African governments need the right mix of funding for infrastructure projects and should not rely on only one institution or country.
This was the sentiment echoed around the Infrastructure Africa Business Forum hosted by the Gauteng department of infrastructure development on Tuesday, 1 September, in Sandton, Johannesburg.
Charles Kie, group executive of investment at Ecobank, told The Times there was increased interest globally in investing in African infrastructure. The continent attracted R60bn a year in such investment.
But the trick was the composition of the investment. About one-third of the $60bn came from China, another third from development finance institutions and the rest from commercial banks and other institutions.
Africa needed about $100bn a year to bridge its infrastructure gap and the composition of investment was not sustainable, Kie said.
"As you can see China is having its own challenges today. We therefore cannot rely on one country to finance one-third of the growth of the continent. There is a need to revisit the way we think about infrastructure financing," he said.
The African Development Bank has introduced the Africa 50 initiative to support the bankability and execution of projects on the continent.
But financiers, Kie added, needed incentives to put their money on the table.
A friendly business environment was the solution.
"It means having a transparent, tax-efficient, regulated framework and policy reforms that support the sustainability of long-term projects. Attractiveness will be higher once investors feel that this kind of environment is there but also stable enough in the long term to ensure that the investment made brings returns," said Kie.
South Africa invested R1tn in infrastructure in the five years to 2014. But this has not been enough to create the amount of employment needed by the economy. As one of its fastest-growing trading partners, China, suffers unprecedented economic turmoil, South Africa will have to find new finance for projects.
Mohan Vivekanandan, group executive of strategy at the Development Bank of Southern Africa, said the energy sector had great potential for investment by the government and private sector.
Metros could use some of their infrastructure to generate electricity and reduce dependence on Eskom, he said.
Vivekanandan warned against dependence on only one public-private partnership, proposing formulation of programmes in which various projects could be initiated.
Source: The Times
