Dakar Financing Summit: Africa’s ailing infrastructure in the spot light
Johannesburg - Africa’s ailing infrastructure will take centre stage at the second Dakar Financing Summit which takes place from February 1-3 in Senegal and organisers hope they can rally investment support for the continent’s priority infrastructure projects.
The summit aims to bring together key decision-makers from the public and private sectors to raise funds for projects that are vital to the continent’s development. A recent World Bank report showed that the poor state of infrastructure in many parts of Africa reduces national economic growth by two percentage points each year. This causes business productivity to decline by up to 40%, making Africa, despite its enormous mineral and natural wealth, the region with the lowest levels of productivity in the world.
The summit, hosted by African Union chair, President Macky Sall of Senegal, is especially timely as African countries try to rebuild from the Covid-19 pandemic, which threatened to erode much of the region’s economic gains achieved over the last decade. The summit will include roundtables with African leaders, executives from major international and African banks, the African Solidarity Fund (ASF), the AfDB, the World Bank, other multilateral development banks, private equity firms and infrastructure fund managers.
Under the theme, “Maintaining the momentum towards world-class infrastructure in Africa", the summit seeks to catalyse public, private and blended funding for identified priority infrastructure projects. Specifically, it aims to generate and galvanise private sector interest in specific regional infrastructure projects and to mobilise substantial funds dedicated to the preparation of these projects.
African Union Development Agency Chief Executive Officer, Nardos Bekele-Thomas said the continent is in desperate need of money, in order to complete infrastructure projects in various countries.
“Together with project sponsors from AU member states, we will present specific projects focusing on corridor development and trade and investment promotion. This will enable us to hold robust exchanges and come up with practical approaches for the financing of these priority projects which are so critical for Africa’s economic integration”, he said.
The summit, which will be opened by AU chair, Macky Sall, said equipping Africa with world-class infrastructure is a continental goal enshrined in AU’s Agenda 2063.
“Infrastructure development is a driver of progress for Africa and a key enabler of sustainable and inclusive economic growth. Its pivotal role in improving the continent’s competitiveness and integration into the global economy is unquestionable. While inadequate infrastructure can be a major obstacle to Africa's long-term growth,” he said.
Despite progress in interconnecting regional infrastructure on the continent since the creation of the African Union and the launch of its NEPAD programme in the early 2000s, Africa still faces serious infrastructure gaps in all sectors, both in terms of access and quality. Only 38% of Africa's population has access to electricity, internet penetration is less than 10% and only a quarter of Africa's road network is paved. Studies have shown that poor roads, rail and port facilities increase the cost of goods traded between African countries by 30 to 40 per cent, undermining private sector development and foreign direct investment (FDI) flows.
In 2021, the AU Assembly of Heads of State and Government adopted the second PIDA Priority Action Plan (PIDA PAP 2), a basket of 69 projects with an estimated investment of $160 billion, covering the energy, ICT, transport and water sectors. President Sall said the projects have to continue but the lack of funding of concern. Some of the projects include roads in Algeria, Morocco and Tunisia.
Solar power plants are planned for Libya while Angola and Botswana are hoping for more data centres. Closer to home, South Africa will have a strong focus on water resources, provided the money can be raised.