African countries now finance a significant share of their infrastructure projects with domestic resources, after such resources accounted for 47 percent of the total amount expended on projects in 2012, Carlos Lopes, Executive Secretary of the UN Economic Commission for Africa (ECA), said here Wednesday.
“Contrary to common belief, our countries are increasingly using domestic resources to finance infrastructure projects,” Lopes told the 30th session of the NEPAD (New Economic Partnership for Africa’s Development) Heads of State and Government Orientation Committee.
He told the Committee that infrastructure development could enhance the ability of African countries to establish competitive industrial sectors and promote greater industrial linkages.
“Closing Africa’s infrastructure deficits could increase per capita growth by 2 percent a year and increase productivity of firms by as much as 40 percent,” Lopes said, attesting that road improvements in rural areas have made huge impacts in doubling agricultural production.
Lopes briefed the Committee on the task it had assigned the ECA and the NEPAD Agency to collaborate with other partners in a study on domestic resource mobilisation in Africa, with particular regard to funding regional projects.
In their report, ECA and NEPAD identified “the huge potential for domestic resource mobilisation” and made recommendations for better tax collection, securitisation of remittances, credit guarantee schemes, and the establishment of an Africa Infrastructure Development Fund.
Lopes cautioned African leaders not to lose sight of factors that reduce the attractiveness of regional infrastructure projects to investors, which pertain mainly to risk and complexity.
Elaborating on risk, the ECA chief mentioned, as an example, the trans-African highways network that was conceived in the early 1970s but today, more than 40 years down the line, missing links and substandard sections still constitute 20 percent of the network.
As another example, he cited the completion rate of projects in the NEPAD Infrastructure Short Term Action Plan (STAP) which was equally low across all sub-sectors: about 15 percent for energy, 17 percent for transport, 11 percent for ICT, and 9 percent for water and sanitation.
“The evidence before us is that the most challenging stage of project preparation is establishing the enabling environment. This is in the sense of identifying legal, regulatory and institutional impediments and overcoming them,” Lopes said.
He also noted that red tape and bureaucracy were bottlenecks in project implementation and ranked equally with lack of finance.
PANA reports that the Committee’s meeting was held under the theme: ‘Unblocking policy, legal and regulatory obstacles to stimulate investment and enhance infrastructure project bankability’.