road Maps (These will comprise a
  sequence of specific coordinated steps to
  progress towards the defined strategic goals)
• Phased and timed bound Programs/Projects for
  Implementation of Infrastructure Development
  Strategies and Road Maps at sub-regional,
  regional and continental levels

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MLTSF PART TWO DELIVERABLES

• Framework for Private sector participation in
  Infrastructure Development and Implementation
• Program Monitoring and Reporting System
• Communication Plan and Communication Materials
  for Dissemination of the MLTSF
• Guidelines and Procedure for Sub-regional and
  Regional Infrastructure Planning, development and
  maintenance
• Commencement of Second Part September 07
• Expected completion Mid 08

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Africa Infrastructure Country Diagnostic Study
AICD

• The AICD Study is a country-level study with
  three main pillars
• fiscal cost of infrastructure i.e. how much
  public money goes into infrastructure?
• What are a countrys infrastructure investment
  needs in terms of social and economic demand?
• How is the infrastructure sector performing
  i.e. is the infrastructure already in place
  effective?
• Output will complement the MLTSF

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MLTSF PRIVATE SECTOR PARTICIPATION FRAMEWORK

• Definition of policy initiatives to support
  private sector participation in infrastructure
  projects
• Segment the private sector into relevant
  clusters, e.g. large multinational companies,
  local SMEs, foreign SMEs, large regional/local
  private sector groups, local co-operatives etc.
• Segment African countries into relevant clusters
  according to the level of private sector
  development (level of investors confidence or
  perceived risk, availability of local financing,
  and prospective market size and growth)

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WAY FORWARDPRIVATE SECTOR PARTICIPATION

• Provide the private sector with useful
  information on projects
• Organise on a regular basis, forums for public
  and private promoters to have dialogue
• Continue offering advise and specific technical
  assistance for preparing concession projects
• Develop and harmonize the regulatory framework
• Appoint, within the framework of regional
  projects, a single counterpart mandated by all
  the stakeholders for negotiating contracts and
  protecting their interests
• Create attractive conditions (fiscal incentives
  for instance) for encouraging private sector
  participation.
• For the different categories of situations,
  define specific strategies for attracting the
  private sector.

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• Conclusion

• Good Progress in the Development and
  Implementation of Regional Infrastructure
  Projects and Programmes
• NEPAD Agenda widely accepted and forms a pivot of
  current development assistance
• Nevertheless, more needs to be done especially at
  the Country, political, and development partners
  levels to facilitate
• Project conceptualisation and preparation
• Project development
• Project implementation
• Attracting private investors

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• Thank you for your attention