https://www.polity.org.za
Deepening Democracy through Access to Information
Home / News / African News RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Embed Video

Moves afoot to unlock indigenous capital for $60bn African energy project pipeline

Photo by Duane Daws
Nepad Agency energy programme head Professor Mosad Elmissiry
Nepad Planning and Coordinating Agency CEO Dr Ibrahim Mayaki

18th February 2014

By: Terence Creamer
Creamer Media Editor

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

High-level initiatives are under way to mobilise indigenous financial resources to support the implementation of priority cross-border African energy projects with a combined price tag of $60-billion.

The 15 power generation, electrical transmission and gas pipeline projects have already been endorsed by African Union Heads of State and Government for priority attention under the Programme for Infrastructure Development in Africa, or PIDA, which also encompassed a suite of transport, water and information and communication technology projects.

Advertisement

Speaking at the African Energy Indaba in Johannesburg on Tuesday New Partnership for Africa’s Development (Nepad) Planning and Coordinating Agency CEO Dr Ibrahim Mayaki argued that Africa had its own resources in the form of pension, sovereign and diaspora funds. However, enabling conditions had to be created to unlock these resources in support of regional infrastructure projects. In so doing, foreign direct investors would have greater confidence to partner with African governments on projects viewed as crucial to sustaining high levels of economic growth, while laying the platform for future industrialisation and job creation.

Mayaki, who is a former Niger Prime Minister, said the proposed creation of the African Development Bank’s (AfDB’s) Africa50 Fund was a “significant milestone”, which sent a “clear signal” that Africa was intent on dealing with its debilitating energy backlogs, which were shaving as much as two percentage points from yearly growth levels in some countries.

Advertisement

The fund was being created in a bid to shorten, from seven to three years, the time from project conception to financial close and was expected to incorporate both project development and project financing dimensions.

AfDB estimated that Africa50 would require an equity investment of $10-billion to enable it to attract the $100-billion worth of African and global capital to implement the PIDA projects. However, the immediate target was to raise $3-billion in equity capital, to establish the fund’s credibility with governments, private developers and financial markets.

A recent study, Mayaki noted, showed that improved governance in Africa had multiplied by five the level of domestic resources available to African governments over the past 12 years. But more work was required to unlock additional domestic capital.

An upcoming financing summit scheduled for Dakar, Senegal, in June would have a particular focus on domestic-resource mobilisation, but would also offer an opportunity for African decision-makers and investors to demonstrate a strong commitment to what was being termed “Africa’s energy revolution”.

Nepad Agency energy programme head Professor Mosad Elmissiry reported that a number of the PIDA energy projects had advanced beyond the feasibility-study stage and that he was optimistic that some might well reach financial close at the Dakar conference.

He refused to be drawn on which specific projects could be considered “shovel ready”, but stressed that implementation was currently the overarching priority for the Nepad Agency, which was overseeing a steering committee meeting in Johannesburg this week to map the way forward for a number of projects.

Elmissiry did confirm, however, that there had been material progress on interconnector projects in East and Southern Africa, as well as on a gas pipeline linking Nigeria and Algeria.

In addition, the recent signing of a memorandum of understanding between South Africa and the Democratic Republic of Congo (DRC) on the 4 500 MW Inga Three hydropower project was adding momentum to that much-vaunted, but much delayed, development. South Africa had agreed to procure 2 500 MW of the plant’s capacity, with the 2 000 MW balance to be used within DRC.

In a number of instances, specific Heads of State had been selected to champion projects, primarily in an effort to clear the political hurdles to implementation. “We tend to think, generally, that implementation is a technical function, but when the political will is not sufficiently infused in the technical process, then implementation finds a lot of obstacles,” Mayaki said – having Presidents personally accountable for implementation was designed to ensure a greater political-project alignment.

Of the  $60-billion required to build the energy projects by 2020, the Nepad Agency estimated only about $10-billion could be sourced from government resources, with the balance having to be secured from the private sector or development financiers.

“Smooth and sustainable implementation will not be possible without adequate financial resources,” Mayaki averred, adding that the Nepad Agency was actively working with the African Union Commission and AfDB to enhance domestic resource mobilisaiton.

But besides unlocking indigenous financial resources the agency was also strongly urging African government to pursue regional solutions ahead of national programmes, as country-level solutions were typically not “optimal”.

“Regional projects are the most efficient economically and environmentally,” Mayaki added, while also emphasising the need to pursue multisectoral programmes ahead of monosectoral models.

“The classical thinking on solving Africa’s energy challenges is no longer working. From a continent level, we think the energy revolution has to be built on three key factors: the first one is looking at regional solutions; the second is mobilising domestic resources; and the third one is adopting a multisectoral approach.”

EMAIL THIS ARTICLE      SAVE THIS ARTICLE

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now