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23.02.2009 Africa

Regional Integration Recognized as Key to Infrastructure Development, but Challenges Remain

By World Bank Ghana Office

ADDIS ABABA , February 6, 2009 -- The role of regional integration in reducing exorbitant infrastructure costs in Africa was highlighted at a roundtable breakfast on Regional Integration held on Monday, February 2, 2009 in Addis Ababa.

Co-hosted by Obiageli K. Ezekwesili, World Bank Vice President for the Africa Region and Donald Kaberuka, President of the African Development Bank, the meeting took place within the framework of the 12 th African Union Summit. The theme for this year's summit held in Addis was “Infrastructure Development for Africa”.

During the meeting, which was opened by Kaberuka, Ezekwesili stressed the significance of regional infrastructure, and highlighted the challenges and opportunities that exist within the sector. A brief presentation on findings from the World Bank's new report, the African Infrastructure Country Diagnostic (AICD), outlined how Africa's inadequate infrastructure is holding back economic growth by two percentage points per capita each year.

Funding gap hurting infrastructure development
Among the issues the report outlined: the major challenges to infrastructure development in Africa as well as the need for regional integration as a means to overcome the challenges.

In Africa, the price of infrastructure services can often be double those in the rest of the developing world. By increasing the scale of production and the extent of competition, regional integration can substantially reduce those costs. Trading power through regional pools would reduce annual energy costs by US$2 billion.

One critical challenge the sector is facing is a large funding gap. Despite a commitment of substantial resources from both internal and external sources to the staggering US$80 billion needed to address infrastructure development, there still is a US$40 billion per year funding gap.

However, addressing infrastructure needs requires more than just money; it also requires improving policies and political will, according to the AICD report. Among the additional areas that require attention: political commitment, sound policies and wise management. The funding gap could also be reduced by as much as half through the proper maintenance of the current infrastructure.

Heads of state emphasize need to raise infrastructure funds

Several participants responded and made remarks during the roundtable. The President of Malawi, Dr. Bingu Wa Mutharika, welcomed the International Financial Institutions (IFIs) focus on regional integration, and encouraged the World Bank and the African Development Bank to focus on regional programs, and not just national ones. This sentiment was echoed by President Jakaya Mrisho Kikwete of Tanzania, who indicated that more funds needed to be committed for regional projects because it is difficult to allocate funds from national projects. President Kikwete, whose term as AU chairman just ended, also said that African political unity cannot exist without the physical links needed to bind the continent together.

President Abdoulaye Wade of Senegal also emphasized the need to take concrete actions to raise funds that would help Africa address infrastructure challenges, and in particular finance the projects on Africa's priority list. President Wade has been actively advocating for funding for African infrastructure since he became Infrastructure Coordinator for NEPAD in 2000. He also pointed to the need for African countries to ensure the quality of infrastructure that is built, such as roads.

“It is better to have 100 km of good roads than a 1000 km of low quality roads,” Wade said

Liberian President, Ellen Johnson Sirleaf, highlighted the importance of infrastructure, particularly roads, in post-conflict countries and said it should be given priority since without them, key developments, such as education, agricultural marketing, or private sector development, cannot take place.

Apart from funding and policy challenges, there was also the issue of technical capacity when it came to implementing infrastructure projects. The Secretary General of ECOWAS, Mohamed Ibn Chambas, underscored the lack of capacity for project preparation at the regional level, and said that the establishment of Project Development Units to oversee the implementation of feasibility studies is absolutely critical. This point was reiterated by Amb. Olukorede Willoughy, who is currently Acting Chief Executive of NEPAD. Willoughy pointed to the lack of technical capacity and available funding to support project preparation as two critical obstacles to quicker progress on regional integration projects.

Participants expressed the hope that the roundtable is a sign of change in the mind-set of IFIs to a greater emphasis on regional integration.

Government involvement key to regional projects
Rounding up the meeting, Ezekwesili acknowledged that there was a clear need for regional integration in the infrastructure sector. But the question now is how to address the need effectively, in particular by sequencing investments for maximum impact.

Furthermore, it was evident that the Bank's International Development Association facility alone could not bridge the region's infrastructure funding gap. She said that further scaling-up was needed, and was hopeful that the Bank's new Vulnerability Fund would help narrow the gap. However, Ezekwesili reminded the Heads of States present that governments must also do their part to create a more conducive environment and improve national policies surrounding the sector.