RESOURCES/FEATURED STORIES

African Project Preparation Facilities Network Meeting

01 December 2014
African Project Preparation Facilities Network Meeting
It is estimated that sufficient infrastructure investments in Africa have the potential to raise the continent’s GDP by 2% per year. The PPIAF-funded study on Africa Infrastructure Country Diagnostic estimated that Africa’s annual infrastructure investments needs to 2015 are $48 billion per year, far beyond the reach of public sector financing alone. On the other hand, the Program for Infrastructure Development in Africa (PIDA)’s Priority Action Plan identified a pipeline of priority infrastructure projects totaling $68 billion from 2012 to 2020.

It is estimated that sufficient infrastructure investments in Africa have the potential to raise the continent’s GDP by 2% per year. The PPIAF-funded study on Africa Infrastructure Country Diagnostic estimated that Africa’s annual infrastructure investments needs to 2015 are $48 billion per year, far beyond the reach of public sector financing alone. On the other hand, the Program for Infrastructure Development in Africa (PIDA)’s Priority Action Plan identified a pipeline of priority infrastructure projects totaling $68 billion from 2012 to 2020.

With such significant investment needs, the role of the private sector in helping to close the financing gap is well established. However, the lack of a strong pipeline of well-prepared, bankable projects is widely recognized as one of the key constraints to unlocking private sector finance for infrastructure development in Africa. It was in this context that PPIAF joined the 10th Infrastructure Consortium for Africa’s (ICA) Annual Meeting in Cape Town, South Africa from November 25-27, 2014. The ICA meeting included a plenary session on the newly established Project Preparation Facilities Network (PPFN)  and a one day conference on “Effective Project Preparation for Africa’s Infrastructure Development”.

Based on the challenges of project preparation, the PPFN was established to enhance coordination between project preparation facilities to promote knowledge management and dissemination, share best practices, and cooperating to effectively sequence interventions through a “tunnel of funds” approach.  During the PPFN meeting PPIAF presented the new strategy  to facilitate the preparation of bankable projects and shared highlights of PPIAF’s current pipeline of activities.

Following the presentations made by PPIAF and the other project preparation facilities, there were two main takeaways from PPIAF’s perspective:

  • PPIAF’s upstream focus is almost unique among the project preparation facilities. The majority of the facilities focus on downstream project preparation. There was consensus among PPFN participants that insufficient attention and funding is being made available for upstream activities. In recognition of this, it was also announced that PIDA is establishing a Technical Assistance Facility (TAF) that will operate upstream in a similar space to PPIAF. It will be vital for PPIAF and the PIDA TAF to coordinate closely moving forward.
  • There is currently insufficient coordination among project preparation facilities in Africa, leading to inefficient allocation of scarce resources. More coordination is necessary to plug gaps and eliminate overlaps.

The one day conference on “Effective Project Preparation for Africa’s Infrastructure Development” brought together representatives from national governments, bilateral and multilateral donors, regional economic communities, project preparation facilities, and the private sector. The conference focused on the challenges inhibiting the development of bankable infrastructure projects in Africa. The major takeaways from the conference included:

  • Implementation of the PIDA Priority Action Plan is currently behind schedule. Some of the causes of this lag were highlighted to be a disconnect between national infrastructure priorities and the PIDA Priority Action Plan pipeline; a lack of adequate project preparation; low institutional capacity; and complexity of regional projects.
  •  Increased private sector role in early stage project development is inhibited by: lack of cost recovery, transparency and process issues (particularly around unsolicited proposals),  and centralized government control of national infrastructure planning.

The conference concluded that improving the efficiency of project preparation in Africa to maximize the impact of scarce resources will require:

  • National ownership of the project preparation process to ensure a connection between projects and national development priorities;
  • Efficient coordination between project preparation facilities and matching of different financing sources and forms with the appropriate project preparation stage;
  • Forging meaningful partnerships with the private sector to leverage additional sources of project preparation funding and expertise.