Sponsors: NEPAD Business Group, African Business Roundtable
Panelists: AfDB representative, Agnes Dasewicz, (Private Capital Group of Africa, USAID, Power Africa), Alfred Liu (private sector), Sipho Moyo (ONE)
CHAIR: Eloho Otobo (Former Director, United Nation Peace Building Commission),
Otobo
- how best using the existing mechanisms to fund infrastructure?
- Sovereign wealth funds new instrument available
- Can’t scale up infra without developing ability of governments to manage it
- Need to increase capacity to be able to train to manage and repair infrastructure
- Scaling up must be a deliberate effort
AfDB
- over last 7 years heavily invested in infra, private sector and PPPs, 49 projects
- mobilised 30bn investment through 3bn
- trying to learn, number of financial constraints
- proposal to set up new vehicle, Africa 50, to mobiles additional investment incl crowding in non traditional sources
- 100bn per year estimated need
- actual investment 50bn, mostly public resources and DFIs, gap continues to grown
- Africa’s mega projects need mega resources
- DFIs and governments face financial constraints
- Lack of early stage project development capital
- Lack of prepared projects prevents investment
- Create a new vehicle with new DNA
- An African initiative, credible and apolitical, flexible, efficient and commercial
- Africa 50 independent investment vehicle
- Project development business line, providing steady deal flow of well-structured projects
- Project finance business line
- Funding structure – target investment vehicles, mainly from Africa, but able to leverage local capital markets
- Collaboration platform, work through the life cycle of a project – early stage bankability, TA etc – an integrated approach
- From idea stage to financial flow on average 7 years plus 3 years of construction
- Incubated by AfDB
- Attractive asset class, provides robust, safe and steady returns
- Secured cash flows backed by contractual agreements
- Senegal and Kenya examples, South Africa
- Launch Q2 2014, pipeline of transformational project
Chair: Q on capacity building? How will the bank mobilise the 50bn?
- in Senegal we realise the best way to achieve capacity building to work with the government, also work with traditional donors with projects
- gap is huge, 50bn, trying to demonstrate to international market that you can invest in infrastructure in Africa – leverage by a factor of 10
- 3bn still a substantial amount
Dasewicz
- promote economic growth in Africa
- 5 year initiative
- will result in private sector and gov continue to work together for longer
- Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania focus countries
- Hope to replicate experience in other countries
- Whole of US government approach – many agencies in the gov who has tools to work with the private sector and governments
- eg OPIC direct investments, USAID transaction advisers
- support investment in Africa’s energy sector, 7bn in support over next 5 years
- trying to coordinate to focus on these countries and power transactions
- AfDB collaboration, crowding in additional investments
- Also with WB and aligning work, also EU and other organisations, so that it adds value to other activities
- Private sector bringing additional capital, over $14bn, working on over 30 transactions to accelerate progress
- Some private sector commitments include General Electric
- Also geothermal, eg in Ethiopia, first private sector led
- Smart metering also in Ethiopia, on household level allowing efficiency – hope to scale up
- Wind transactions in Kenya, helping Kenya distribution company to train capacity
- Mini hydro 10MW in Tanzania, accelerate agricultural efficiency – gov guarantee to enable local banks lending to the project
Liu
- representing private sector
- you have to see the whole picture to do infrastructure
- many African countries have no planning, they just want money, but it’s not enough
- China becoming second largest economy
- Noone helped Africa capitalise on natural resources
- Bringing Chinese money to Africa, 200bn last year fr government
- African needs help from all countries, but need strategy and planning, not just a single projects
- Creating African – Asian – American foundation, to develop Africa
Moyo
- links agriculture and infrastructure
- its about inclusive growth, consistent good growth for last decade, but a lot hasn’t been inclusive
- need strong foundation of infrastructure assets
- lack of infrastructure is a daily hardship of poor people
- 100bn infrastructure gap
- research last year, from investors hear set back in Africa is infrastructure, in part energy and roads
- part of agriculture multiplier effect comes from infrastructure, also affects health, education, etc
Q: Ethiopian gov guaranteeing loans, AfDB investing money. Lot of individuals with capacity – question of high interest rates, these will be kept in profits, could be transferred to people instead.
Q: Power Africa, could create jobs in the countries.
Q: Work for organisation trying to stop child trafficking.
Q: Work force engagement, where is this?
Q: Use of direct labour as a strategy
Q: Power Africa, how is agriculture used as being part of the solution
Q: Power planning, policy environment is very important
Q: Power Africa, are you tying tariffs to the poor?
Q: Agriculture is main part of the future of Africa, what does this mean?
Q: Difference US and China in infrastructure investment?
Q: AfDB, do you have criteria to choose countries?
Moyo
- We are targeting the youth, agriculture has been neglected – part of the transformation
- A value chain need to be developed, not everyone want to be a labourer, we get this
- Creating better living standards, decent jobs, viable business opportunities, and economic transformation
Dasewicz
- Guarantee to a local entrepreneur in Tanzania, not large companies – clarification – to build small hydro
- Trying to find the local entrepreneurs that are thinking of creative solutions
- Distributed energy and local entrepreneurs is key
- On work force development, very important, also links with tariffs
- Energy is often expensive since distribution systems is efficient
- Need trained technicians, systems, processes, to make it efficient and keeping tariffs on reasonable level
- Policy environment, why we focus on transactions, as first step to figure out obstacles
- Then you can prioritise them
AfDB
- interest rates being too high, they remain high on infrastructure projects, capital intensive
- demonstrate perceived risk of infrastructure
- project criteria, will invest in all countries in Africa – where we can work with the government and the private sector
Liu
- I know how to get money out
- Chinese investment, help to develop country, didn’t charge money
- WB gives money to the state, maybe they steal some of it
- Chinese doesn’t given money to the government, guarantee to finish the project
- Gives the project directly to the African people