Kampala, Uganda, February 23, 2017 (ECA) - Inadequate infrastructure continues to be a stumbling block to Africa’s economic and structural transformation, says Soteri Gatera, Chief of the Industrialization and Infrastructure Section at the Economic Commission for Africa (ECA).
Speaking at the joint East African Community Heads of State retreat on infrastructure, health financing and development in Uganda, Mr. Soteri said inadequate infrastructure was arguably the single biggest impediment to industrial development on the continent.
Mr. Soteri’s session during the EAC Ministers Forum that was convened in preparation of the Heads of State meeting the following day, focused on infrastructure and energy development and financing in Africa; the current and future trends.
He said it was sad that close to 700 million people on the continent did not have access to modern energy, most of them in rural areas.
“This indeed negatively affects their livelihoods, economic activities, education, health and so forth,” said Mr. Soteri, adding additional power infrastructure has not kept up with population growth.
“Without adequate energy, African countries cannot reach their developmental targets, and could remain in perpetual state of underdevelopment,” he said.
“As energy, particularly electricity is critical in powering all economic sectors in Africa, it is important that we get policies, actions and measures right first time. Increasing electricity generation, and transmission remain big priorities up to year 2040.”
He cited Kenya as a success story in electrification, adding this demonstrates the possibilities for African power sectors to improve their generation and distribution performance. Kenya has in recent years aggressively pursued connections, having nearly doubled electricity access from 25 to 65 percent of households in four years.
There are many challenges facing investments in Africa, said Mr. Soteri, but two outstanding challenges are the plethora of policies and laws and regulations which inhibit private sector investment and curb its enthusiasm, and specific risks associated with investment in infrastructure in Africa.
“For the first challenge, ECA has developed a continent wide model law to enhance investment in transboundary infrastructure,” he said as he explained the aims of the law which include facilitating private sector investment and financing in infrastructure projects; ensuring transparency, efficiency, accountability and sustainability of infrastructure projects; harmonising cross border laws and regulations and promoting intra-African trade and open markets to international trade.
Mr. Soteri said Africa could fund its infrastructure priorities with domestic resources. For example, Africa collects $600 billion annually from domestic taxes; $10 bn in remittances; has banking reserves estimated at about $65 bn; international reserves of over $ 400 bn; $60 bn that is lost annually through illicit financial flows; stock market capitalisation estimated at $ 4 trillion; and its fast growing equity markets of which with Kenya’s valued at $ 20.6 bn.
“The five percent Pension Funds campaign by NEPAD and ECA has to be supported and taken up by member States pension funds for rapid delivery of infrastructure assets of regional nature,” he added.
Mr. Soteri said the long term vision for infrastructure development in Africa can only be realised if governments:
- Streamlined and accelerated infrastructure project pipeline readiness and attractiveness thereby enhancing bankability of infrastructure projects.
- Addressed key gaps that currently prevent institutional investors from engaging more fully in infrastructure
- Provided a multi-stakeholder platform for parties involved in infrastructure investment to help capture the full transformational potential of megaprojects
- Provided a platform for blended finance institutions to mobilize investments
- Facilitated the development and acceleration of the emerging capital markets
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