DRC Inga mega hydropower plant implementation advances with AfDB support
November 24, 2013 | 1 Comments
Tunis, November 20, 2013 – The Board of Directors of the African Development Bank Group (AfDB) approved US $68 million in financing for the multinational Inga Site Development and Electricity Access Support Project (PASEL). The project will further the development of the Inga hydropower plant located on the banks of the Congo River with a vast hydro-electric potential estimated at 44,000 MW – half of the continent’s installed electricity capacity.
The AfDB’s support, which comes in the form of a Fragile States Facility grant of US $7.7 million and an African Development Fund grant of US $60.6 million, accounts for 43% of the total project cost of US $169 million. With this approval, the support of the AfDB to the Inga project, since the inception of the mandate to lead the implementation of the NEPAD Infrastructure Action Plan, will amount to-US $90 million.
PASEL will finalize the preparation of the first phase of the Grand Inga Hydropower Project, called the Inga 3 Project, which will consist of developing a power-generating capacity of 4,800 MW on the Inga site and building power transmission lines that will supply electricity to the Democratic Republic of the Congo (DRC) and to the Republic of South Africa.
Specifically, this project will facilitate the development of the local institutions and skills necessary (technical, legal and financial advisors will be provided) to attract private capital for the completion of Inga 3 which is a complex project. In addition, capacity-building efforts will enable local actors to make a wise choice for the project’s principal investor-developer under the public-private partnership. Improved access to electricity is also expected in the semi-urban areas of Kinshasa for more than 25,000 households.
“This is the right project for the DRC and the Bank – at the right time,” said Alex Rugamba, Director of the AfDB’s Energy, Environment and Climate Change Department. “It is timely because it facilitates the implementation of Inga 3 whose investment costs would otherwise be difficult to mobilize in the current context of the DRC.”
The AfDB’s financing will be used to cover the cost of technical assistance to ensure the completion of preparatory activities for the Inga 3 Project. It will also help address electricity scarcity in remote areas that are not directly covered by Inga but where the DRC intends to develop electrical systems around micro- or mini-hydropower plants. The Bank will put several advisers at the disposal of the Inga Site Development and Promotion Authority and conduct several studies on the Inga project that will generate real-time gains in the overall project schedule.
PASEL builds on previous AfDB support to the Inga Hydropower Project, which led to: the development of institutional and technical plans; a feasibility study, which defined the development pattern of the Grand Inga by successive phases; and the identification of an innovative approach to the project that will guarantee the full realization of Inga’s hydro-electricity potential and promote continental integration.
The Inga 3 Project will increase access to more reliable and cheaper energy in the DRC, contributing to an increase from the current 9% to over 40% by 2020. It is also expected to improve the business climate and productivity of the economies of beneficiary countries.
Current demand for electricity in the region is huge and steady, guaranteeing a market for the energy to be produced from the hydropower plant. Indeed, South Africa has already signed an agreement with the DRC to import about half of the electricity that will be produced, guaranteeing the bankability of project. Signed by the presidents of South Africa and DRC in October 2013, the treaty, which is the framework for the energy-purchase agreement, is awaiting ratification by their respective national parliaments.
AfDB Board approves US120 million financing for Nairobi’s outer ring road
November 20, 2013 | 0 Comments
AfDB Board approves US120 million financing for Nairobi’s outer ring road
Project to take 4 years; starting 2014; Complete road will reduce travel time from 45 to 15 minutes
NAIROBI, Kenya, November 19, 2013/ — The Board of the African Development Bank (http://www.afdb.org) on Wednesday November 13th approved US$120 million financing for the Nairobi Outer Ring road project which involves the improvement of the existing single carriageway road to a 2-lane dual carriageway complete with service roads, grade separated intersections, pedestrians–foot-over bridges, walkways and cycle tracks over the entire length of the road.
The 13-kilometer project, on completion is expected to directly enhance the traffic circulation and eliminate traffic bottlenecks to various economic activity centers such as the industrial zone, and the vast populous residential areas of Eastlands.
AfDB Regional Director for Eastern Africa, Mr. Gabriel Negatu confirmed the financing as a mix of grant and loan from the Africa Development Fund (ADF), with the Government of Kenya as the counterpart financier of the project whose total cost in US$130million.
“The Africa Development Bank Group will provide 89.8% financing for the total project through Africa Development Fund (ADF) loan of US$115.9million and a grant of US$5million. We believe that this road will not only reduce the travel time from the current 45 minutes to 15 minutes, but will also transform the socio-economic welfare of the people living along the transport corridor,” the Director said.
The road traverses Nairobi’s East and North districts serving an estimated population of at least 2.2 million representing some 70% of the Nairobi County population. Other beneficiaries include users of major city connecting arterial roads of: Nairobi-Thika highway, Eastern Bypass, Northern Bypass, Mombasa Road, and onto the Jomo Kenyatta International Airport (JKIA).
Negatu pointed out that the key outcomes of the project will include improved property values arising from reduced congestion, and improved business environment for informal traders owing to access to new market facilities and improved sanitation.
Other complementary civil works elements include: 250 market stalls and associated sanitary facilities, planting of 4,500 trees along the corridor, children’s traffic safety park, and 3 Wellness centers for HIV/AIDs and related illnesses.
It is further estimated that by improving the existing road, the annual vehicular GHG emission rates in tones in the corridor would drop by at least 70% due to improved average traffic operating speeds along the project corridor particularly, with the integration of the Bus Rapid Transit System as envisaged by the year 2022.
“Our approach to this and every project that we have undertaken is guided by our commitment as a Bank to realize inclusive and green growth in Africa. Under this project, at least 500 disadvantaged youth from the informal settlements will gain from artisan training program aimed at enhancing their skills to assure long-term gainful employment thereafter.” Negatu added.
The Africa Development Bank previously financed the successful completion of the 50km Thika Superhighway, which was jointly financed by the Republic of China and Government of Kenya. Outer Ring Road project brings to 63 the kilometers of roads financed by the Bank within the Nairobi metropolitan.
Distributed by APO (African Press Organization) on behalf of the African Development Bank (AfDB).
About African Development Bank
The African Development Bank (AfDB) Group (http://www.afdb.org) is a multi- lateral development finance institution established to contribute to the economic development and the social progress of African countries. The Bank Group comprises three entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF).
As the premier development finance institution on the continent the AfDB’s primary objective is to assist African countries – individually and collectively in their efforts to achieve economic development and social progress. The Bank Group finances projects, programs and studies in multiple sectors such as infra- structure, agriculture, health, education, higher education and training, public utilities, environment, climate change, gender, telecommunications, industry and the private sector.
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Innovative Project Improving Food Value Chain to be Launched in Monrovia
November 19, 2013 | 0 Comments
An innovative project aimed at reducing rural poverty and household food insecurity will be launched on November 19 in Liberia
MONROVIA, Liberia, November 18, 2013/ — An innovative project aimed at reducing rural poverty and household food insecurity will be launched on November 19 in Monrovia. The Smallholder Agricultural Productivity Enhancement and Commercialization (SAPEC) project is jointly financed by the Global Agriculture and Food Security Program (GAFSP) (http://www.gafspfund.org) and the African Development Bank Group (AfDB) (http://www.afdb.org). SAPEC project is managed and administered by the AfDB.
The four-day event, to be launched by the Vice-President of the Republic of Liberia, Joseph N. Boakai, will bring together around 200 participants, including Government officials, Members of Parliament and the Senate, representatives from the donor community, agriculture organizations as well as farmers’ associations and beneficiaries from similar projects.
The SAPEC project will increase income for smallholder farmers and rural entrepreneurs particularly women, youths and the physically-challenged, thus empowering the rural communities and setting the scene for a transformation of agriculture from subsistence activities into revenue-generating business.
“We are excited that GAFSP’s contribution will enable Liberia to rebuild and implement their own food and agricultural strategy, which we believe will have a huge, sustainable impact on the livelihoods of smallholders around the country,” said Geeta Sethi, Program Manager, the Global Agriculture and Food Security Program. “This project will help Liberia set an example for other post-conflict countries on how to build a food secure, stable state with a vibrant agricultural sector that contributes to economic growth, increased incomes, and food and nutrition security, and poverty reduction. Congratulations to Liberia,” she said.
“Indeed, the SAPEC addresses Liberia’s fragility following 14 years of civil conflict that devastated the economy, decimated institutions, destroyed infrastructure and triggered massive rural-urban migration,” said Chiji Ojukwu, Director, Agriculture and Agro-Industry, AfDB. He further highlighted that “the project promotes pro-poor growth by investing in smallholder agriculture to reduce food insecurity, and fosters equity and inclusiveness by ensuring the participation of women, youth and the physically-challenged in agricultural activities. The SAPEC project thus contributes to the peace- and state-building goals of the country as it transitions from conflict and fragility to recovery and resilience.”
The project is expected to improve the food value chain through market development and access through the rehabilitation of 270 km of all-weather feeder roads. Twelve market centres are also expected to be rehabilitated, nine agribusiness centres constructed and three technology transfer centres refurbished.
The project will also increase the productivity of 4,000 ha and 1,000 ha of uplands that will be dedicated respectively to cassava and rice cultivation. The project will also make more land and water available for cropping with the rehabilitation of 1,000 ha of community-owned lowland.
GAFSP is a global effort to aid vulnerable populations afflicted by hunger and poverty. It takes up where emergency and recovery assistance leaves off, targeting transformative and lasting change in agriculture and food security within poor countries. Following commitments by G8 leaders at the L’Aquila Summit in July 2009 and reaffirmed by the G20 Summit in Pittsburgh in September 2009, GAFSP was established in April 2010.
To date, GAFSP expects to improve the incomes and food security of over 10 million beneficiaries, mainly smallholder farmers and their families and has allocated $912 million in grant funds to 25 countries and $50 million in financing packages to agribusinesses.
The World Bank manages the public sector part of the program and IFC manages the GAFSP private sector window. For more information, visit http://www.gafspfund.org.
For the AfDB, strengthening agriculture and food security through an integrated value chain approach can improve the livelihoods of Africans who live in rural areas. By continuing to invest in rural infrastructure (such as rural roads, irrigation, electricity, storage facilities, access to markets, conservation systems and supply networks), the AfDB will help countries increase agricultural productivity and competitiveness.
By investing in regional infrastructure and engaging in policy dialogue to remove trade barriers to importing food and inputs such as fertilizers, it will help restrict food price volatility and reduce food insecurity.
AfDB President named 2013 African of the Year
November 17, 2013 | 0 Comments
TUNIS, Tunisia, November 8, 2013/African Press Organization (APO)/ – African Development Bank Group President Donald Kaberuka (http://www.afdb.org) has been named 2013 African of the Year in recognition of his role in spearheading the Africa50 Fund to mobilize the financing of infrastructure projects on the continent.
The $50,000 award was announced Thursday evening in Addis Ababa during the African Media Leaders Forum. The prize is sponsored by Nigeria’s Daily Trustnewspaper.
“[This award] is for his bringing to fruition the idea of domestically financed development,” Salim Ahmed Salim, Tanzania’s erstwhile foreign minister and former Secretary-General of the Organization of African Unity (current African Union), said at the forum.
The Africa50 Fund seeks to leverage infrastructure financing for transformational development projects from African central bank reserves, pension and sovereign wealth funds; the African diaspora; and high net worth individuals on the continent.
The Fund was endorsed in May 2013 by African Finance Ministers during the Bank’s Annual Meetings in Marrakech, where Kaberuka underscored the critical role of infrastructure in Africa’s development. “The one thing which can really slow down the recent performance in its tracks is infrastructure,” he said. “No country in the world has been able to maintain 7% GPD growth and above (sustainably) unless the infrastructure bottleneck is overcome.”
In July, African institutions including the African Union Commission, UN Economic Commission for Africa, Regional Economic Communities (RECs), regional Development Finance Institutions (DFIs) and NEPAD Planning and Coordinating Agency endorsed the Africa50 Fund as the continent’s vehicle for facilitating large-scale mobilization of resources to unlock international private financing with a view to addressing Africa’s $45-billion infrastructure gap, according to some estimates.
The African Development Bank will play a lead role in the Fund, said Kaberuka: “It will be a vehicle which can build on the AfDB track record and financial strength as investor, financial engineer, attract local and international pools of savings, utilize smart aid and leverage that to up our funding of infrastructure. It will be a strongly rated instrument able to issue a bond of significance – a bond attractive to investors.”
The Africa50 Fund is a game-changer in the delivery of infrastructure, Slim Ahmed said Thursday, adding that Africa must take ownership of its development.
“We are proud to honour an idea whose time has come. Dr. Kaberuka has shown what Africa should do,” he said.
The award will be presented at a ceremony slated for January 15 in Abuja.
Last year’s African of the Year award went to former South African president Thabo Mbeki.
Magatte Wade, Head of Communications, AfDB, email@example.com
African Development Bank (AfDB)
AfDB to co-host ‘Africa Day’ in Washington
November 17, 2013 | 0 Comments
WASHINGTON, November 15, 2013/ — The African Development Bank Group (AfDB) (http://www.afdb.org) in collaboration with the World Bank Group will host the first ever ‘Africa Day’ during the Law, Justice and Development (LJD) Week 2013, on November 20th, at the World Bank Group Headquarters in Washington DC. Every year, the LJD Week is organized to provide a forum for legal and development practitioners, scholars, governments and civil society to discuss the critical role the law and judicial mechanisms can play in furthering development outcomes.
The aim of “Africa Day” is to bolster knowledge on key and emerging legal issues on the African continent. Participants of Africa Day will explore how law and justice can help translate voice, social contract, and accountability into development impacts in Africa.
For decades, a number of African countries have grappled with developing and implementing effective legal regimes so as to promote sustainable economic development. The results have been mixed. Because law is an essential tool for promoting economic growth and development, the Bank’s legal experts will be joining a panel of fellow specialists, judicial officers, and senior government officials in key relevant ministries, local and international institutions, to offer a global perspective on Africa and the key development and legal challenges it faces.
This year’s “Africa Day” would be opened with an address by the AfDB President, Dr. Donald Kaberuka, setting the tone for an in-depth focus on critical legal issues in Africa’s development process.
The themes for the day are in three main areas namely:
(a) Economic opportunities in extractive industries (mainly in the oil and gas sectors) and meaningful engagement with BRICS (Brazil, Russia, India, China and South Africa) and South/South cooperation;
(b) Emerging issues with a focus on the Africa 50 Fund which seeks to unlock private financing sources and to accelerate the speed of infrastructure delivery in Africa, thereby creating a new platform for Africa’s growth and prosperity; and
(c) Emerging issues relating to illicit financial flows and the recent constitutional developments in a number of countries.
Distributed by APO (African Press Organization) on behalf of the African Development Bank (AfDB).
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Is Africa About To Get It Right on Infrastructure?
November 5, 2013 | 0 Comments
ADB targets USD 500 million for Project Development vehicle of Africa50
By Ajong Mbapndah L
Africa5o the continents newest and most innovative infrastructure delivery vehicle is off to a promising start following the recent launch of its fundraising drive at NASDAQ. USD 5oo million is the amount on target by the African Development Bank, ADB, for the project development of Africa50 which will focus on regional and national projects of strategic importance to Africa. Sponsored by the Made in Africa Foundation (MIAF) of Ozwald Boateng, the choice of NASDAQ was to attract interest from investors says Neside Tas Anvaripour, Director of Business Development at the ADB and Team Leader for Africa50. “Africa50 embodies Africa’s promise for sustained growth and prosperity,” said Tas of the project which will be Africa’s largest infrastructure delivery vehicle created so far. The alliance between MIAF and AfDB aims to raise up to USD 500 million for Africa50’s project development arm by the first half of 2014.In an interview with Ajong Mbapndah L, Tas Anvaripour sheds more light on Africa50, the attractive returns it will provide to investors .
The African Development Bank and Made in Africa Foundation officially launched the fundraising for Africa50’s Project Development Vehicle at the Nasdaq headquarters, how did this go and why the choice of Nasdaq and New York?
The event was a positive development in our establishment efforts, as it promoted Africa50’s Project Development Vehicle. The Bank is targeting to raise up to USD 500 million for the Project Development vehicle of Africa50, Africa’s newest and most innovative infrastructure delivery vehicle, to develop regional and national projects of strategic importance for Africa. For us, it was important to launch these efforts in a location that could attract significant interest from investors. As for NASDAQ, we opted for this choice because Africa50 is a commercial vehicle offering attractive returns to investors. NASDAQ conveys this message like few other places.
Who were those who took part at the Fundraiser and what did it come up with, any positive signs?
The event was sponsored by Made in Africa Foundation. We welcome the increasing interest to fuel Africa’s growth. In addition, the event received interest and support from globally recognized names such as: Capri Capital, Huffington Post, Double Click, Heirs Holdings, Tony Elumelu Foundation, and Gilt Group, through a working luncheon hosted immediately after our appearance at NASDAQ by Arthur Sulzberger, Publisher of the New York Times. Personally, I think that attracting mainstream interest into Africa50 is the real sign of success for the events in New York
It certainly should not come to you as a surprise that many people may have heard about the Africa 50 project for the first time because of that launching and many others may not never have heard about it at all, what is the Africa 50 Project?
Africa50 embodies Africa’s promise for sustained growth and prosperity. Through Africa50, we will be developing and financing the infrastructure backbone that is needed in the continent. Through better infrastructure, African countries will increase their global competitiveness, reducing the costs of doing business and accelerating the speed of delivery for goods and services. But, perhaps most notable is the fact that through better infrastructure, which includes power, transport, ICT, as well as water and sanitation projects, Africa can achieve regional integration, thereby growing the size of its internal market at the same time as the current historical expansion of the continent’s middle class. Africa50 is an independent structured credit vehicle able to deliver innovative financing to support transformational infrastructure.
If we understand well, it is a partnership between some private sector groups and the AFDB, who does what, who is responsible for what and what criteria, is going to be used in identifying priority projects?
African Development Bank is the sponsor and seed investor of Africa50. We are currently discussing the participation of several different governments, institutional investors, private companies, and impact investors into Africa50’s founder’s equity base. However, we cannot yet announce specifically who else is part of this initiative. What we can say is that African Development Bank is receiving overwhelming support from Africa, as well as from the rest of the world to set-up Africa50.
The goal is to raise $ 500 million for Africa50’s project development arm by the first half of 2014, how is this amount going to be raised?
Africa50’s $500 million for Project Development is being raised through a combination of commercial investors, impact investors, and bilateral donors. African Development Bank will provide seed capital. At the moment, we are finalizing the specific structure that would maximize the investment level.
At what point should people expect to see the first project accruing from this initiative?
Although we are being described as overly ambitious, my experience in the market reveals that we will have a minimum of two critical investments – be that through Africa50’s Project Development or Project Finance Vehicles – in the first half of 2014. In essence, the market should expect a fast turnaround between establishment and project delivery because speed and efficiency are paramount to Africa50.
To skeptics who will complain that there have heard about lofty promises from the trans-continental road projects, to the huge expectations from NEPAD etc, how do you reassure them that the Africa 50 Project is different?
We have done this before. Between 2009 and 2011, African Development Bank delivered four large infrastructure projects in Senegal that were unthinkable until we came into reality. By investing EUR 185 million, African Development Bank catalyzed over EUR 1.3 billion in total investment in the country, in two years, thereby giving rise to an integrated approach that solidified one of Africa’s most important infrastructure backbones. Through Dakar Airport, Senegal is opening new doors for global investment into the country. The Sendou Power Plant is providing the electricity needed for the airport, as well as for about additional 40% of the country’s population. By investing in the Dakar Toll Road, the airport and the power plant are efficiently connected to the City of Dakar. But, of course, all this wouldn’t be possible without the raw materials –including the coal supplies for the power plant—arriving into Senegal through the expansion of the Dakar Port. Simply put, we have the experience, track-record, and stakeholder’s trust and confidence to enable the successful roll-out of Africa50 into Africa’s infrastructure market.
Everyone will agree infrastructure is an issue, what are some of the other areas that the African Development is putting its focus on?
Agriculture, health and education are also critically important for Africa’s development. By investing in infrastructure, we seek to support other institutional efforts in these key areas. By leveling the playing field by which farmers can bring their products to markets, by shortening distances between health centers and health consumers, and by developing the jobs and industry demanded by graduates, infrastructure holds the promise to continued growth and stability in Africa.
From a personal perspective, there seems to be growing attention from the rest of the world on Africa and its opportunities, what does Africa need to do to reap premium dividends from the attention ?
To translate this interest into higher levels of investment, Africa ought to design and establish the missing investment products and services (i.e. tenor extension, first loss guarantees, credit enhancement, exit options, etc.) while, at the same time, ring-fencing the prospects for healthy returns. This is achieved through an improved enabling environment, a sustained reform effort, and innovative vehicles such as Africa50.
Senegal: AfDB approves US$ 33.5 Million to promote youth and women employment
November 1, 2013 | 0 Comments
The Board of Directors of the African Development Bank (AfDB) Group) on Wednesday, 23 October 2013 in Tunis, approved a loan amounting to US$ 33.5 for Senegal to help the country finance the Project to Support the Promotion of Employment for Youth and Women (PAPEJF).
This project embodies the vision of the authorities of Senegal in the fight against youth unemployment and underemployment as defined in the « Company Project of Senegal ». It represents an ambitious program in terms of job creation and is in complementary with the initiatives implemented by other development partners.
This project seeks to create decent jobs and sustainable incomes through skills development through the promotion of micro, small and medium-sized enterprises (MSME) for the youth and women, especially in agricultural and services value chains. The project will generate at least 15,000 sustainable decent jobs in rural and semi-urban areas (60% for youth of both sexes and 40% for women) and develop the technical and managerial skills of 17,000 entrepreneurs.
It thus provides for the creation of 156 integrated agricultural, aqua cultural and poultry farms which will entail the development of approximately 1000 ha of land. It will also involve the construction of 18 training centres for handicraft trades, the establishment of 15 multifunctional platforms and 40 trading kiosks, and the refurbishing of 3 agricultural vocational training centres.
Focusing on youth and women entrepreneurship in the agricultural and services value chains it will broaden employment and income opportunities in the in the rural and semi-urban areas targeting particularly the regions of Kaolack, Fatick, Thiès, Casamance Naturelle (Ziguinchor, Kolda and Sédhiou) and in the surburbs of Dakar. By consolidating the development of the agricultural, poultry and aquaculture value chains, this project will enhance the outputs and specific potential of the selected areas, thus increasing employment and income creation opportunities.
The PAPEJF is aligned to the first pillar of the 2013-1017 National Economic and Social Development Strategy (SNDES), which target “growth, productivity and wealth creation”, in particular regarding employment promotion, rural sector development and integrated development of the rural economy. This project meets also the objectives of the New National Employment Policy (NPNE) which focuses on the creation of sustainable jobs and better management of the labour market.
Moreover, it is consistent with CSP 2010-15 and the Bank’s strategy for 2013-2022 which seeks to “support inclusive growth through economic diversification and integration”. In this regard, The PAPEJF is consistent with three of the five operational priorities of the 2013-2022 strategy (skills and technology; private sector development; and infrastructure development) and targets two of the three special interest areas (agriculture, food security and gender).
As of 23 October 2013, the active portfolio in Senegal was nearly 302 million U.S. dollars for 12 active operations in the public sector, and U.S. $ 221.8 million for five others in the private sector.
Think tanks chart the path for Africa’s accelerated transformation through regional integration
October 29, 2013 | 0 Comments
Africa is well positioned to chart the path for transformation through regional integration. But it should go beyond the narrow focus on trade in goods. This was the conclusion reached, following an afternoon discussion that brought together a high-level panel on regional integration featuring representatives from African think tanks and the African Development Bank on Sunday in Johannesburg.
Intra-African trade in goods was reported to be insignificant and the high-level panel suggested that regional integration should also cover: the movement of people to ensure labour mobility, which is vital in bringing wages down; the movement of talent through the promotion of mutual recognition of qualifications in fields such as medicine; and the movement of capital by facilitating stock exchanges cross-listing to enhance capital mobilization.
For Africa to fast-track regional integration and successfully increase value addition and integrate into global value chains, think tanks also expressed the need for leveraging commodities for industrialization, job creation and economic transformation.
The Bank’s Energy, Environment and Climate Change Director, Alex Rugamba, underscored the relevance of the theme of this year’s African Economic Conference – “Regional Integration in Africa” – “for Africa seeking larger markets that can support economies of scale and create suitable conditions for investment.
“Regional integration has gained prominence in this continent’s development agenda,” he said.
NEPAD and Regional Integration Director for the AfDB, Janvier Litse, provided a broad picture of the continent’s regional integration status, noting that despite ongoing efforts to support regional integration, “Africa remains the most unintegrated region in the world.”
Litse also pointed to the weak implementation of agreements by African leaders, urging participants “to critically examine the status quo, to dissect the emerging issues and find practical solutions” to these challenges. “Together we can shape the continent’s integration trajectory and make regional integration a success for Africa,” he said.
Presenting the Bank’s regional integration vision, Regional Integration Division Manager Moono Mupotola explained the institution’s commitment and strategy “to unlock Africa’s potential” to enable the efficient flow of goods, services and people. She emphasized the need to consolidate Africa’s small and fragmented markets and address common cross-border issues such as security and climate change. She also affirmed that challenges remained, even though the Bank had invested huge amounts in hard and soft infrastructure as well as in transformative projects.
For her, the challenges include limited capacities to implement common regional projects as well as differences in national priorities, weak productive capacities, major infrastructure gaps, weak implementation capacity at national and regional levels.
With regard to lessons learned, she stressed the need for selectivity, with more focus on policy and institutional aspects of integration, as well as increased political dialogue. “There is a need for more project preparation and mobilizing private funding for regional operations,” she said, adding that the Bank has a lot of ideas, but project preparations have been a challenge.
AfDB’s Research Division Manager, also a discussant, Issa Faye, for his part, made a strong and thought-provoking point, underscoring the need to wonder if the Bank was on the right track, and if its regional integration achievements have effectively benefitted African populations. “Our institution has achieved a lot in terms of procedures, but there is still room for improvement in the area of implementation,” Faye said, further highlighting shared prosperity, politics and democracy as key elements to take into account.
The five panelists who spoke during the second session, chaired by Steve Kayizzi-Mugerwa, Director, Development Research at the AfDB, focused on the priorities and policies with regard to how regional integration can support industrialization. The panelists expressed the need to think outside the box and be strategic in funding regional integration. Other suggestions included ownership of integration issues by Africans, institutional capacity building, provision of adequate budget for research and tackling the challenges and opportunities in creating a vibrant private sector in Africa.
The Chief Economist and Vice-President Mthuli Ncube said integration cannot take place without investing in infrastructure, skills training and education. “Infrastructure is at the centre of regional integration as it enables connectivity,” he said.
However he emphasized the need to place enhanced emphasis on the often neglected issue of soft infrastructure, such as one-stop border posts. In a continent with the highest number of landlocked countries, Ncube observed the need for efficient ports, arguing that all ports are in fact regional assets. These ports should be served by efficient corridors enhanced by trade facilitation measures. He also highlighted the importance of measuring results, noting that the Bank has made some headway in this area, but more needs to be done.
Victor Murinde, Director of the African Development Institute, recognized the quality of the debates and participants, disclosing that this year’s networking session with African think tanks charted the path for accelerated transformation through regional integration.
AfDB to Cooperate with South Sudan in Water Sector
October 29, 2013 | 0 Comments
The USD 5.4 million grant, extended from the Fragile States Facility, will benefit some 170,000 people living in those 11 towns.
The low levels of access to safe and potable water and adequate sanitation coupled with poor hygiene awareness has been the principal cause of water-related diseases such as diarrhea, cholera and guinea worm in the country. Despite the availability of surface and ground water resources in South Sudan, two out of three people in the country do not have access to safe and potable water services whereas eight out of 10 people do not have access to adequate sanitation.
The grant will finance the feasibility study and detailed designs for water supply and sanitation infrastructure facilities in the identified towns. In order to address the sustainability of the planned infrastructure and operations, a framework for capacity building of sector institutions within the study area will be developed. Based on an integrated approach, the study will address the challenges to sustainable provision of water supply and sanitation services in a holistic manner.
The study will cover aspects of water resources management, knowledge management and capacity building among local institutions as well as facilities for monitoring and evaluation.
The study is anticipated to be concluded in September 2015 and the knowledge generated will enrich the AfDB’s continued learning process, and its support to African countries, especially in fragile states.
The 11 towns selected for the study are: Fangak, Mbili, Jikou, Leer, Ayod, Gokmachar, Tonj, Mundri, Cueibet, Terekeka and Kapoeta.
On account of the impact of lack of access to water, South Sudan Government has labeled the water supply and sanitation sector as an extremely high priority and a key entry point to its development objectives. The water sector is therefore one of the top six expenditure priorities as articulated in all the Government’s key strategy documents.
The study outcome will be ready to finance and implement project documents for the identified priority 11 towns in South Sudan. This will provide opportunities for the government to access investment funding for water and sanitation infrastructure development, for which the AfDB will be ready to provide the support.
Farmers in Cameroon to benefit from US$25.70 million for AfDB rural infrastructure and development support project
October 26, 2013 | 1 Comments
Farmers in the North-Western region of Cameroon will benefit from a loan and a grant amounting to US$25.70 million (UA 16,800 million) approved by the African Development Bank’s Board of Directors to help finance the Grassfield Rural Infrastructure and Participatory Development Support Project, Phase II
The Project aims to improve agricultural production and incomes of beneficiary communities by creating rural infrastructure and building capacity. It will help to reduce poverty in the rural communities in the area covered by the project.
The project will be implemented in Cameroon’s North-West region, which has a population of 1,850,000 and a poverty rate of 51%, and is home to 13% of the total number of the rural poor.
As a continuation of the first phase of the project from 2005-2011, the operation will be implemented in basins with strong production potential, namely Widikum, Santah/Tubah, Gayama and Mbaw/Mbonso covering 8 of the region’s 36 council areas, with a concentration on the first two to maximize impact. It will help to improve agricultural production and the incomes of the beneficiary communities by creating rural infrastructure and building the capacity of the actors. The estimated outputs are: (a) irrigation development on 610 ha; (b) rehabilitation of 278 km of rural roads; and (c) establishment of socio-economic support facilities and capacity building for the different partners.
At least 250,000 people (producer organizations, processors, traders, councils, etc.), half of whom are women grouped in 50,000 households will benefit from the project. It is expected to raise agricultural production by about 37,000 tonnes as well as an annual increase in income per producer from CFAF 250,000 in 2013 to CFAF 357,910 in 2018, and CFAF 477,210 in 2024.
The project has the potential for a high degree of complementarity with the Bamenda–Enugu Corridor Project financed by AfDB, which will help to increase trade with Nigeria, Cameroon’s neighbour to the west. The project will also scale up actions carried out under the Institute of Agricultural Research for Development (IRAD’s) basic seed production operation financed by a Nigeria Technical Cooperation Fund (NTCF) grant.
Through the establishment of a market information system that will be a major decision-making tool, the project will help to generate knowledge. It also envisages the adoption of an innovative approach involving the implementation of a pilot activity to establish an information system platform on agricultural markets called ‘AgriTechnology Cameroon (ATC)’. It will be based on the use of mobile telephony services (SMS) and other media for real time dissemination of information and appropriate services.
In the longer term, the project will result in the revitalization of agricultural production development and an approximately 25% reduction in poverty in the country’s North-West Region.
The project will be implemented in five years from April 2014, and will have over 250,000 direct beneficiaries half of whom are women in 50,000 households plus transporters and traders. In addition, it will help to build the capacity of cooperatives, agricultural professional associations and regional and local technical administrations. At full development, the project will increase agricultural production by about 37,000 tonnes in the intervention area. The beneficiaries will participate through the planning, implementation and management of the different activities.
The project’s total cost is estimated at UA 25.600 million. It will be jointly financed with resources from the ADF loan and grant amounting to 16.800 million (CFAF 12,563 million) representing 66% of the project’s total cost. The Government of Cameroon will provide the remaining UA 8.80 million.
Ten West Africa clean energy projects celebrated in Accra by Sustainable Energy Fund for Africa
October 26, 2013 | 1 Comments
Ten clean energy projects representing a total aggregate investment of over USD 80 million in bio-fuels, solar, biomass and hydro-power initiatives developed by West African entrepreneurs and companies were presented to investors in Accra at the West Africa Forum for Clean Energy Financing (WAFCEF).
WAFCEF was the final stage of a business plan competition launched in March 2013 by the Climate Technology Initiative Private Financing Advisory Network (CTI-PFAN) and the Ecowas Center for Renewable Energy and Energy Efficiency (ECREEE), in partnership with theSustainable Energy Fund for Africa (SEFA) and other regional partners.
The event was deemed a success with the participation of more than 100 financiers, clean energy experts and representatives of financial institutions from across Africa and overseas.
According to Joao Duarte Cunha, Coordinator of SEFA, “this initiative united like-minded partners interested in harnessing the entrepreneurial talent of the region to promote economic progress by using West Africa’s vast clean energy resources. WAFCEF really connected all the dots – entrepreneurs, ideas, advisory support and financing – and provided a platform for the often neglected smaller clean energy projects to succeed”.
The contest entailed the presentation of ten qualified project sponsors that will have the opportunity to present their business plans to potential investors and make a pitch for financing. The goal was to identify the most promising business ideas and unlock renewable energy and energy efficiency investment in West Africa.
The 10 projects had been selected from over 70 submissions from across the ECOWAS region for their economic viability and environmental benefits. Before being presented at the Forum, each of them had received intensive mentoring from professional consultants.
SME Funds Bioethanol Scale-Up Project from Nigeria was picked as the winner of the WAFCEF 2013 business plan competition. This project is looking to raise USD 21 million of investment for the spinning-off of a successful second-generation bio-ethanol production and cook stove manufacturing operation.
The bioethanol is produced from sawdust and water hyacinth, using proprietary and patented technology, and then further refined to produce a safe and highly efficient bio-gel for use in specially manufactured cook stoves, which are also produced by SME Funds, for distribution through a unique distribution network to service rural and peri-urban Nigeria.
The judges also selected three runners-up in the business plan competition:
- Azuri West Africa, a regional project of Azuri Technologies, looking to raise USD 6.6 million to expand its existing solar light distribution business into West Africa, using an innovative pay-as-you-go payment model based on proprietary software and hardware, to provide base of the period customers with affordable light in rural West Africa;
- Moyamba 11 MW Hydro Project, developed and presented by Smol Powa, to construct and operate a small hydro power project on the Gbangba River in the Southern Province of Sierra Leone for captive off-take by three bulk users, including the local community through the power utility;
- The Wave2O Project by Resolute Marine provides reverse-osmosis desalination powered solely by wave energy. The project involves the installation of the first Wave2O system in Cape Verde which is projected to have a capacity of 4,000 m3/day, and will supply more.
For investors WAFCEF was a great opportunity to access a select group of clean energy projects with high profit potential, verified environmental and development benefits, which are ready for investment.
“WAFCEF 2013 was one of the most enjoyable and inspiring events I can remember. The business ideas they had created were varied and compelling. This was 21st Century Africa at its very best,” said.
Andrew Reicher, Chairman of Berkeley Energy Africa, manager of Africa Renewable Energy Fund (AREF). AREF is the new USD150m renewable energy fund for sub-Saharan Africa jointly sponsored by the Sustainable Energy Fund for Africa and the African Development Bank.
SEFA is housed in the Energy, Environment and Climate Change Department of the African Development Bank.
Climbing value chains: Options for African policy makers
October 26, 2013 | 0 Comments
Africa’s economic landscape has changed considerably over the last twenty years. After two decades of sustained economic growth, Sub-Saharan Africa’s GDP is almost $1.5 trillion. Its middle class rose to 350 million people in 2010, up from 126 million people in 1980 and in 2010, consumer spending stood at approximately $600 billion.
Yet, despite all these improvements, Africa’s position in the global trading system places the continent at a great disadvantage in terms of trade dynamism and developmental potential. The continent’s predicament is usually characterized by African firms being stuck at the bottom of global value chains, primarily exporting raw materials while importing finished goods. In 2011, Angola produced 1,785,000 barrels of crude oil per day but its refinery capacity represented a meagre 39,000 barrels a day, half of its daily consumption rate of88,000 barrels. The difference is met through a costly import bill. Another example of inefficient integration in global value chains is in the coffee sector where Germany alone, a non-producer of coffee, exports more coffee than the whole of Africa combined, with the value of its exports almost double that of Africa!
The reasons for Africa’s failure to participate more effectively in global value chains are numerous. They range from inadequate transport, energy and telecommunications infrastructure to cumbersome border procedures, poor business environments, lack of technology, skills and low institutional capacities.
In this blog, the objective is not to focus on the challenges but on the opportunities presented to African firms by the rise of regional and global value chains. The argument put forth is that in the short-to-medium term, most opportunities for African firms to integrate into regional and global value chains are likely to be within agroindustry, trade in tasks (for goods or services) or industrial migration.
Opportunity 1: Agroindustry
Agroindustry may present the most straightforward opportunities for Africa to link to regional and global value chains. This is primarily because population growth, increased dietary changes, rising incomes and urbanization in many parts of the developing world (particularly Asia) shall continue to drive up demand for agro based products. In this market environment, Africa has great potential for increasing agriculture based exports.
Opportunities exist for value chains upgrading in many sectors especially rice, maize, sugarcane, dairy, cocoa, cotton, tea, coffee and oil palm. However, constraints to value chains upgrading are difficult to pinpoint since they are specific to each value chain and its corresponding markets (local, regional or global). This highlights the need for policy makers to remain vigilant and to deepen their understanding of relevant value chains so as to ensure that policy interventions are targeted and efficient.
With more than 450 million hectares of land, the continent is home to nearly 50 percent of the world’s arable land. Private sector’s interest in African agriculture is at an all-time high. This is evidenced by the massive increases in agriculture related land acquisitions over the last few years. With the right policy mix, negotiations of better land deals and investments in technological upgrading and standards infrastructure, Africa could commercialize its agriculture sector and position itself to capture many higher segments in regional and global value chains for a wide range of agro based products.
To achieve this goal, governments and business leaders will need to revamp their policy frameworks in support to agriculture, farmers, and agribusinesses. Scaling up agricultural research and facilitating access to affordable capital, water, energy, transport and inputs will also be key.
Opportunity 2: Trade in tasks
With globalization and the rapid improvement in transportation and communication technologies, international trade is increasingly characterized by trade in intermediate goods with different countries contributing to the production of a final good. A product might read “Made in China” or “Made in Japan” when in actual fact it was made in two, three sometimes four countries with each country specializing on the production of a specific task or input along the value chain. This process is generally referred to as trade in tasks or trade in intermediates. The figure below depicts the various components that go into the construction of a Boeing 787:
Source: Boeing Co
If one includes additional parts not shown in the figure above, a total of 10 countries participate in the construction of the Boeing 787.
Trade in tasks is the way through which most East Asian nations climbed the global value chains ladder. It is also likely that most opportunities for African firms to integrate global value chains will be through trade in tasks. After all, focusing on the production of a “task” or “input” along the production chain is far less daunting and capital intensive than breaking into global markets with a final product like a personal computer or a television. Once plugged into a global value chain and as technological know-how increases, African firms may then look for opportunities to move up the value chain.
The concept of trade in tasks for goods also applies to services value chains. According to OECD estimates, the global offshore services industry has grown from a little less than 50 billion USD in 2005 to more than 250 billion USD in 2010. Depending on a country’s endowments (its language, availability of skills, etc.) policymakers may wish to explore opportunities to tap into information technology outsourcing (ITO) or business process outsourcing (BPO) markets. In BPO services, firms could capture many of the lower-value chains such as network management, payroll and call centers, accounting or document management. In ITO, some of the higher value-added activities such as support to IT infrastructure and software development are within the range of certain firms and countries.
Opportunity 3: Industrial migration
Finally, industrial migration particularly from Asia may offer opportunities for African countries with conducive investment climates to rapidly upgrade their production systems. This is because currency appreciation and/or rapid increases in wage rates in Asia are likely to push labor-intensive firms to relocate to countries where labor costs are lower.
Industrial migration may also be driven by Africa’s rising consumer spending levels which is projected to surpass 1 trillion USD by 2020. Countries with enticing business environments could position themselves as future manufacturing hubs for either regional or global exports and we may already be witnessing a move in that direction. In 2008, the Chinese electronic company Hisense set up shop in Egypt and together with its local partner Sun TV is currently estimated to produce 100,000 LDC TVs a year. In Kano, Nigeria, Hong Kong based Lee Enterprises produces plastics, steel, ceramic tiles and leather hides. There are many more such examples on the continent.
Industrial migration is happening, creating numerous opportunities for value chains upgrading and the structural transformation of African economies. Whether Africa countries benefits from this process will depend on the extent to which industrial migration happens within a policy framework that encourages local production, employment and gradual technological transfer.
Africa’s current trade structure is unsustainable. Policies and incentives must be put in place at national level to restructure the composition of exports and gradually move from the production of primary commodities towards more value-added goods and services. In this particular regard, there may be a need to reconsider the adequacy of existing investment, export and industrial promotion frameworks to see whether they provide all the elements needed to accelerate industrialization.
In the short to medium term, most of the opportunities for African firms to integrate regional and global value chains are likely fall within the three areas mentioned above. The “quick-wins” are likely to be concentrated in agroindustry sector. Trading in tasks in both goods and services value chains shall also present a menu of opportunities for African firms. Finally, policymakers will need to keep a “watchful eye” on the unfolding industrial migration process in order to entice strategic industries and capitalize on opportunities as they arise.
In many ways, the most important success factor in whether African countries succeed in climbing value chains will be the extent to which policy makers invest resources in enhancing their understanding of global trade and production patterns. Increasing analytical capabilities on trade and production patterns would enable African policymakers to identify niche markets they could tap into and industries that they could attract in relatively near future. Failing to do so will almost surely lead to poor policy interventions and inefficient resources utilization.
*Source ADB . Jean-Guy Afrika is a Senior Trade Policy Analyst at the AfDB. He is the task manager of the Africa Trade Fund (AfTra), a trade-related, technical assistance facility with the objective to accelerate the integration of African countries and regions into the global trading system