Mrs. Nardos Bekele-Thomas CEO, AUDA-NEPAD speech at the Opening Ceremony of the Second Dakar Financing Summit
Mrs. Nardos Bekele-Thomas
The 2nd Dakar Financing Summit for Africa’s Infrastructure (DFS-2)
Presidential Roundtable: Financing Africa’s Infrastructure Priorities under PIDA PAP 2
Thursday 2 February 2023
11:30 – 13:00
At the outset, I would like to take a moment to acknowledge and celebrate His Excellency President Macky Sall and the Government of the Republic of Senegal for hosting this historic 2nd Dakar Financing Summit for Africa’s Infrastructure (DFS 2.0).
Thank you, Excellency, for your leadership and enduring devotion to Africa’s infrastructure agenda. Your legacy as a visionary who initiated the Regional Express Train and cross-country highway – the backbone of the country’s infrastructure – and as the voice for regional integration in West Africa is unquestionable. Your efforts have been remarkable and an inspiring example to us all.
Excellencies, Ladies and Gentlemen,
I would also like to acknowledge:
- Your Excellency Paul Kagame, President of the Republic of Rwanda, Chairperson of the NEPAD Heads of State and Government Orientation Committee (HSGOC), the proud pioneer of Africa’s Smart Cities Initiative which harnessed ICT infrastructure to provide a higher quality of life to Africans and made our cities more efficient, competitive and innovative and for your thought leadership. Your excellency, I am deeply grateful for your support and guidance.
- Excellency Aïmene Benabderrahmane, Prime Minister of the Democratic and Popular Republic of Algeria and Excellency Mostafa Madbouly, Prime Minister of the Arab Republic of Egypt, founding Members of NEPAD. Thank you for your presence at this Summit and your commitment to the mandate of AUDA-NEPAD.
- Your Excellency Moussa Faki Mahamat, Chairperson of the African Union Commission thank you for your intellectual guidance and leadership, and for giving myself and the AUDA-NEPAD team the opportunity for open and frank discussions.
- All honourable Ministers of Finance, Transport, Infrastructure, Economic Planning and Public Works from all corners of Africa
- Your Excellencies the Secretaries General and honourable representatives of all Regional Economic Communities
- Distinguished Members of the Diplomatic Corps and
- All Distinguished leaders of Development Financing Institutions, Private Sector Stakeholders and the PIDA Project Owners
- Ladies and Gentlemen - Good morning
Thank you all indeed for your commitment to building upon the vision of our forefathers and delivering upon the dream of world class infrastructure for Africa. Your presence at this Summit is a testament to your willingness to reflect upon and resolve the challenges that hinder the realization of Agenda 2063.
Excellencies, Ladies and Gentlemen, many of you have been part of the journey of progressing Africa’s infrastructure agenda forward including through the formulation of the Programme for Infrastructure Development in Africa (PIDA) and the inaugural Dakar Financing Summit which called for a paradigm shift in the way the resources of the continent are used.
Once again, we find ourselves in that privileged position where we have the opportunity to herald a new era in our approach to infrastructure financing.
In yesterday’s media briefing, Senegal’s Director General of Infrastructure, Mr Mamadou Camara, put it eloquently that just as the veins work together with other vessels to pump blood to our hearts - bridges, roads and railways are the lifeline of our economies. We cannot achieve integration and growth, trade, development, peace and security without infrastructure.
Over the last decade, we have borne witness to the adverse impact of poor infrastructure on Africa’s potential. As a continent, we had set out to reduce energy costs and more importantly increase access to electricity. Despite our best efforts, it is disheartening to note that more than 600 million Africans remain in the dark. At a national level, countries like South Africa are facing an energy crisis which costs the country between 86 to 230 million dollars a day, depending on the intensity of power cuts. As a result, the International Monetary Fund predicts growth for South Africa of only 1.2% this year and 1.3% next year. Additionally, the crisis will lower production, increase the cost of living, and reduce income for businesses, such as mining and retail, and affect crop yields due to reduced irrigation. Furthermore the pending 18.65% increase in electricity tariffs will increase the cost structures of South African companies immensely.
Other countries in the Sahel region like Chad for example, have amongst the lowest rates of access to electricity in Africa and in the world with less than 10% of Chadians having access to the national grid. Low access to electricity hampers Chad’s security, and significantly slows its growth and the much needed economic transformation.
And yet, theGrand Inga Dam, Kariba Dam and South Africa’s very own Gariep Dam, if developed well could offer adequate capacity to meet the demand of the entire continent.
Insofar as our commitments to reduce transport costs and boost intra-African trade, I am afraid to report that we have fallen short of our targets. It is shameful and frustrating that we have to leave the continent and connect through Dubai and Paris in order to travel within our continent. This is the paradox of the 5th liberty – while we allow foreign airlines full access to our skies our very own airlines are restricted and crowded out of business.
A recent mission to Congo Brazzaville reminded me of the limitations of cross-border exchanges on the continent. Ladies and Gentlemen, how is it that the Congo River remains unbridged to this day? How is it that the people of Congo Brazzaville and Congo Kinshasa do not have the necessary infrastructure that will optimize their socio-economic engagements? For example, we have Bangui and Zongo which are separated by the Ubangi River and don’t have access to bridges!
It is time for Africa to unshackle ourselves and build bridges that connect us.
Ladies and Gentlemen, talking about Africa’s paradox, I would like to remind ourselves that while we talk about ICT as a critical enabler for development, less than 10% of all data generated in Africa is kept in Africa. 90% is stored offshore because we don’t invest in data centres. In today’s world, data is the critical currency. We need to have control of our data, and if we don’t, we cannot control our future.
Excellencies, these are but a handful of examples which make a compelling case for why we need to draw our attention and resources to the ambition of an Africa with World-Class Infrastructure.
Taking cognizance of the gravity of these issues and the general inadequacy of traditional sources of finance for Africa’s infrastructure, it is high time that the continent adapts the best practices of the global infrastructure financing landscape.
Already countries such as Ethiopia, Senegal, Cote d’Ivoire, Rwanda Kenya and Egypt have mitigated the shortcomings of the current funding and delivery architecture and the limitations of Africa's debt as a percentage of GDP to diversify their infrastructure funding sources. We need to take lessons from countries who have tapped into innovative sources of funding to finance infrastructure projects. For example,
- Ethiopia where diaspora bonds are being used to finance infrastructure,
- Senegal where Islamic financial instruments such as sukuk are being used; and
- Kenya where 10% of institutional funds are used for infrastructure projects in addition to the placement of infrastructure bonds to the diaspora (I am sure that Honourable Raila Odinga, the African Union High Representative for Infrastructure Development in Africa, will share more on this in his presentation)
Through the African Infrastructure Guarantee Mechanism (AIGM) and the 5% Agenda, AUDA-NEPAD calls upon Member States to use at least 5% of their pension and sovereign wealth funds and assets for infrastructure development. This will enable us to drive both public and private investments in key sectors of the economy.
Excellencies, Ladies and Gentlemen, I am pleased to share that since the inaugural DFS, AUDA-NEPAD has actively developed instruments and tools that continue to fast-track the financing and delivery of PIDA projects.
To date, out of the 400 projects from PIDA PAP 1, 76 operational, 78 are under construction and 23 are in the tendering stage. The remaining projects are on their way to bankability. So, while PIDA PAP 1 showed good results, we could do more and should do more. The time is now!
Excellencies, our experiences as AUDA-NEPAD have enabled us to identify some of the bottlenecks which slow down the implementation and delivery of all PIDA projects for your reflection and resolution. These include:
- The lengthy intergovernmental negotiations on implementation arrangements which can take more than 3 years, and even longer in extreme cases;
- Not all Projects are allocated funding from the national budget and it is difficult to leverage other funding
- Project preparation can be lengthy due to lack of capacity in Member States
- The fragmentation of approaches from development partners, limited coherence or coordination creating inefficiencies, leakages and wastefulness in implementation
- Lastly, there is limited political will to resolve policy and regulatory bottlenecks that prevent PIDA projects from reaching financial closure. For example, our banking systems need to be connected to facilitate transactions across borders. We also need to harmonize our systems, policies and standards; for example, for rail infrastructure we have to move from metric to standard to connect!
Excellencies, it is my expectation that this Summit and Presidential Roundtable, will provide guidance on how we can resolve these issues and more importantly to recommend concrete actions on the priorities of the Summit - which are (1) Increasing and securing the necessary funding for Project Preparation and (2) Matching project financing needs to existing sources of financing. We desperately need to increase our efforts towards mobilizing more domestic resources, and optimize our existing instruments.
In this vein, I am most pleased to announce that after this roundtable discussion, AUDA NEPAD will sign a Framework of agreement with AFREXIM BANK to establish a joint project preparation facility. We believe that this will complement our existing NEPAD IPPF with the African Development Bank, and the AIGM that we have launched with AFDB, ISDB, DBSA, and other partners. I would like to seize this opportunity to thank all our partners and call upon all stakeholders present here today, to join us as we move towards increasing our capacity to excel in project preparation. Excellencies, we know that well prepared projects with the participation of investors, always win financing.
Ladies and Gentlemen, AUDA-NEPAD desires to mobilise 8 billion dollars for project preparation and a much needed 1 billion dollars for early-stage project preparation over the next 5 years. We need you and we need it now!
PIDA projects should be included in national development plans and budgets. We ask that the private sector to invest more in our infrastructure.
On a political front, we need political will and good governance. In my humble opinion, we need a Presidential Accountability Forum to encourage our leaders to champion our projects towards completion.
Excellencies, the political agenda should reflect the will of the people and not our sovereign desires.
In closing, we may not be able to change our history or our geography, but we can certainly change our future. We are all counting on you.