Africa $170bn infrastructure need
AFRICA’S INFRASTRUCTURE FINANC ING needs would move up to $170 billion yearly from 2025. Currently, the continent with 1.3 billion people has been having an estimated funding gap to the tune of $108 billion annually...
AFRICA’S IN FRASTRUCTURE FINANCING needs would move up to $170 billion yearly from 2025. Currently, the continent with 1.3 billion people has been having an estimated funding gap to the tune of $108 billion annually. All this has been exposed by the Covid-19 pandemic, which further revealed the continent’s need for added infrastructure spending.
This emerged during an African Development Bank (AfDB) infrastructure workshop titled: ‘Infrastructure Project Preparation: Ensuring Sustainability and Resilience Post COVID-19’.
Solomon Quaynor, AfDB’s vice president noted that African countries typically lack the fiscal space to cushion the pandemic’s impacts. He also said that the pandemic posed a challenge for institutions like the AfDB; adding that the pandemic is pushing the continent to refocus priorities.
“We’re going to have to innovate, come up with better project preparation approaches, we’re going to have to design risk mitigation instruments because a lot of private sector would not be willing to take the risk of government obligations without a counterguarantee,” Quaynor said.
The AfDB workshop took the form of a panel discussion on the critical roles that government, multilateral lenders and the private sector can play in building much-needed infrastructure in an economic climate made more challenging by the on-going Covid.
The panel comprised Lamine Lo, director of financing and PPPs in the ministry of economic planning and cooperation, Senegal; Solomon Quaynor, AfDB vice president, in charge of private sector, infrastructure & industrialization; Jerome Haegeli, group chief economist and managing director, Swiss Re, and Srinivas Sampath, chief of the PPP thematic group, Asian Development Bank.
There was consensus among the panelists that MDIs, including the African Development Bank (AfDB) and Asian Development Bank (ADB), have a critical role to play in preparing projects for investment, tapping new sources of financing and supporting the recycling of assets.
“There is enough project preparation support available in the multilateral community. There is
ADB’s project preparation facility, EBRD’s facility, the World Bank, GIF, and clients should use them,” said ADB’s Srinivas Sampath, the chief of PPP thematic group at the Asian Development Bank.
On the question about government’s role in creating an enabling environment, Lamine Lo, a director of financing and PPPs in the ministry of economic planning and cooperation, Senegal, laid out the country’s priorities post COVID-19, listing the health sector, agriculture, education and pharmaceutical sector.
“Why these sectors? It is driven by lessons learned from COVID-19, but it is also driven by the need to build an economy which is sustainable,” he said.
Haegeli, the Swiss Re’s chief economist and managing director underscored the longer-term nature of climate change impacts, observing that “COVID-19 is a human tragedy, it’s the deepest recession of our lifetimes, but it has an expiry date, climate change and biodiversity don’t. That’s why I think there’s even more upside to act.”
The panelists blended realism with optimism while reaffirming the need for change and collaboration. “We need to refuel the global economy’s tank. While we refuel, let’s exchange the engine, let’s put in new batteries. And that’s why we need sustainable infrastructure. That’s at the core of the global recovery,” Haegeli said.
For Sampath: “There are many building blocks we can put in place, both in terms of managing the crisis, as well as medium to long-term infrastructure, quality preparation of infrastructure projects, and making sure they are structured and attractive for the private sector to come in and invest because this is not something MDBs and the government alone can do.”
Quaynor, AfDB’s vice president advised: “Never waste a crisis. One of the potential positive impacts of this crisis is it’s pushing all of us to really focus priorities. And also make sure that we build quality infrastructure that maximize the positive impacts to the economy and we also build it to withstand natural disasters, pandemics and epidemics going forward.”