NEPAD Summit Introduces Flagship Infrastructure Projects Just Before The Anticipated U.S.-Africa Leaders Summit

By Cov Africa on July 23, 2014

Posted in Corporate and Investment, Current Events, Energy and Natural Resources, Public Policy and Government Affairs

From June 14-15, African leaders, businesses and investors gathered for the Dakar Finance Summit for Africa’s Infrastructure–organized by the New Partnership for Africa’s Development (NEPAD)–to discuss the financing of major national and regional infrastructure projects. The Summit’s hallmark feature was the creation of the Dakar Agenda for Action (DAA), which acknowledges African states’ desire to reduce foreign aid dependency through the facilitation of private sector development, and the necessity of creating sound infrastructure in meeting this goal. Most significantly, the DAA identified 16 key regional power, transportation and communication infrastructure initiatives that are in the process of acquiring additional financing and Public Private Partnership (PPP) support. The Summit identified these projects as being of particular strategic, political and economic importance for Africa’s development trajectory. The 16 initiatives, sometimes referred to as the Dakar Financing Summit 16 (“DFS 16”), are part of a larger infrastructure policy framework established by the Programme for Infrastructure Development in Africa (PIDA), which the African Union (AU) adopted in 2012 to move Africa’s infrastructure development forward between 2012-2040. The projects will be implemented by the African Development Bank (ADB) under NEPAD’s supervision. The DAA also called upon regional and state actors to implement Africa50--the ADB’s infrastructure investment and development platform–in promoting the DFS 16 to private sector investors.

During the most recent AU Summit in Equatorial Guinea, the AU agreed to prioritize the financing of the DFS 16 projects and to facilitate the legal and policy conditions necessary to enhance infrastructure investment more broadly. AU members also agreed to create a Continental Business Network (CBN) on Infrastructure Financing through NEPAD and other partners to foster project preparation and capacity development for infrastructure initiatives. The prioritized DFS 16 projects will serve as a foundation for further PIDA activities over the next 25 years.

Some of the most noteworthy DFS 16 initiatives include the following:

The Ruzizi III Hydropower Project: This run-of-the-river hydro-electric plant would provide electricity for approximately 107 million people throughout the Great Lakes region of the Democratic Republic of Congo (DRC), Rwanda, and Burundi. It would promote peace and stability throughout the region, and would be the Great Lakes’ first energy sector PPP. The European Union (EU) and the European Investment Bank (EIB) are especially active in the coordination of political and financial support and in providing preparatory funding for the project. The project’s preferred bidder is the consortium of Sithe Global Power Ventures LLC (USA) and Industrial Promotion Services Ltd. (Kenya).

The Nigeria-Alergia Gas Pipeline: This pipeline, also referred to as the Trans-Saharan Gas Pipeline, will stretch from the Niger Delta basin across the Sahel to the Algerian coast, connecting to the existing Trans-Mediterranean, Maghreb Europe, Medgaz and Galsi pipelines. Gas will be acquired from Nigeria, which has the seventh largest gas reserves in the world. Natural gas resulting from the pipeline’s expansion will be exported to Europe, boost domestic gas supplies, and reduce desertification through sustainable gas production. In 2009, Niger and Algeria signed an intergovernmental agreement paving the way for the project’s commencement; progress is reportedly being made in obtaining Nigeria’s ratification.

Dar es Salaam Port Expansion: Tanzania’s Dar es Salaam port is the second most significant point of regional trade in East Africa. The envisioned modernization would yield U.S. $1.8 billion in annual efficiency gains. Tanzania and neighboring countries could earn up to U.S. $2.6 billion annually if the port’s efficiency was equivalent to the region’s largest port in Mombasa, Kenya.

Lusaka-Lilongwe ICT Terrestrial Fibre Optic Expansion: This initiative is a sub-project of the ICT Terrestrial Connectivity initiative, which creates cross-border interconnection of broadband networks to build regional African networks and numerous routes to submarine cables linking Africa with the rest of the world. The project, which is expected to commence construction in 2015, would increase regional and continental connectivity by installing an upgradable fibre line from Lilongwe, Malawi to Zambia.

The DFS 16 and the Upcoming U.S.-Africa Leaders Summit

U.S. government bodies are conspicuously absent from the DFS 16 brochure, which reveals that the European Union, Chinese state-entities, UK development bodies, the French Development Agency, and the World Bank all actively support specific DFS 16 initiatives. However, in light of the projects’ importance, U.S. support for these initiatives will likely be courted during the upcoming U.S.-Africa Leaders Summit. During the Summit, over 40 African heads of states will discuss U.S.-Africa relations and matters concerning trade, investment and development under the Summit’s theme, “Investing in the Next Generation.” Because weak infrastructure networks are a significant obstacle to U.S. companies’ engagement throughout Africa, the DFS 16 is a viable focal point of discussion. Only 38 percent of Africa’s population has access to electricity, and basic transportation networks and internet access are seriously lacking.

The Summit is expected to be a platform for the forging of significant business deals. Yesterday, U.S. Commerce Secretary Penny Pritzker revealed that almost U.S. $1 billion in deals of various structures will be announced during the Summit’s U.S.-Africa Business Forum. Secretary Pritzker reportedly affirmed that these deals represent “new money,” and that “there will be more to come.” The U.S.-Africa Business Forum–which will focus on U.S. private sector involvement in Africa’s infrastructure, power, agriculture, and information technology sectors–will be an excellent opportunity for countries to promote the DFS 16 flagship initiatives to U.S. business executives and senior U.S. government officials. Over 200 U.S. and African business executives are expected to attend the forum.

Unlike African leaders summits in China, Japan, India and Europe, the U.S.-Africa Summit will not feature private talks between African heads of states and President Obama. This somewhat unorthodox format will necessarily cause the Summit’s “interactive dialogue” to lean towards regional and unifying pan-African concerns such as regional infrastructure development, rather than the concerns of particular nations. Infrastructure advancement is a topic that unites all African states, and it is a likely topic of the Summit sessions on investment, peace and regional stability, and governance.