Infrastructure development key to unlocking Africa’s potential

18 November 3014

Nene

President Jacob Zuma and Finance Minister Nhlanhla Nene at the G20 Leaders’ Summit in Brisbane. (Image: GCIS)

With an infrastructure funding gap of US$93-billion per annum, the establishment of a Global Infrastructure Hub by the G20 countries may come as a boon for African countries.

The Global Infrastructure Hub, or GIH, is an initiative launched during the recent G20 Leaders’ Summit in Brisbane, Australia, that will complement “on-going efforts to reduce barriers to infrastructure development in most G20 countries’, according to South African Finance Minister Nhlanhla Nene.

Speaking to journalists in Pretoria on Tuesday, 18 November, Nene said the GIH will be open to all member countries as well as to non-G20 members. “It is intended to also attract private sector financing, to complement efforts by the public sector. Further details on the operations of the hub will be finalised soon, and it will be ready to operate in the early parts of 2015,’ he said.

“We are therefore happy that issues of accelerated infrastructure investment through designing appropriate funding instruments, carefully structured public private sector partnerships (PPPs), and project development facilities received a lot of attention at the Summit,’ Nene added.

The GIH initiative on infrastructure will complement a number of other initiatives in which South Africa is involved, Nene said. These include the Infrastructure Consortium for Africa (ICA), a platform for brokering more financing for infrastructure projects and programmes in Africa, which was launched at the G8 summit in Gleneagles in 2005.

The ICA aims to accelerate efforts to meet the urgent need for infrastructure development in Africa, according to Nene, and acts a conduit for economic growth and development on the continent. He said ICA addresses both national and regional constraints to infrastructure development, with a particular focus on regional infrastructure.

Membership of the ICA comprises the G8 countries, the World Bank Group (WB), the African Development Bank (AfDB) Group, the European Commission (EC), the European Investment Bank (EIB), South Africa and the Development Bank of Southern Africa (DBSA).

“ICA is another important avenue through which South Africa seeks practical strategies to implement the commitments made in institutions like the G20 and BRICS, in pursuit of Africa’s infrastructure development objectives,’ said Nene.

Adding, Nene said lack of a “pipeline of well-prepared, bankable projects’ is one of the key constraints to infrastructure development in Africa. “Although more than 52 Project Preparation Facilities operate in Africa, these facilities are not effectively unlocking infrastructure development across the continent. Project preparation and the financing thereof remain key stumbling blocks to Africa’s infrastructure development,’ he said.

In addition to these initiatives, South Africa has set up a task team on look into private sector financing of infrastructure, made up of government, business and labour representatives. Nene said the task team has been able to narrow its focus to areas that will have the greatest impact, namely encouraging private sector financing and participation in infrastructure; and the steering of development finance institutions to focus more on “crowding in’ private sector investment.

Because of the prominence of infrastructure development to South Africa (infrastructure development is a key priority in the National Development Plan), the country will host the 10th annual meeting of the ICA in Cape Town from 25 to 27 November 2014. The meeting will be held under the theme “Effective Project Preparation for Africa’s Infrastructure Development’, according to Nene.

SAinfo reporter