Expected aid cutbacks in developed nations and a push by some African governments to tackle yawning infrastructure gaps by public-private partnerships present a real opportunity for investors on the continent, the World Bank private sector arm said on Friday.
The regional head of the International Finance Corporation also said that Central African nations have generally been slower than those in West Africa in pushing through reforms needed to attract business, but relative stability had created openings for providing power, roads and healthcare. World Bank studies have found that some $93 billion is needed every year to address Africa's infrastructure needs.
Yolande Duhem, head of the IFC's operations in West and Central Africa said the private sector alone cannot bridge the gap, but a toll road being built to ease the commute for Senegal's capital, Dakar, could be a model for the future. "I think it is setting the tone for opening up these types of structures, or replicating them in other countries." The 230 million euro project, involving the IFC, regional development and commercial banks and France's third-largest construction group Eiffage , is due to end costly and time-consuming traffic jams in and out of the seaside city.
Duhem said economic uncertainty in Western Europe and North America was likely to squeeze traditional sources of funds, while resource firms would also continue to have a role to play in developing infrastructure in return for mines, for example. But she said there was no reason why the private sector could not help develop infrastructure in the same way it has revolutionised telecommunications in Africa, where mobile phone access multiplied tenfold to 40 percent between 2002 and 2008.
"I see the lack of sufficient private sector investments in this sector as an opportunity ... in as much as you do see this continuity in terms of the push towards private public partnerships in the region," she added. The IFC's focus in West and Central Africa is similar to that on the rest of the continent: improving the investment climate and access to finance, especially in infrastructure, health, education and agribusiness.
Duhem also noted the emergence of independent power producers: "We have more in our pipeline today than we had in the 2002-2009 period." According to the IFC, just 5 percent of sub-Saharan Africa's power production capacity, which is around 60,000 megawatts, is generated by the private sector while in Latin America's top six economies the figure was around 50 percent.
Duhem said the IFC's involvement in ContourGlobal in Togo and the Dibamba Power Development Company in Cameroon were examples of projects that could be replicated elsewhere. "We see an acceleration. It is still not enough to bridge the gap but if you have this type of progress (showing) the partnerships can work it is an opportunity," she added.
The IFC has targeted involvement in projects to increase installed power generation by 1,500 megawatts between 2012 and 2016. It expects African investment to gather steam as the number of conflicts eases and countries start to show improved economic governance and sustained, albeit from a low base, business reforms over a number of years. Duhem said Nigeria could play a pivotal role in economic growth in the wake of successful polls earlier this year, and, having recovered from its post-election conflict, Ivory Coast was set to become again a key driver for the region.
While praising nations like Mali, Burkina Faso, Cape Verde and Ghana for reforms, Duhem said oil-rich Central Africa was lagging. "(It) is probably a part that needs to collectively do more and where ... the pace of reforms has been slow." "I am convinced that this momentum is putting pressure the countries that have not reformed," she said.