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Financing African Infrastructure

12/03/2020

DATE: Tuesday 23 May 2017
TIME: 14:30 – 16:30

PANEL

  • Mr. Pierre Guislain, Vice-President, Private Sector, Infrastructure and Industrialization, AfDB
  • Ms. Janet Heckman, Managing Director for Southern and Eastern Mediterranean Region, EBRD
  • Mr. Jingdong Hua, Vice President, Treasury & Syndications, IFC
  • Mr. Paulo Noguiera Batista, Vice President & Chief Risk Officer, NDB
  • Mr. Charles Corbett, Managing Director, Head of Financial Institutions, Sovereigns and Development Organisations, Financing Solutions Africa, Standard Chartered Bank

MODERATOR

  • Mr. Wallace Kantai, NTV Kenya

Poor infrastructure cost the continent a cumulative 25 percent in foregone growth in the last two decades alone, equivalent to the growth rate achieved in the past ten years. The growing productivity gap between Africa and the rest of the developing world is exacerbated by Africa’s poor road and railway network; underdeveloped air and marine transport, and unreliable power supply. A continent that accounts for 16% of the world’s population has 53% of all the total population without electricity in the world. Africa loses about 4% of its GDP to lack of electricity. Per capita electricity use in Africa averages 181 kwH compared to about 13,000 KwH in the United States of America and over 6,500 KwH in Europe. Africa’s poorest pay some of the highest energy costs in the world. Africa’s industrialization agenda could become a pipedream without a substantial overhaul and meaningful investment in the infrastructure sector.
Investments in infrastructure are often big ticket, long-term undertakings fixed by their structure and location, which require substantial financial resources. These imply substantial sunk costs with potential difficulties to cover the upfront investments. These together with the effect of global economic downturn pushing banks to deleverage and de-risk in developing markets, shallow capital markets, inadequate legal and regulatory frameworks, challenging business environment as well as inadequate instruments to crowd in long-term financing from the contractual savings industry, call for innovative solutions to finance infrastructure development in Africa. Given the size of the financing gap and the fact that Governments have limited fiscal space to finance infrastructure from taxation or borrowing, it is clear that the private sector should be part of the solution. While it may be challenging to crowd in enough private investments in the short term through infrastructure bonds and other capital market driven instruments, financing through Public Private Partnership in its various forms could be a viable option. Over the last few years, Development Financial Institutions such as the AfDB have been instrumental in providing innovative financing initiatives to bridge the infrastructure gap. These include the Africa 50 Fund, as well as the New Deal on Energy for Africa geared towards accelerating universal access to electricity in Africa by 2025.
This event will be a Davos-style plenary discussion which will feature the infrastructure gap holding back Africa’s economic transformation and the actions being taken by multilateral development banks and other financiers to close this gap. Stakeholders of infrastructure development from the continent such as the Africa 50 Fund may contribute from the floor. The main focus of the event will therefore be to outline how multilateral development banks and other financing institutions can leverage resources by creating a platform for participation of the private sector, including specialized investment banks and other agencies.

 


 

Financing African Infrastructure, AM 2017