Public-private partnerships are needed to close the infrastructure development gap in Africa

by MMC
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Public-private partnerships (PPPs) are key to closing the infrastructure development financing gap in Africa, and governments and the private sector should work together to create effective PPPs, said Dr Robert Lisinge, Acting Director of the Private Sector Development and Finance Division at the United Nations Economic Commission for Africa (ECA).

He was speaking on Thursday at a plenary session of the 2023 African Economic Conference on public-private partnerships aimed at catalyzing infrastructure development and innovative financing for industrialization in Africa.

“Financing infrastructure in Africa remains a major challenge facing many countries on the continent. To bridge the infrastructure gap, public-private partnerships are key to infrastructure development in Africa,” said Dr Lisinge.

He noted that the African Development Bank estimates that between $130 billion and $170 billion is needed annually for infrastructure development, leaving a substantial financing gap of $68 billion to $108 billion.

Traditionally, African governments and international partners like China have been the main investors in infrastructure. However, due to financial constraints, it is becoming increasingly necessary to consider public-private partnerships. These can leverage private investment, technology and expertise, thereby improving the efficiency and cost-effectiveness of service delivery.

According to Dr Lisinge, experience with PPPs varies from country to country due to differences in GDP, size and depth of the capital market. ECA works with African countries to improve their PPPs for infrastructure development, undertaking capacity building and helping them mobilize resources for infrastructure development.

Ms. Eniye Ogbebor, legal expert at the World Association of PPP Units and Professionals (WAPPP-Africa), said infrastructure development is essential for sustainable development in various sectors, including green energy, clean water and sanitation, in order to achieve the Sustainable Development Goals (SDGs). ).

“The infrastructure financing gap in Africa is around $100 billion. To bridge the infrastructure gap, there is a need to tap the private sector,” Ogbebor said, noting that PPPs provide financing options and leverage risk sharing, including financial and technical risks.

Dr. Arsène Honoré Gideon Nkama, PPP expert at the Faculty of Economics of the University of Yaoundé II and consultant on the ECA project in Yaoundé, Cameroon, said that Cameroon, despite its many problems, has an economic still resilient enough to promote PPPs.

However, the current business environment should be improved to promote more PPPs, while capacity building is also needed to help mobilize funds.

Mr. Getahun Moges, a retired energy sector expert and power sector regulator in Ethiopia, said there is an urgent need to address the infrastructure financing gap in Africa. “In the case of Ethiopia, the pace of development and private sector engagement have been slow and sometimes lead to unnecessary delays. Furthermore, it is difficult to understand PPP regulatory frameworks, feasibility and procurement regimes in the country,” he said.

Mr. Moges noted that development partners are supporting aspects of PPP development in Ethiopia through financing mobilization, technology transfer and capacity building.

The plenary session was held during the three-day African Economic Conference taking place in Addis Ababa, Ethiopia. Experts discussed how to attract private sector investments to PPPs, promote collaboration among stakeholders, identify necessary legal reforms, strengthen PPP skills and establish platforms knowledge for lasting support.

Distributed by APO Group for the African Development Bank (AfDB) Group.

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