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Development and Progress Achieved in Infrastructure and Natural Resources Development

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Title: Development and Progress Achieved in Infrastructure and Natural Resources Development


1
Development 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

9
Note 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

11
Financing 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
12
What has been achieved recently in infrastructure
natural resources development
13
Progress 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)
15
Mineral 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
16
Progress 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
19
Progress Achieved in INRD
  • 3. Africas vast energy resources are being
    harnessed albeit at slower rate than
    escalating demand

20
Has 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
21
Progress 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)
23
Progress 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.
25
Moving 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
26
Progress Achieved in INRD
  • 6. Profound major infrastructure challenges in
    transport, which negatively impact on trade
    regional integration are being addressed

27
Underdeveloped 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.

28
Road 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

29
Progress Achieved in INRD
  • 7. An integrated approach to transport
    infrastructure can work better coupled with an
    integrated corridor approach to infrastructure
    development

30
Moving 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

31
Corridor integrated approach to Infrastructure
development
Energy Systems
Minerals
Transport Systems
Development Corridors
Beneficiation Industries
Research Development
32
mmehlwana_at_uneca.org
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