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Public-private partnerships needed to bridge infrastructure development gap in Africa

16 November, 2023
Public-private partnerships needed to bridge infrastructure development gap in Africa

Addis Ababa, Ethiopia, 16 November 2023 - Public-private partnerships (PPPs) are essential for infrastructure development in Africa, and governments and the private sector should work together to create effective PPPs, said Robert Lisinge, Acting Director of the Private Sector Development and Finance Division at the UN Economic Commission for Africa (ECA). Mr. Lisinge was the moderator at a plenary session at the African Economic Conference 2023 (AEC), on Public-Private Partnerships to catalyse infrastructure development and innovative financing for industrialization in Africa. 

“Financing Africa’s infrastructure is still a big challenge faced by many countries on the continent. To bridge the infrastructure gap, public-private partnerships are essential for infrastructure development in Africa,” said Lisinge.

He noted that the African Development Bank (AfDB) estimates that between $130 and $170 billion is needed for infrastructure development every year, leaving a substantial financing gap of $68 to $108 billion. 

Traditionally, African governments and international partners like China have been primary investors in infrastructure. However, due to financial constraints, there is a growing need to explore public-private partnerships. These can harness private investment, technology and expertise, improving service delivery efficiency and cost-effectiveness. 

According to Mr. Lisinge, the PPP experience varies across countries due to GDP differences, capital market size and depth. The ECA has been working with African countries to enhance their PPPs for infrastructure development, undertaking capacity building and helping them mobilize resources for infrastructure development.

Ms. Eniye Ogbebor, PPP Legal Expert, Member of Africa Leadership Chapter, WAPPP, said infrastructure development is critical for inclusive and sustainable development in various sectors, including clean energy, clean water and sanitation, in order to achieve SDGs.

“The infrastructure financing gap in Africa is around $100 billion. To bridge the infrastructure gap there is a need to bring in the private sector,” added Ms Ogbebor, saying that PPPs provide options to financing, and leverage risk sharing like financial and technical risks.

She said that new approaches which puts people at the core of projects are needed to have bankable initiatives that reflect the reality of the people.

Arsene Honore Gideon Nkama, a PPP Expert at the Faculty of Economics, University of Yaoundé II, and Consultant on the ECA project Yaoundé, Cameroon, said Cameroon, despite its many problems, has an economy that is still resilient enough to promote PPPs.

However, the current business environment should be improved to promote more PPPs, while capacity building is also necessary to help mobilize funds.

Mr. Getahun Moges, an Energy Sector Expert and retired Power Sector Regulator in Ethiopia, remarked that there is a huge gap in infrastructure financing in Africa that urgently needs to be addressed. “In Ethiopia’s case, the pace of development and engaging the private sector has been slow and sometimes results in unnecessary delays. Also, there is a big challenge of understanding the regulatory frameworks for PPPs, feasibility, and procurement regimes in the country,” he said.

Mr. Moges noted that various development partners’ programmes support aspects of PPP development in Ethiopia through finance mobilization, technology transfer and capacity building.

The plenary session was held at the three-day African Economic Conference taking place in Addis Ababa, Ethiopia. It encourages experts to discuss how to attract private-sector investment to PPPs, promote collaboration among stakeholders, identify necessary legal reforms, build PPP competencies, and establish knowledge platforms for sustained support.