Developpement de l'Afrique
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Africa could attract more than $20-billion in investment to plug big infrastructure gaps provided individual states cede more sovereignty to strengthen regional economies, an African Development Bank expert said on Wednesday.
African and foreign investors would readily provide a mix of public and private financing when governments ease regulatory barriers to enable such projects to earn a profitable return, AfDB development economist Samuel Onwona said in an interview.
"The money is there, provided we can help create the comfort level the private sector is seeking and iron out the policy rigidities," he said, adding traditional aid flows were too small to fund the energy, transport and communications ventures.
"Financing Africa outside the official development assistance window -- this has to be addressed to open the floodgates for the funds to flow. This is how Asia did it."
He said the required multinational projects involved $9,5-billion of roads, $10,5-billion in energy and $1,95-billion in information and communications technology ventures.
Historically Africa's infrastructure has been geared to old colonial markets in Europe, resulting in economic isolation for the 40 percent of Africans who live in landlocked countries and starving local markets of cross-border roads and railways.
Another barrier to regional integration comes from a decades-old tangle of contradictory customs, foreign exchange and visa regulations erected by governments that often jealously guard their sovereignty in dealings with neighbours.
The problems persist between many states despite the growth of regional African economic trading blocs.
"The money is no problem, so why is development not taking place in Africa when there is so much money around? Why is Africa attracting only 3 percent of global foreign direct investment when we have seriously lucrative economic activities. It is because we have these institutional rigidities that need to be harmonised," said Onwona.
"We have a lot of work to do to get the politicians on board...We are talking about regional infrastructure that will connect Africa," said Onwona, of the AfDB Infrastructure, Private Sector, Regional Integration and Trade department.
The AfDB, whose shareholders include Africa's 53 nations and 24 non-African donor countries, lends commercially to Africa's richest nations and lends at concessionary rates to poor ones from its Development Fund, financed largely by Western donors.
Last month donor countries agreed a record level of support for the bank's soft loan window amounting $8,9-billion for 2008-2010, a rise of 52 percent over the 2005-2007 period.
But Onwona said the money was "peanuts compared to the demand out there" and the AfDB could help the financing process by anchoring discussions between public and private donors.
"This is where the big money is, but that kind of big money does not chase social development, it chases very economically viable businesses," he said. "You are talking about road corridors, power, economically viable projects that do have a social impact. Putting the economic ahead of the social is not bad, if we can use that to scale up infrastructure."
