The NEPAD Infrastructure Project Preparation Facility (NEPAD-IPPF) is advocating for the establishment of a regional information hub to advertise bankable projects in Africa.
The organisation is proposing that each country should have a window linked to the centralised hub as part of an overall objective to unlock bankable investment opportunities in Africa.
Centralised platform for bankable projects
Coordinator for NEPAD-IPPF, Shem Simuyemba, said: “It would be both a ‘project hub’ and a ‘help desk’ – a centralised IT platform for bankable projects which potential investors can access. Such a hub could be housed by the AfDB to ensure credibility and confidence by both project owners (governments) and potential investors.”
Simuyemba was speaking at a recent assessment and programming session, held at the AfDB Headquarters in Abidjan, Cote d’Ivoire.
He explained that the one-stop-shop initiative would not just be a listing of projects, but a differentiation of the financial-readiness of the projects in terms of all the key returns that investors look for such as assurance of transparent procurement practices, tenure, risk, returns, availability of co-financing, depth of local capital markets, among others.
“The important point to remember is that projects need to be bankable from the point of view of the person who will provide the risk capital to make the project happen. While bankability is about figures, it is also about risk and reality and these factors all go together in making an investment decision,” Simuyemba said.
He stressed the need for bankable investment opportunities in Africa to be unlocked to attract regional and international investors.
Unlike other regions such as North America, Europe, Asia and Latin America, which have strong private sector project developers and sponsors, the emergence of an indigenous class of trans-continental investors such as Dangote was just the beginning for Africa, the AfDB noted.
The Bank stated that this is attributable to a number of factors, among which is a history of state monopoly companies, which crowded out the private sector and stifled its growth; heavily controlled and regulated sectors particularly in infrastructure – which did not have the necessary enabling environment and incentives for private sector participation; as well as weak capital markets.
Unlocking investment opportunities in Africa requires a number of measures to be undertaken as a matter of policy priority, Simuyemba said outlining three other measures to be taken to achieve this.
The first is the liberalisation of sectors that remain dominated by government. He gave examples of the information, communications and technology (ICT) sector whose liberalisation a few decades ago opened massive investment opportunities for the private sector. Read more…
He observed how African countries, which have recently opened up their energy-power sectors, have witnessed major investments by independent power producers (IPP) and even smaller players in off-grid green energy investments.
“The transport sector for both road freight and passengers is now vibrant because it is predominantly private sector driven. However, the same cannot be said about railways where governments still need to provide clear guidelines on an ‘open access rules’ for railway operations.
“Equally, despite the Yamoussoukro Decision (of an open African air transport market), investments in airport infrastructure, safety and industry have remained relatively limited. The key to unlocking investments in these sectors is clear market rules,” Simuyemba stated.
“The second is the need to scale-up capacity for project preparation and development as this is the only means to assess, package and structure the projects in such a way that there is a ‘rolling pipeline’ of bankable projects,” he concluded.
Featured image source: 123rf