Mapping of Development Partners Support to Leverage Investment to Africa s infrastructure

Transcription

1 Mapping of Development Partners Support to Leverage Investment to Africa s infrastructure Dambudzo Muzenda, OECD Directorate for Finance and Enterprise Affairs Investment Division

2 AfI Project Background Project to map support by bilateral and multilateral development partners for infrastructure in Africa: -Including the enabling environment -Financing instruments: investment funds, export credits, guarantees, blending How can this support leverage private investment?

3 Funding for Sub-Saharan Africa s Infrastructure 6% 21% 8% 65% Domestic sources Private sector Non OECD countries ODA Current spending is US$45 billion but US$93 billion is needed, leaving a gap of US$48 billion Source: World Bank/ AICD, 2009

4 Some Key Findings Aid to Africa s infrastructure : from USD 5.5 billion in 2006 to USD 9.2 billion in % of aid to Africa s infrastructure is from WB, EU institutions, AfDB; Japan, Germany and France Sectoral distribution: transport 42%;W&S 29%; energy 26%; ICT 3%

5 Leading Donors

6 Key Findings There are different leading donors for hard and soft; for each sector; and for North Africa and SSA Significant aid fragmentation several donors providing a small percentage of the total Main recipient countries: Morocco (13% of total), Egypt, Ethiopia, Tunisia, Tanzania

7 Enabling Environment Legal, policy and institutional framework that supports infrastructure A sound enabling environment can: -reduce inefficiencies in public operations -ensure long-term planning -make projects run better -make use of natural resources fully -attract private investment

8 Donor Support to Enabling Environment Roughly a ¼ of aid to Africa s infrastructure is allocated to the enabling environment Sectoral allocation: water and sanitation (37%); energy (33%); transport (28%); ICT 2% Top recipient countries: Morocco, South Africa, DRC, Nigeria, Egypt

9 Other Financing Instruments Development partners also make use of other interventions to support infrastructure in Africa -Investment funds -Guarantees -Export credits -Blending These can help to attract private investment in Africa s infrastructure

10 Investment Funds DFIs provide capital to establish a fund; the fund is privately managed and invests directly in infrastructure projects or through intermediaries Promotes investment in risky projects or countries that are perceived to be risky Evidence that funds have strong leveraging impact on private investment

11 Blending Combining concessionary financing (pure grants and concessional loans) with debt financing from IFIs or market sources Example is the EIB s Infrastructure Trust Fund Facilitates investment in projects with high social impact but low financial returns

12 Guarantees Offered by bilateral and multilateral agencies Covers investors against commercial and political risks Bring in investors; improves loan terms; investors have to show development impact Donors have different views on guarantees Presents accounting difficulties

13 Export Credits Offered by ECAs in donor countries Normally restricted to investors from the home country Not much data on how they are used for infrastructure projects But can make a difference to attracting investors and covering their risks

14 Other Development Partners Africa s emerging economies: China, India, Arab Funds, Brazil, playing a big role in financing infrastructure projects China now the biggest contributor to Africa s infrastructure: USD 9 billion in 2010 USD3.3 billion from Arab Funds African stakeholders think emerging partners have a competitive advantage in infrastructure

15 China s Investments in African Infrastructure Mix of non-concessional loans, equity finance and concessional loans to Chinese enterprises Making use of resources-for-infrastructure deals in many countries e.g. Angola and Ghana China-DAC Study Group promotes learning on China s development experience for Africa and its development partners

16 Thank you Contact: Infrastructure Policy Officer, Directorate for Finance and Enterprise Affairs (Investment Committee Secretariat) Senior Policy Analyst, Development Co-operation Directorate (Development Assistance Committee Secretariat)