Launched amid much fanfare by President Thabo Mbeki of South Africa and other continental luminaries in 2001, the New Partnership for Africa’s Development (NEPAD) promised a fresh era of progress through a dynamic agency freed from the constraints of Africa’s tired leadership structures.
With lofty goals to "eradicate poverty, promote sustainable growth and development, integrate Africa in the world economy, and accelerate the empowerment of women,” the agency capitalised on the excitement of an international community transfixed by the UN’s Millennium Development Goals. "We are essentially saying that surely the time has come that as the African continent we should say [there must be] an end to the underdevelopment of the continent, an end to the poverty and there must be an end to conflict,” Mbeki boldly proclaimed in 2002.
Today, NEPAD’s Planning and Coordination Agency has become the African Union Development Agency and is attempting to carve out a new role for itself in a very different landscape.
With Mbeki and other high-profile backers retired from the scene, chief executive Ibrahim Mayaki, a former prime minister of Niger, faces a battle to prove NEPAD’s relevance on a continent where multi-billion dollar infrastructure schemes and the private sector are seen as the crucial drivers of development.
"The idea is to have an entity which takes care of the implementation processes regarding development,” Mayaki tells African Business in New York.
"When we agree on a common strategy in infrastructure, with priority projects, the role of this agency should be to look after how those projects are being implemented. Take the Lagos-Abidjan corridor – our role is to support ECOWAS in building a specialised entity, which will manage the corridor, facilitate the way its going to work by providing expertise, and linking them to potential financiers, particularly in the private sector.”
If that role seems diminished compared to the aspirational initial goals of NEPAD, it’s because results-based implementation focused on bankable projects has supplanted the utopianism of one-stop schemes to guide Africa’s development. Mayaki says the role of NEPAD has been gradually changing over time to accommodate this new reality, and argues that the transition of the agency to the African Union offers an ideal funding structure to pursue its renewed mission.
"Up to now, 80 per cent [of the budget] was funded by donors. That ratio is going to change… what the AU has been giving us has been multiplied ten-fold. We will need to be more accountable vis-à-vis member states. Previously we were accountable to donors… [but] the ball game is changing and giving us more autonomy to decide our own priorities and operations.”
Armed with new funds, Mayaki says that one of the organisation’s key roles will be to work with member states and the continent’s regional integration organisations to initiate cross-border infrastructure projects. But as well as focusing on countries with a pipeline of bankable schemes, NEPAD will also have to encourage investment in nations where planning remains rudimentary.
"These projects need to be bankable, they have to be going through feasibility studies. But now you have a political dimension – we are using members states’ money and member states want a geographical equilibrium of projects. We can’t say we are going to ignore Central Africa and choose East Africa because they have more bankable projects.” With such huge funding demands – the African Development Bank estimates an infrastructure shortfall of $92bn per year on the continent – NEPAD’s most important role will be facilitating the arrival of the private sector. In essence, it will have to convince investors that regional projects offer a decent return on a safe investment.
"Up to now we knew how to do national infrastructure projects but we hardly knew how to do regional projects because the management systems are different, and coordination between countries is new. Building public-private partnerships on cross-border projects is radically different. So we’re in a learning curve. But evidently, you will move towards private money and public money, a kind of blended finance. Our role is… to lead them to financial close.”
With limited private funds chasing a large number of potential projects, NEPAD is attempting to unlock new project financing. In an event on the sidelines of the UN General Assembly in New York, the agency convened African sovereign wealth funds and pension funds in a bid to persuade them to deposit a greater proportion of their estimated $1 trillion in assets under management in African projects. NEPAD has set a modest target of 5 per cent.
"How can we work together to invest more than 1%? We will need to do our homework by bringing bankable projects in environments where doing business is good. That will allow you to think differently about risk – you might have a little more risk, but higher returns,” he insists. Another potential source of funds is provided by China, whose promises of $60bn for Africa at this year’s FOCAC pricked up the ears of NEPAD. "Our role as an AU development agency is to go to the Chinese and say OK, you’ve put $60bn on the table, so how do we implement that?” he asks.
"We are pushing the Chinese in three directions, the first is beyond thinking national and bilateral and to think regional. The second is that we have to be very careful with debt. You have to reflect very well to which usage you will put that debt. Point three, all African countries are convinced that we do not want our interaction based on taking raw materials, we need a transfer of technology.”
Whether the Chinese are interested in consulting NEPAD is one of the many open questions that could determine the relevance of the organization as it transfers to the AU. But while challenges lie in wait, Mayaki is convinced that NEPAD has a new lease of life. "It will not be a revolution. I don’t think from one day to another we’ll suddenly turn ourselves into an excellently working organization. We have to be cautious, it’s an arduous process, a construction process and we need to have solid foundations. It’s a shift from a VW to a kind of Ferrari. We’re shifting to another level of implementation.”
Agencies
The article was first run in the African Business Magazine.