African stakeholders, cooperating partnerships, financiers and private-sector investors met at the headquarters of the African Development Bank in Abidjan on November 24, 2016 for the Partner Dialogue Forum organized by the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF) to share ideas on how to better coordinate, leverage and build smart partnerships to accelerate delivery of Africa’s infrastructure in the face of growing economic activity across Africa and also growing appetite by both African and international investors to put more money into infrastructure in Africa.
The PDF was moderated by Alex Rugamba, Director of Energy and Climate Change at the AfDB. In his remarks, Rugamba said African practitioners in the infrastructure space had a lot of experiences and lessons to share which can enrich Africa’s infrastructure delivery, but that not enough practical forums were at hand outside the normal conferences. He therefore, commended NEPAD-IPPF for convening the PDF as a practical conduit for sharing ideas, lessons learned and having practical policy take-aways.
The PDF looked at three themes. The first was “Effective Partnerships for Project Delivery” – what should be done to build results-driven partnerships to accelerate the pace of infrastructure delivery in Africa? The discussant was Mapolao Mokoena, Infrastructure Specialist at the Southern Africa Development Community Secretariat. She cited lack of institutional capacities, skills and know-how as some of the binding constraints from the public sector side in effectively managing infrastructure delivery in a holistic manner. She further said, while governments were traditionally used to dealing within the public-sector infrastructure space, with more private-sector players coming to the table, this was proving problematic for governments in terms of providing informed policy and institutional responses. She called for more dialogue and partnerships to ensure that governments fully understood what the private sector wanted and needed.
The second theme whose discussant was Musara Beta, Chief Market Analyst at the Southern Africa Power Pool (SAPP), examined issues related to “Resources for Project Preparation” – How can Africa scale up resources for project preparation to increase the stock of bankable infrastructure projects?
Musara called for diversification of the resource base for project preparation and development away from traditional donor grants to a blend of public and private, with more private-sector involvement and increased cost recovery by facilities such as NEPAD-IPPF. He also observed that with regional power markets in Africa maturing, there is need to re-examine the Power Purchase Agreement (PPA) model whereby governments are tied to long-term tariff commitments in an environment where, as more players enter the power market, prices become competitive. He therefore called on a paradigm shift of using regional power market pricing as a benchmark instead of relying only on PPA tariffs, which are largely based on cost-recovery considerations.
Musara called on African governments to understand that projects can only be financed and implemented when they are bankable and that to achieve bankability requires committing resources to project development. African countries therefore, both at the national and regional level, need to pool more resources for project preparation and development and work alongside the donors in putting more money into Africa-wide institutions like NEPAD-IPPF, which had assisted power pools such as the Southern Africa Power Pool to prepare a number of major power projects, particularly regional power interconnectors.
Silvester Kasuku, Chief Executive Officer of the LAPSSET (Lamu Port in Kenya, South Sudan and Ethiopia Corridor Project) was the discussant for the third theme on “Fostering Project Financial Close and Implementation” – with the question, who needs to do what to foster project finance close? Citing his experience as the CEO of the US $24.5-billion LAPSSET multi-sectoral mega infrastructure project, which involves construction of new ports, highways, modern railways, oil pipeline and refinery, tourism and recreation, he said there was need for a number of success factors to be in place, citing four critical ones.
The first, was clear institutional and coordination frameworks among the countries involved to ensure that policy, operational, legal and project timing and sequencing issues were well coordinated. For example, one cannot build half a railway in one country when it is meant to be a cross border railway.
The second was high-level political championship, whereby LAPSSET has and continues to have the support of Presidents Mwai Kibaki and Uhuru Kenyatta of Kenya; Salva Kirr of South Sudan; and the late Meles Zenawi and the current Prime Minister Hailemariam Desalegn of Ethiopia, who met and continue to meet regularly to ensure common approaches to driving this mega, but complex project.
The third was for the countries involved in a project to commit their own funds first as a way of attracting potential investors especially the private sector as part from sharing risk and helping to de-risk projects. This sends a strong signal on commitment, he said. For example, the Kenyan Government has used its own domestic resources to build the initial infrastructure for LAPSSET.
The fourth is the need for a holistic, multi-sectoral approach to ensure that all the major issues – access to land and services by investors, an enabling environment, harmonized policies and legislation, a one-stop-shop, etc., were in place to ensure that the bureaucracy was “tamed”.
Contributing to the debate, Shem Simuyemba, Manager, NEPAD-IPPF, informed participants that the Partner Dialogue Forum demonstrated the hunger for practical knowledge by policy-makers and practitioners and that NEPAD-IPPF intended to make the PDF a regular platform for value-added dialogue on forging smart partnerships for infrastructure project delivery impacting on Africa, involving key public- and private-sector players.