Washington, D.C., October 8, 2008 -- In the run up to this year’s International Monetary Fund-World Bank Annual Meetings, the Bank’s Africa Region Vice President called for strong private-public partnerships to help finance infrastructure projects across Africa.
“Africa’s infrastructure needs are indeed very daunting,†Obiageli Ezekwesili told attendees of the annual U.S.–Africa Infrastructure Conference, organized by the Corporate Council on Africa, a Washington-based nonprofit that seeks to connect the American business community with its counterparts across Africa.
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World Bank Africa Region Vice President Obiageli Ezekwesili with James H. Lambright, chairman of the Export-Import Bank of the United States.
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There are pressing needs in many areas, such as transportation and telecoms, but "nowhere is the deficit more prevalent than in the power sector," she said, noting that the 47 countries in sub-Saharan Africa with a total population of 600 million people had a combined power generation capacity no more than that of Argentina alone, a country of 30 million people. "Power production in Africa is so low that it is barely enough to power one light bulb per person for three hours each day," she said.
Speaking to the morning session on Financing Options – alongside other speakers from Export-Import Bank of the United States (EXIM), the Overseas Private Investment Corporation (OPIC) and the African Development Bank – Ezekwesili highlighted the critical role of the power sector in economic activity, and the substantial funding deficit it faces. The consequent negative effect on growth only further reduces individual countries' ability to raise funds. Encouragingly, however, a few countries — Cape Verde, Tanzania and Uganda — are taking steps on their own to address the financing gap, and are investing pension funds into local infrastructure development.
High fees and taxes make additional resources hard to come by, however, especially because of a relatively low rate of return in the short term. “Whether the measure is power tariffs, road freight tariffs, phone or internet charges, the costs in Africa are substantially higher than what we find elsewhere in the developing world,†Ezekwesili said.
One solution is to seek regional initiatives on major infrastructure projects. When the cost is spread among various countries, the return on the investment is more attractive, because of an expanded market given that operations span across state boundaries. There are signs that this message is gaining ground on the continent:
In East Africa, the World Bank is working with governments on the Eastern Africa Submarine Cable System (EASSy), which aims at providing broadband access to countries in the region via fiber optic technology.
On the West African regional stock exchange (Bourse régionale des valeurs mobilières, or BRVM), nearly half of all equity issues are related to infrastructure, Ezekwesili said.
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