Exclusive interview with Paul Runge, MD of Africa Project Access. On 17 May, he will address the Finance and Investment Forum at African Utility Week on “Upcoming power projects in African economic hotspots”.
What are the most common mistakes/misconceptions about projects in Africa?
The emphasis should be on project intelligence rather than just information. It is vital that suppliers and investors know what is really going on in a market and who the real role players and decision-makers are. The homework, such as verification of in-market partners, must be done.
It is essential that all those along the project ‘food chain’ from suppliers to contractors to designers to consultants have a grasp of development finance. The expression “a project without money is a piece of paper” applies here. The numerous sources of finance from donors to development finance institutions to equity and specialised funds to export credit facilities should be identified, understood and utilised. Exporters do not make sufficient use of their financial instruments when they enter African markets that are orientated towards development finance.
It is also very important that the full logistics chain be understood and the appropriate actions taken. Africa’s generally poor transport infrastructure means greater reliance on logistics and supply chain service providers. A break in the chain can mean expensive delays and even cancellations.
The nature of African projects is changing from government and social projects to private commercially viable initiatives. The number of unsolicited bids made by consortia that present ‘one-stop’ solutions is increasing. This means that companies should ‘hunt in packs’ by teaming up with relevant partners providing the requirements of the project as a whole from preparation to design to construction to supply. Financial and logistics partners are relevant for all stages of the project. The Chinese and others secure projects in our continent because they supply holistic, comprehensive solutions including finance.
You are focusing on the social development component of projects for African Utility Week – what will be your message at the event?
Even remote site projects are not taking place in a vacuum. Project implementers have to go beyond the minimum social impact requirements. African governments are increasingly insisting on local beneficiation in the form of local supply and skills development. Where local communities have not been in tune with the projects and their objectives, there have been strikes and even riots, which have negative implications not only for the project company but for the host government too.
What makes a social development project successful?
Strong local partners who understand the operational and socio-political environment will be of great benefit in avoiding problems. Resource companies working in the same area on the same resource should join forces and present a common plan and front to the government and local communities. The pooling of resources will enable better analyses of the current and potential situation by for example, identifying labour requirements that can be recruited from local communities. Their ‘buy-in’ and even support is essential. There are a few technical assistance agencies, such as the GIZ of Germany, who have considerable experience and expertise in the local social dynamics and should be approached for advice.
What kind of projects are you involved in currently?
I am preparing a mission to investigate the power sector in Ethiopia. My colleagues and I continue to undertake market investigations into cement supply and distribution. I am continuing to focus on the new oil and gas port hubs being established in numerous African countries and will soon be visiting San Pedro in Côte d’Ivoire.
Renewable energies remain a major priority and we are busy with a number of investigations into this area. Communications hubs such as Djibouti will be investigated in the near future. My associates and I are currently compiling a basic compendium of incentives, products and services available to South African exporters so that they can better understand and utilise them.
Any exciting projects/success stories you can share with us?
Groundwork in central Africa led to the decision by a major industrial company to establish an integrated cement plant. A major European development finance institution prioritised renewable energy projects identified from our in-market visits for funding. Projects were accessed by a number of our clients as a result of our project early alert system and methodology.
Many of our success stories cannot be shared due to client confidentiality.
You have done some interesting work in Africa – what is your career background that led to your current position?
I represented South Africa at the Paris Club rescheduling of the debts of Malawi, Zambia and other countries. Whilst stationed in Paris in the early 1980s, I was Project Liaison Officer for projects in Gabon. I also spent two years supervising projects in the Cape Verde islands, notably the rehabilitation of a desalination plant on Sal Island.
As Head: Africa at the South African Foreign Trade Organisation in the late 1980s and early 1990s I led the first official South African business missions to numerous African countries. During a spell with the South Africa Foundation, I arranged major missions of South African captains of industries to eight African markets.
Having established Africa Project Access in 1995, I began focusing on specific resource-based economic ‘hotspots’ in sub-Saharan Africa and led specialised missions to Pemba/Palma in Mozambique (gas), the New Copperbelt in Zambia (copper), Lake Albert in Uganda (oil), Takoradi in Ghana (oil), Guinea (iron ore) among others. Initial visits to key funding agencies such as the World Bank and African Development Bank were successfully concluded.
I have undertaken a wide range of assignments from potable water in Senegal to renewable energy project identification in Nigeria and Côte d’Ivoire to cement sector studies in the DR Congo, Zambia and Mozambique to health sector analyses in Ethiopia and Kenya to investigation of South African wine distribution in Cameroon and Côte d’Ivoire. We were also commissioned to undertake an in-depth investigation of project opportunities related to the North-South Corridor.
I majored in African colonial history for my BA (Hons), completed various development finance courses and have written a successful book “Potholes & Profits” on my African experiences.