Building capacity to help Africa trade better

PIDA Progress Report 2017


PIDA Progress Report 2017

PIDA Progress Report 2017
Photo credit: The New Times

Foreword by Dr Ibrahim Assane Mayaki


Currently, half of Africa’s population of 1.1 billion is under 25 years young and it is estimated that 300 million youth will enter the African labour markets until 2030. Additionally, there is a mismatch between skills demand and supply to absorb this socio-economic capability via a well-educated and skilled workforce. The African Union recognised this potential by naming 2017 as the year of Harnessing the Demographic Dividend through Investments in Youth. As a matter of fact, in March 2017, the AU Member States’ Ministers for Transport, Transcontinental and Interregional Infrastructure, Energy and Tourism emphasized regional infrastructure as a key leverage to create jobs and invited AUC and NEPAD Agency to consider job creation a vital element during the implementation of the Programme for Infrastructure Development in Africa (PIDA).

Officials from the African Union (AU), the NEPAD Agency and the African Development Bank (AfDB) reaffirmed their commitment to ensure employment opportunities are included in infrastructure project design to create inclusive growth and sustainable development in Africa. The pledge was made at the closing ceremony of the second annual PIDA Week in Abidjan, Côte d’Ivoire in 2016. Consequently, the NEPAD Agency, as the AU’s technical implementing organ, developed the PIDA Job Creation Online Toolkit to capitalize on the demographic dividend for job creation and wider regional economic development via PIDA infrastructure projects. This is as well underscored by this year’s theme for PIDA Week “Regional Infrastructure Development for Job Creation and Economic Transformation.”

Secondly, this year, infrastructure financing has also been the key topic of PIDA’s deliberation. Closing the infrastructure deficit is vital for Africa’s economic prosperity and sustainable development. The costs of closing Africa’s infrastructure gap are enormous. The PIDA project will cost around US$ 360 billion between 2011 and 2040, with significant investments required by 2020. Such costs are beyond the financing capacities of African governments or even Development Finance Institutions (DFIs) and Multilateral Development Banks (MDBs). Therefore, a concerted effort has to be made to bring on-board all stakeholders that can pool in funds towards the financing of PIDA.

Attracting private sector participation through Public-Private Partnerships (PPPs) is therefore essential for the delivery of various infrastructure projects envisioned under PIDA. PIDA delivery will depend on effective Public-Private sector Partnerships (PPPs) and not just on the public sector or DFIs and MDBs. A clear and transparent regulatory framework is the foundation for a conducive business environment. For private investors to come on board, governments will need to create the right legislative, regulatory and institutional environment. Demonstrating political commitment by the government is key to attracting investors.

The Continental Business Network (CBN) is continuing its agenda towards de-risking infrastructure projects as a key element to attract financing. Pension and Sovereign Wealth Funds emerged as the key catalyst to close this financing gap. In September 2017, the NEPAD Agency, under the guidance of the CBN, has initiated a revolutionary campaign that is Africa-led and Africa-owned, aimed at increasing the allocations of African asset owners to African infrastructure from its currently low base of approximately 1.5% of their Assets Under Management (AUM) to an impactful 5% of AUM. NEPAD-CBN called for a more strategic engagement with domestic institutional investors in support of this campaign. The purpose of the 5% Agenda campaign is to work with Pension and Sovereign Wealth Funds including Ministers of Finance to gradually increase infrastructure investments, using financial resources available on the continent and strengthen public-private partnerships to mobilize financial and global institutional investments. There is need therefore, for policy makers to create an environment for pension and SWFs which will enable them to invest in large-scale infrastructure projects in Africa under the appropriate reform national and regional regulatory frameworks that will guide institutional investment in Africa.

2017 also saw the commissioning of the Continental High Speed Railway Network Project, an AU Commission-led initiative – designed to interconnect all African Capitals – including major economic, commercial and industrial hub – with appropriate high-speed rail infrastructure and technology. I am once again glad to inform you that our enhanced M&E System (VPic/AID) has been revamped with more features fulfilling its promise in supplying the required infrastructure status information on PIDA implementation. Please visit the new VPic website: http://www.au-pida.org.

Let me conclude with these three critical points:

  • Africa must take leadership in financing its infrastructure projects, with African Pension and Sovereign Wealth Funds playing their rightful role.

  • Africa’s regional infrastructure development is the foundation for the African transformation that we all expect and want, and the implementation of regional infrastructure projects will accelerate industrialisation and trade.

  • The 5% Agenda is revolutionary and another critical game changer that will drive financing by institutional investors into Africa’s national and regional infrastructure projects, through the de-risking of projects.

Key Lessons Learned and Recommendations

The following are lessons learned and recommendations from RECs, partners and project implementers on PIDA implementation:

  • As regional integration arrangements deepen and intra-African trade increases, there is need to focus on improved trans-continental highways in terms of road and rail networks; deepening of financial markets and increased cross-border financial flows including money transfer will require additional investments in ICT terrestrial links as well as national and regional data centres; while growing industrialization and agro-industries will require more reliable and affordable power supply across the energy mix.

  • In terms of Energy and related infrastructure, Africa has abundant reserves of fossil fuels and an even greater abundance of renewable energy assets which provides a key opportunity for Africa’s infrastructure development for the future. The continent has more than half of the world’s renewable energy potential.

  • Africa’s infrastructure development can also leverage on the anticipated youth dividend anticipated from the youthful population structure of Africa as well as a deliberate strategy to include and involve women in infrastructure projects, implementation and management.

  • An integrated corridor development approach is crucial in developing PIDA projects, if the full development impact of the projects is to be realized. The project economics and viability can be enhanced by taking advantage of synergies between large trans-boundary projects.

  • PIDA must also build upon and optimize existing instruments such as:

    • IAIDA to strengthen coordination and cooperation between PIDA actors

    • Regularly stakeholder meetings such as the PIDA Steering Committee

    • SDM services of stakeholder mapping and assisting with cost/benefit sharing agreements between countries

    • Use team planning/coordination/retreats between continental and regional institutions

  • PIDA projects implementation is low in the Central African region causing the region to remain below the PIDA targets despite being one of the regions with high resources. The Northern region also has a low number of PIDA programs. Additionally, strengthening linkages between Central and the rest of Africa will help to accelerate Africa’s integration. To provide equity for all regions in terms of PIDA projects implementation, it is important to unlock further financing to support infrastructure development, enhance policy harmonization and increase/ encourage governments to engage and commit more resources to implement development projects.

  • Other areas that need to be looked at specifically are joint resource mobilization strategies, more financial engagement from government, and supporting countries in conflict or transition situations to graduate from conflict to cooperation through joint regional projects such as cross-border roads, railways and power transmission projects.


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