Infrastructure professionals from all across the continent meet in Cape Town to discuss the potential use of PPPs to cover the $48 billion estimated annual gap
Last week, infrastructure professionals with interests in Africa met during three days in Cape Town in the “Infrastructure Project Financing Africa” conference, organized by Marcus Evans. A very complete line-up of speakers, including, among others: Mr. Mahib Cisse (Chief Investment Officer of Infrastructure Finance at the African Development Bank); Mr. Kogan Pillay (Head of the SADC PPP Network); Mr. Eric Kaleja (Regional Director at the German Investment and Development Corporation) and Mr. Anthony Pearce (Former Director General of the International Road Federation), presented the infrastructure challenges and needs of the continent.
According to the African Development Bank, financing needs for construction and operation of infrastructure in Africa are estimated at $93 billion per year, with a current financing gap estimated at $48 billion per year. Power and transport infrastructure account for seventy per cent of those needs. Government and public agencies are still the main source of financing for African infrastructure, accounting for two thirds of the $45 billion annually spent. However, the role of International Finance Institutions and Private Investors has increased lately, and they now provide with $6 billion and $9 billion per year, respectively.
Among private investors, the role of infrastructure funds is steadily increasing. InfraPPP tracks globally all investment vehicles that target infrastructure assets, having identified at least 10 funds with an estimated $5 billion available to invest in African infrastructure (see additional information on these funds in the next page). Public Private Partnerships are also having a more relevant role in the development of new infrastructure in Africa, resulting in a growing pipeline of projects for investors (see additional information on PPP projects in Africa in the next page). InfraPPP, through its online platform (www.infrapppworld.com), manages a database of more than 1,100 PPP projects globally.
One of the main conclusions of the event was that PPP projects need to be structured adequately at early stages. We believe the success of these projects requires:
• Developing a pipeline of projects and prioritize them;
• Carrying out a feasibility study to analyze the viability of each project and define the optimal PPP structure;
• Conducting a market test and ensuring feedback from private investors and financiers.
Jose de la Maza, Partner of InfraPPP, believes that “African Governments and Public Agencies are increasingly understanding the positive impact of collaborating with external advisors to analyze and prepare PPP projects.”