Infrastructure Development and Regional Integration

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Infrastructure Development and Regional
Integration
Economic Commission for Africa

• Hakim Ben Hammouda
• Director,Trade and Regional Integration Division
• ADB-ECA High Level Seminar
• Ouagadougou, 16 May 2006

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Outline

• Introduction
• Challenges and issues
• Initiatives to promote infrastructure development
  in Africa
• Innovative ways of financing infrastructure
  development
• Conclusion

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Introduction

• Efficient infrastructure and services key to
  Africas integration and development
• Relevance of sound interregional and overseas
  transport
• facilitation, promotion, and expansion of
  international and intra-regional trade
• enables African countries to fully participate in
  global market place
• contributes to economic growth and therefore
  poverty reduction

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Introduction (cont)

• Requirements for infrastructure to play its role
  in integration and development
• Physical and operational integration of networks
• Convergence of policies
• Joint planning and development of facilities
• Cross-border investments
• Accession to international treaties and
  conventions
• Harmonization of standards

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Challenges and Issues

• Lack of coherent policy framework for
  infrastructure development
• Inadequate financing
• Financing socially desirable but non-bankable
  projects
• High transaction costs due to inadequate
  infrastructure

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Ongoing Infrastructure Development Initiatives in
Africa

• ECA Activities
• Sub Saharan African Transport Policy Programme
  (SSATP)
• NEPAD Infrastructure Programme
• Activities of European Union and other
  multilateral and bilateral donors

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ECAs Support to Infrastructure Development

• Lead institution in implementation of UNTACDA I
  and UNTACDA II
• Prepared successor arrangement to UNTACDA,
  adopted by African Transport Ministers in 2002
• Lead promoter of the Trans-African Highways
  Network (TAH)
• ECA and AfDB jointly reviewed the implementation
  status of TAH in 2003

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Sub Saharan African Transport Policy Programme
(SSATP)

• Launched in 1987 as joint initiative of ECA and
  World Bank
• 33 African countries currently SSATP partners
• SSATP supports NEPADs infrastructure programme
• Thematic areas of the plan include poverty
  reduction related strategies road management and
  financing strategies regional transport
  strategies, etc.

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NEPAD Infrastructure Programme

• Key components of NEPAD Infrastructure programme
  
• Transport facilitation (establishing policies,
  frameworks suitable for investment and efficient
  operation)
• Capacity Building to facilitate project
  implementation
• Investment in physical projects
• Studies to prepare future projects

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Infrastructure Development Funds

• NEPAD-Infrastructure Project Preparation facility
  (NEPAD-IPPF)
• Assist African Countries and RECs to prepare
  viable infrastructure Projects for financing
• Support creation of enabling environment for
  private sector participation in infrastructure
  development

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Infrastructure Development Funds (Contd)

• Infrastructure Consortium for Africa
• Broker and target funding for priority regional
  infrastructure projects
• Generate information about infrastructure
  investment needs on the continent
• Facilitate project preparation work
• Secretariat based at ADB. ECA should be invited
  to be part of the consortium

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Innovative ways of financing Infrastructure
Development

• Africas infrastructure investment needs
  estimated at over US250 billion during the next
  10 years
• Huge financial requirement calls on
• African governments to continue playing an
  important role in infrastructure development
• Donor community to increase funding for
  infrastructure development

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Innovative ways of financing Infrastructure
Development

• Traditional sources of fund not sufficient to
  support Africas infrastructure needs
• African countries most look for alternative
  sources
• Suggested alternative financing mechanisms
• Use of Africas Pension Fund
• African countries devoting fixed of their GDP
  to infrastructure development
• Imposing special taxes to support infrastructure
  development
• Introducing infrastructure indexed bonds

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Suggested alternative financing mechanisms (cont)

• Using Global Financial Markets to finance
  Africas infrastructure development
• Introducing special Government credits to private
  investors in Infrastructure
• Establishing regional infrastructure banks

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Conclusion

• Both public and private sector need to be
  mobilised for Africa to meet resource
  requirements for its infrastructure development
• Key areas of concern in this regard are
• Establishment of conducive environment for
  private sector participation
• Introduction of innovative policies and measures
  to increase financial resources
• Establishment of stable macroeconomic policies
  and development of cross border financing

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• MANY THANKS FOR YOUR ATTENTION