Geneva, March Capacity Building for Effective Infrastructure Regulation

Transcription

1 CONFÉRENCE DES NATIONS UNIES SUR LE COMMERCE ET LE DÉVELOPPEMENT UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Multi-Year Expert Meeting on Services, Development and Trade: The Regulatory and Institutional Dimension Geneva, March 2009 Capacity Building for Effective Infrastructure Regulation by Smunda MOKOENA Chairperson AFUR

2 African Forum for Utility Regulators Forum Africain pour la réglementation des services publics UNCTAD CONFERENCE CAPACITY BUILDING FOR EFFECTIVE INFRASTRUCTURE REGULATION SMUNDA MOKOENA AFUR CHAIRPERSON

3 INTRODUCTION Africa, particularly Sub Saharan Africa, is faced with three inter related capacity gaps in infrastructure development: Physical capacity Financial capacity Institutional and Human capacity 2

4 Presentation Outline State of infrastructure in Africa : physical capacity Infrastructure Needs and financial requirements : financial capacity Infrastructure regulatory gap: institutional and human capacity What role for the AFUR to fill the capacity gaps? The Way forward Introducing AFUR 3 3

5 STATE OF INFRASTRUCTURE IN AFRICA physical capacity access to electricity in Africa is only 30 percent,(12% in rural areas) compared to over 75% for other LDCs Access to water and sanitation is about 65% compared to 80 percent for other LDCs; access to roads is 34 percent compared to 50% for other LDCs, the penetration rate for telecommunication is less than 13 % compared to 40 % in other LDCs This situation has resulted among others in: reduced share of world trade,lack of international competitiveness, and reduced flow of Foreign Direct Investment (FDI) Africa s low rates of economic growth, Pervasive poverty 4

6 Insufficient economic growth SSA and the challenge of economic growth: African economies continue to enjoy sustained economic growth rate of: GDP growth 5.2% 5.3% 5.7% 5.4% 3.5% (IMF projections) However, the severe slump in global demand may lead to a collapse in commodity prices and economic downturn in SSA On the other hand, from 1998 to 2006, only five countries in Africa (Angola, Chad, Equatorial Guinea, Mozambique and Sudan) grew at 7 8 per cent growth rates necessary for halving poverty by 2015(UNECA, 2007). 5

7 SSA and the challenges of the MDGs SSA has been singled out as one region that is unlikely to meet the target by 2015 at current trends: 1990/ poverty 44,6% 44% education 53% 64% health: SSA faces the spread of HIV/AIDS and other deadly diseases, particularly Malaria 6

8 INFRASTRUCTURE NEEDS IN AFRICA financial capacity To become competitive, realize its productive potentials, and reduce poverty, SSA needs massive improvements in infrastructure : The report of the Commission for Africa (Blair) estimated the continent s needs at $20 billion a year investment ; or 5% of GDP to achieve the MDGs, and an additional 4% of GDP should be added for operation and maintenance to ensure sustainability of infrastructural investment A more recent and comprehensive study based on the collection of country-level data the Africa Infrastructure County Diagnostic (AICD) undertaken by the World Bank shows that annual infrastructure investment needs in Africa to be about $40 billion per year, of which more than 50% for power; and maintenance and operating costs of the same magnitude This figures should be compared to Brazil four year plan worth $300 billion to modernise roads, power plants and ports; and India five year plan around $500 billion. Source: Infrastructure Consortium for Africa Annual Report

9 MEETING THE FUNDING REQUIREMENTS Important initiatives for infrastructure development in Africa are underway, including amongst others: NEPAD Infrastructure Development Programme with the technical support of the AfDB under the NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF): with emphasis on private sector ; Infrastructure Consortium for Africa (ICA): The ICA is one of the major outcomes of the G8 response to the NEPAD infrastructure development programme. The ICA Secretariat is hosted by the African Development Bank. It was inaugurated in October The total commitments under ICA is on the rise from $7.5 billion in 2006, to $12.4 billion in 2007, or an increase of 61% The EU-Africa Infrastructure Trust Fund (the Trust Fund) launched in 2007 is a major new effort to increase in a coordinated manner the resources dedicated to regional infrastructure in Africa, particularly to facilitate interconnectivity andregional integration on the African continent in the energy, water, transport and (tele)communications sectors 8

10 MEETING THE FUNDING REQUIREMENTS (continued) the China-Africa Development Fund managed by the China Development Bank was designated to manage the $5bn to support Chinese Investments in Africa. India also is emerging as an important player in infrastructure development in Africa with Pan Africa E-Network aimed at developing Africa s ICT by eventually connecting all 53 AfricanCountries to a satellite and fibre-optic network. 9

11 MEETING THE FUNDING REQUIREMENT (continued) PRIVATE INVESTMENTS The experience with the privatization process seems to be rather disappointing experience: While privatization and competition in infrastructure increase efficiency and improve average consumer coverage, it could eventually hurt and exclude the poor; On the other hand, the flows of private investments fell short of expectations for Africa 10

12 Source:PPIAF Database 11

13 Private investments Notwithstanding this mixed picture of privatization, Africa is in bad need to attract private finance to help fill the infrastructure development gap; In this regard Public-Private Partnerships are increasingly seen as an essential institutional mechanism to design, build, finance and/or operate infrastructure facilities. However, the private sector is often deterred by the high risks and the regulatory environment of SSA 12

14 CAPACITY CHALLENGES IN AFRICA Important pre-requisites for a successful Public Private Partnership program include: a clear policy framework, a legal system that ensures contracts are effective and enforceable, a long-term investment plan, and an operating framework within government to properly manage the PPP process. 13

15 Institutional and human capacity challenges in Africa The quality of regulation matters for private investment. Hence, the government needs to develop strong regulatory capability to protect consumer while reassuring investors There are a few common principles that constitute the foundations of infrastructure regulatory bodies: coherence, independence, accountability, predictability, transparency and competence 14

16 Institutional and human capacity challenges in Africa (continued) Although some African countries have frameworks in place, the functioning and effectiveness of many recently created regulators is still a work in progress because of a number of capacity shortcomings that include amongst others: limited technical expertise: lack of knowledge and trained regulatory staff, especially of economists, accountants and lawyers skilled in regulatory policy analysis and contract design; most utility regulators in Africa have only been in existence for less than 10 years weak governance environment: inadequate secondary legislation; lack of predictability and consistency; unclear powers, and lack of clarity between Policy Makers and Regulators on the regulatory decision making process; poor investment climate for doing business Introducing 15 AFUR 15

17 Regulatory Commitment and Institutional Capacity 16

18 The case for independent regulator The previous figure shows that the system of Independent Regulator may not be automatically valid in all circumstances it requires the combination of capacity and commitment, and the specific country context should also be taken into consideration 17

19 Capacity challenges at Regional level In spite of the spirit of the Infrastructure development in the treaties of all the RECs, there are still gaps with respect to aligning sector policies, designing regional master plans, harmonizing regulatory regimes and investment codes, and mobilizing investment resources. Thus, raising the cost of doing business and impeding factor mobility, investment, and competition 18

20 WHAT ROLE FOR AFUR? Organization of the AFUR Objectives of the AFUR Role in Capacity building 19

21 African Union, NEPAD & AFUR AU formed 2001 New Partnership for Africa s Development (NEPAD) - The AU socio-economic programme for the continent: Clause 110 of the Framework Document of NEPAD establishes the African Forum for Utility Regulation and Regional Regulatory Associations (e.g. RERA, AWAUR, CRASA, WATRA, ERAERA) Introducing 20 AFUR 20

22 ALGERIA NIGER AFUR Membership MAURITANIA UGANDA MALI KENYA SENEGAL TANZANIA GAMBIA MALAWI COTE D IVOIRE GHANA ZAMBIA ZIMBABWE TOGO NAMIBIA NIGERIA SOUTH AFRICA CAMEROON LESOTHO Introducing 21 AFUR regulatory agencies from 21 countries + 7 observers from 5 further countries

23 Capacity Building Introducing 22 AFUR Harmonisation of Regulatory Frameworks Information Sharing AFUR Objectives Joint Mobilisation Promotion of Autonomous Regulation & Utilisation of Financial Support Promotion of Sound Relationships with stakeholders Support to African Initiatives 22

24 Advisory Role ADVISORY ROLE IN INSTITUTIONS OPTIONS FOR REGULATION, ADVOCACY FOR BEST PRACTICES IN INFRASTRUCTURE REGULATION AND CONDUSIVE INVESTMENT CLIMATE 23

25 institutions options for regulation 24

26 AFUR ROLE IN Capacity Building 25 Organizing regulatory training courses bringing together participants from different parts of the continent, including fro experience sharing Conducting skill training in a number of critical technical areas Networking with relevant training institutions in Africa and abroad that serve as centres of regulatory training and other capacity building services Working on establishing regulatory training centres in the continent in particular, in West, Central and Eastern Africa. 25

27 THE WAY FORWARD 26 STRENGTHENNING REGIONAL REGULATORY CAPACITY INCLUDING AMONGST OTHERS: Advocacy for Increasing integration of infrastructure systems: power, telecom, transports etc. Harmonizing regulatory principles and market structures for integration of infrastructure Sharing of expertise, experiences & information (gaps to be filled, contradictions to be removed, etc.) Strengthening the AFUR institutional and human capacity for more visibility and efficiency 26

28 Thank You 27