Eastern African countries need to initiate bankable infrastructure development and industrialisation projects if their growth aspirations are to be realised, experts at a regional meeting that is underway in Moroni the capital of Comoros, said on Wednesday.
The matter was highlighted during a panel discussion related to the role of infrastructure in furthering the region’s industrialisation agenda.
The emphasis is no longer entirely on the lack of finance, experts said. Fabienne Pehuet Lucet, an international energy, industry and infrastructure consultant, explained that a bankable project is one that is credible enough for creditors and lenders to believe in it.
“And there must be a clear vision of what is feasible and predictable. Don’t get things wrong; there are small countries that want to build nuclear plants, and that isn’t credible. Again, governments will change but a bankable project will remain,” she said.
Over 200 experts from across Eastern Africa have this week been in Moroni discussing catalysts and constraints to transformative growth in the region. The three-day session was jointly organised by the Economic Commission for Africa and the Government of Comoros.
Adeyinka Adeyemi, the Senior Inter-Regional Advisor, Head of Regional Integration and Infrastructure Cluster (NEPAD Focal Point), Capacity Development Division, ECA, told the meeting that Africa’s share in world manufacturing value addition has remained low, standing at 1.5 per cent in 2010, down from 1.9 per cent in 1980.
Manufacturing share in Africa declined due to weak infrastructure, governance, unfair competition, and policy implementation gaps, he said.
Adeyemi stressed that a competitive industrial sector has been hindered by poor infrastructure – energy, transport, communications, and others – resulting in high costs. He said adequate infrastructure does, among others, enhance economic activity and competitiveness by reducing transport costs, advancing Africa’s integration, and promoting strong and sustainable growth by reducing poverty.
Commitments to infrastructure development last year fell to $62.5 billion from $78.9 billion in 2015, he said.
Of that amount, $26.3 billion (40 per cent), came from African governments, and the rest from external funders. External finance fell because Chinese funding came down from $20.9 billion in 2015 to $6.4 billion in 2016.
He told The New Times: “The issue of bankability of projects is not new. Countries lack well trained and able technical people who know how to prepare and develop bankable infrastructure and industrialisation projects. Otherwise, the money is available but investors want to put money in a project that can be implemented and is profitable, later.’’
What key players are doing
Besides having bankable projects, Adeyemi’s advice is that regional countries need to watch what key players are doing. On the continent, he pointed out, South Africa, Nigeria, Morocco, Kenya and Egypt account for 58 per cent of FDI projects registered last year.
“By 2015, African countries will spend more than $180 billion on infrastructure. But by the same time period, Nigeria alone will have spent $77 billion on infrastructure,” he said, emphasising importance of investment climate which has to be improved through pertinent reforms.
The 21st meeting of the Intergovernmental Committee of Experts (ICE) of Eastern Africa, which ended, Thursday, is also a platform to share best practices.
Abiot Ashagre, the Manager of the Huajuan Industry Zone in Ethiopia, said his country seeks to become a middle income country by 2025.
“Our strategy focuses on industrialisation and export-led growth while targeting labour-intensive light manufacturing industries. We project to create one million jobs in five years and five million jobs in 10 years in the manufacturing sector,” Ashagre said.
Ethiopia’s priority sectors for manufacturing include textile and garmet, textile, agro-processing, and industrial parks.
David Niyonsenga, an Infrastructure Expert at the East African Community (EAC), admitted that without adequate infrastructure, the region’s manufacturing and industrialisation projects will not materialise.
Niyonsenga added: “The challenges in implementing our resolutions should be seen as opportunities for all east Africans.”