Title: Development and Progress Achieved in Infrastructure and Natural Resources Development
1Development and Progress Achieved in
Infrastructure and Natural Resources Development
8th Session of the Committee on Trade, Regional
Cooperation and Integration 6 - 8 February
2013 Addis Ababa, Ethiopia
2 Africas Infrastructure Challenges
- 1. Africas GDP growth not ALWAYS congruent with
poverty alleviation
3 Global Growth and Global Poverty
GDP Growth p.a. () GDP Growth p.a. () Living below 1.25 pd (MDG1) (m) Living below 1.25 pd (MDG1) (m)
1990-2000 2000-2008 1988-1990 2007-2008
World 2.9 3.1 1,668 1,329
China 9.9 10.4 724 208
India 5.5 7 414 456
SSA 2.2 4.9 224 355
In terms of GDP Africa performs on par with
other developing regions
Growth with limited inclusion little abatement
of poverty
4 Africas Infrastructure Challenges
- 2. There is growing infrastructure funding gap in
all scenarios
5 Africa has currently a huge infrastructure
deficit
- At the national level and regional level
- Annual investments gt93bn (World Bank)
- At the regional level
- 38bn between 2012 and 2020 (PIDA)
6 Fiscal flows devoted to infrastructure
- Most SSA spend 6-12 of GDP p.a. on
infrastructure - Less than 600m p.a. (less than 50 pp but
pales vis-à-vis what is required
Inefficiencies infrastructure funding gaps
leveraging private sector financing through PPPs
one options (successful cases toll roads in SA,
telecom in many SSA countries)
7 Africas Infrastructure Challenges
- 3. There is very little private sector
participation in infrastructure development
8 PPI is low by international stds but improving
- Only in the telecom sector that PPI is more
pronounced - Conditions not conducive for PPI in many African
counties - Low/non-existent sovereign credit ratings a
limiting factor ? limits public sectors ability
to use private investors
- Key Propositions
- Flexible Financing
- Efficiency gains
9Note Bold junk high yield speculative bonds,
Italics investment grade and under observation,
Underlined Investment grade and premium
10 Africas Infrastructure Challenges
- 4. Over-reliance on external finance for
infrastructure and trade-offs on local
commodities associated lack of local finance
11Financing from ODA, PPI non-OECD financiers
comparable but sectoral distribution varies
substantially Among the emerging financiers of
Africas infrastructure, China is by far the
largest - channelled through export-import Bank
of China
Energy transport sectors largest proportion of
financing Chinas concentration on
natural resource development
12What has been achieved recently in infrastructure
natural resources development
13Progress Achieved in INRD
- 1. Growing investments in African mining sector
from OECD and Non-OECD
14 Growth in investment in African mining
China imports US100 billion worth of base metals
p.a. reliant on SSA for cobalt imports
Chinese investment in (a) mineral processing
(semi-fabrication) operations (b)
infrastructure to facilitate extraction
evacuation of products Canadian mining firms
emerge as major players in Africas mining
industry from 233m in 1989 to 635m in 1995
and surpassed 20b in 2008
Canadian African mining assets distribution by
country (2010)
15Mineral commodities to transform economies
Australia scaled-up investment in African mining
countries in recent years Collective investment
in last 10yrs. in excess of 20b projected to
/-50b in the next 5yrs.
ASX-listed companies with operations in Africa
Are benefits shared equitably between mining
companies African countries?
Most countries redesign fiscal provisions to
enhance national benefits accruing from the
mining sector
16Progress Achieved in INRD
- 2. Africa Mining Vision is taking shape and
redefines Africas beneficiation of its
minerals resources
17 African countries owning and beneficiating their
mineral resources
- Regional developments
- Development adoption AMV by African HoSG in
2009 - revamping policy regulatory frameworks to
reflect developmental objectives - improving mineral sector governance,
- developing economic social linkages,
- revitalizing small-scale mining
- creating institutional capacity for implementing
the AMV
- Subregional Level developments
- Efforts to harmonize mining codes increased
across the continent - Draft ECOWAS Directive Harmonization of Guiding
Principles Policies in Mining Sector - SADC Framework for Harmonization of Mining
Policies Standards Regulatory Frameworks
18 There are remaining challenges to overcome
A major challenge is that of weak capacities in
value chain
Ineffectiveness of regulatory regimes to
contribute to creation of equitable sustainable
mineral wealth creation based on a diversified
mineral sector, integrated into local regional
economy through optimized linkages.
Existing fiscal instruments dont optimize
collection of resource rents, such as windfall
and additional profits taxes Artisanal
small-scale mining (ASM) sub-sector faces
challenges related to deficiencies in skills,
finance, marketing and technology
19Progress Achieved in INRD
- 3. Africas vast energy resources are being
harnessed albeit at slower rate than
escalating demand
20Has not tapped into vast energy resources
19.5m people in New York consume in a year same
quantity as 791m people in SSA, excl. RSA
Region People without access (millions) Percentage without access
AFRICA 587 59
(Sub-Saharan Africa) (585) (69)
DEVELOPING ASIA 799 21
(China) (8) (1)
(India) (404) (33)
(Other Asia) (387) (10)
LATIN AMERICA 31 5
DEVELOPING COUNTRIES 1,438 24
WORLD 1,441 20
Endowed with vast non-renewable and renewable
energy resources BUT Inadequately harnessed
21Progress Achieved in INRD
- 4. All scenarios point to the increased of energy
demand by 2040 and therefore potential for
growth investments and associated development
22 Africa need to invest to energy generation
- By 2040
- COMELEC will increase by 6.2 pa (additional
298GW) - SAPP will increase by 4.4 pa (additional 129GW)
- WAPP will increase by 8.9 pa (additional 90GW)
- CAPP will increase by 7.3 pa (additional 26GW)
- EAPP will increase by 6.5 pa (140GW)
This translates into big investments US40.5b
p.a. to 2040 to meet the forecast energy demand
(PIDA Study)
23Progress Achieved in INRD
- 5. Africa energy infrastructure development is
benefiting from recent global (e.g. green
economy) and regional (PIDA) initiatives
24 Some of the promising trends in energy
Emerging trends in clean or low carbon energy
development African power utilities are
transforming power generation, transmission and
distribution - attracting private capital through
PPPs IPPs Share of hydropower from current
levels of less than 15 are increasing Promising
natural gas programmes and initiatives
investments in exploration distribution Global
energy partnerships to harness Africas renewable
energy resources.
25Moving forward in developing energy
infrastructure for regional integration
Reshape energy markets through stimulating local
demand Drive down costs of technologies though
localization (indigenization) mass production
for local consumption Introduce new models in
the energy systems Finance own
development Invest in RD by creating (where
there are none) or strengthening the existing
centres of excellence
26Progress Achieved in INRD
- 6. Profound major infrastructure challenges in
transport, which negatively impact on trade
regional integration are being addressed
27Underdeveloped transport infrastructure an
impediment
- of road networks in good condition from 4
(DRC) to 90 (RSA) - Extension maintenance problems (vehicle
overloading, lack poor management of funds
allocated to road network - Africa has highest accident rate vis-à-vis
vehicles on the road - African railways network has low density and
different technical stds - Maritime transport accounts for 92-97 of
Africas international trade (but safety and
security piracy and robbery of merchant ships - Underdeveloped inland waterways transport - few
internationally-navigable inland waterways - Global share in air transport is very low and
accounts for only 3 per cent of the global
traffic.
28Road transport most dominant accounting 90 of
intra-African trade
- 24 projects programmes for transport under PIDA
PAP relating connectivity modernization of
corridor, ports, railways air transport - Improvement of road network incl. completion of
missing links of TAH - Bamenda-Enugu Transport Facilitation Programme
- Funded by AfDB, World Bank and JICA
- Increase trade cooperation between ECOWAS
ECCAS - Dakar-Ndjamena-Djibouti and Djibouti Libreville
transport corridors - Pre-feasibility studies of missing links
- Financed by NEPAD-IPPF
- Study on the regional norms of TAH was conducted
by AUC/ECA - adopted by African Ministers in charge of
Transport endorsed by HoSG in Jan 2012
29Progress Achieved in INRD
- 7. An integrated approach to transport
infrastructure can work better coupled with an
integrated corridor approach to infrastructure
development
30Moving ahead robust strategies need to be
considered
To transform transport sector, these constraints
challenges need to be addressed
Foster regional integration, econ growth, soc.
development and poverty reduction
- Inaccessible roads
- High transport costs
- High rate of corruption
- Insufficient use of ICT
- Security risks
- Environmental concerns
- Political instability
- Prevalence of infectious diseases
- Inadequate policies
- Inadequate human resources
- Integrated approach to transport development
policy - Give priority to implementation of PIDA PAP
projects - Promote building of missing links in transport
infrastructure - Strengthen human instit. capacities
rehabilitate training institutions - Fully implement YD to liberalize air transport
market - Promote dry ports in landlocked countries to
facilitate transit operations decongest sea
ports
31Corridor integrated approach to Infrastructure
development
Energy Systems
Minerals
Transport Systems
Development Corridors
Beneficiation Industries
Research Development
32mmehlwana_at_uneca.org