Financing Africa

1
Financing Africas Rural Infrastructure A New
Approach

• Michael R. Taylor
• School of Public Policy
• University of Maryland
• March 17, 2006

2
Rural Infrastructure and Trade

• Trade policy is important at national, regional
  and international levels
• Technical assistance for farmers and agribusiness
  can be valuable
• BUT neither will pay off for Africas rural poor
  without the physical infrastructure needed to
  produce goods and access markets
• Aid for trade initiatives should emphasize
  infrastructure

3
Public Investment in Infrastructure

• Substantial public goods investment is needed
  for irrigation, electrification, transport, and
  market infrastructure
• Public investment is justified to foster private
  investment and entrepreneurship
• Maputo Declaration reflects commitment of African
  leaders to agriculture-led growth
• External public capital remains essential

4
Infrastructure Financing Gap

• CAADP calls for public and private investment of
  25 billion per for 10 years
• Africas poorest countries have little capacity
  to mobilize local resources for infrastructure
  projects
• Private investors have little incentive to invest
  in infrastructure, especially absent public goods
• Donors doing little now to fill the
  infrastructure financing gap

5
The Gap in Donor Financing of Infrastructure

• World Bank is the largest external source of
  infrastructure investment, but total 2005
  commitments to Africa were only 3.9 billion
• Of which, less than 1 billion related to rural
  infrastructure
• USAID generally doesnt do infrastructure MCA
  promising but still modest scale
• US and other OECD donors generally still give
  priority to health, education and other social
  sector spending

6
The Donor Effectiveness Gap

• Much external assistance for African agriculture
  and rural development is
• Donor driven
• Fragmented
• Inefficient
• Undermining of local ownership and accountability
  

7
One Solution A New Africa-Led Financing Facility

• An African Rural Infrastructure Facility, housed
  at the African Development Bank, could
• Attract and pool significant new donor resources
• Build African capacity to design and manage
  infrastructure projects
• Focus on capital-intensive physical and market
  infrastructure
• Be the primary pan-Africa vehicle for
  prioritizing, coordinating and managing external
  public investment

8
To Be Successful.

• An African Rural Infrastructure Facility should
• Respond to local assessments of need and be
  accountable to Africans
• Be market-oriented and collaborative with the
  private sector
• Be transparent and provide leadership in fighting
  corruption
• Work closely with the World Bank and other
  international financial institutions
• Have a clear compact with donors

9
Conclusion

• Doha Development Round is hollow without
  infrastructure
• More of the same on development assistance is not
  the answer
• Africas development rests on what Africans do
• An Africa-Led finance facility can give Africans
  the means to do it