ii |INFRASTRUCTUREFINANCINGTRENDSINAFRICA:ICAANNUALREPORT2012 · PDF file · 2013-10-23INFRASTRUCTUREFINANCINGTRENDSINAFRICA:ICAANNUALREPORT2012 |iii Foreword 1 ... the implementation

ii | INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICAANNUALREPORT 2012

INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICAANNUALREPORT 2012 | iii

Foreword 1About the ICA 2Interview with the ICA Co-ordinator 3Definitions 5Acronyms 6List of Graphics 7

1. Key Messages and Findings 9

2. Trends 112.1 Introduction 112.2 Who is Financing Africa’s Infrastructure 132.3 Momentum Builds Behind PIDA 16

3. ICA Member Financing 173.1 Introduction 173.2 Trends in Commitments and Disbursements 193.3 Trends in Regional Infrastructure Portfolios 213.4 Hard and Soft Infrastructure Commitments and Disbursements 233.5 Commitments to Disbursements Lag 253.6 Project Preparation 263.7 Qualitative Analysis 27

4. Other Public Sector Financing 294.1 Introduction 294.2 Regional Development Banks 314.3 China 314.4 Arab Co-ordination Group 334.5 Europe 354.6 Other G20 Sources of Finance 36

5. African National Budgets for Infrastructure 37

6. Private Sector Financing 396.1 Introduction 396.2 Public-Private Infrastructure Advisory Facility (PPIAF) 406.3 Investment Considerations and Risks 416.4 Countries Most Attractive for Investment 426.5 Project Preparation Challenges 436.6 Market Trends 44

7. Sectoral analysis 457.1 Introduction 457.2 Transport 477.3 Water 517.4 Energy 537.5 ICT 55

Annexes 57Annex 1: Introduction 57Annex 2: ICA Members’ Selected PIDA Projects in the Pipeline 58Annex 3: Data Notes 59Annex 4: IFC 2012 data (Submitted post data analysis. Data notincluded in main report- Section 3. ICA Member Financing) 60

Contents

© 2013 The Infrastructure Consortium for Africa Secretariat c/o African Development Bank

BP 323 – 1002 Tunis Belvedere, Tunisia

Disclaimer

This report was written by the ICA Secretariat in collaboration with a consultant. While care hasbeen taken to ensure the accuracy of the information provided in this report, the authors make norepresentation, warranty or covenant with respect to its accuracy or validity.

No responsibility or liability will be accepted by the ICA Secretariat, its employees, associates and/orconsultants for reliance placed upon information contained in this document by any third party.

www.icafrica.org

CreditsCover: Moez AkkariText, data analysis and layout: Cross-borderInformation. www.crossborderinformation.comMaps, graphics and charts: David BurlesPhotos:Pages 1, 11, 29: istock Photo/Getty ImagesPages 17, 37, 45: Jon MarksPage 39: Thalia GriZiths

1 | INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICAANNUALREPORT 2012

For African nations to eradicateextreme poverty, or develop theirdiverse economies to a level wherethey can integrate more fully into theglobal economy, it is necessary toaccelerate construction of energy,information and communicationstechnology, transport and waterinfrastructure. In addition, to achievethese ambitious goals, they need towork more closely together, not leastin promoting cross-border linkagesand regional development initiatives.

The Infrastructure Consortium forAfrica was created as a catalyst tohelp the continent to promote avirtuous cycle of closer co-operationand higher, more efficiently utiliseddevelopment spending in its sectors offocus. This ICA Annual Report for2012 shows this to be a work inprogress, in which hearteningprogress has been registered, but withmuch more left to do in achieving theConsortium’s goals of encouragingpublic and private sector investmentin essential physical infrastructure,while acting to help create theconditions by which investment ismobilised as efficiently and effectivelyas possible.

Progress means removing thetechnical and policy blockages thathave all too often slowed downthe implementation of essential

infrastructure development projectsand programmes. The ICA hasemerged as an initiative for betterunderstanding why those blockagespersist and as an advocate ofstrategies to unblock them.

The ICA’s approach is more valid thanever, during a period when the globalcommunity is uniting behind majorinitiatives to address the continent’sinfrastructure deficits – as underlinedby announcements such as the AfricanDevelopment Bank’s proposed $20bnAfrica50 Fund to help underwritecommercial infrastructure projectsand a reinvigorated continent-wideProgramme for InfrastructureDevelopment in Africa (PIDA). Thisreport shows that major donors are insupport of and have committedresources to these continentalinitiatives for infrastructuredevelopment.

Even before financing is required forequipment procurement, engineeringand construction, smaller but equallyimportant envelopes of finance areoften necessary to prepare projects toa ‘bankable’ stage.

Questioning of private sectoroperators, carried out for this report,suggests that lack of adequate projectpreparation financing remains aproblem. The ICA has long argued the

need for early-stage funding (forfeasibility studies and detaileddesign).

This issue is now being addressed, andwhile donor support will remain animportant instrument for affectingchange, increasingly the resourcesapplied to unblocking theinfrastructure project pipeline willcome from within the continent itself.

I am glad to report that soundings ofprivate sector opinion show growingenthusiasm from private businessesand investors to participate ininfrastructure development on thecontinent, with a growing momentumfor projects that will bring Africaneconomies closer together, and speedtheir integration into the globaleconomy.

The continent is on the move. TheICA is there to benchmark the speedand intensity of financing for thatdevelopment and help to point avariety of stakeholders towardsstrategies that will allow even moreprojects to leave the drawing board inthe years ahead. �

– Alex Rugamba

DirectorRegional Integration and Trade DepartmentAfrican Development Bank

Foreword

INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICAANNUALREPORT 2012 | 2

The Infrastructure Consortium forAfrica’s mission is to help improve thelives and economic wellbeing ofmillions across the continent, bysupporting the scaling up ofinvestment for project developmentfrom public and private sources.

With a focus on regional as well ascountry-specific initiatives, the ICAhelps to facilitate infrastructuredevelopment in the water, transport,energy and ICT sectors. This is inrecognition of the fact that manyAfrican countries lack the essentialbuilding blocks of economic progress,such as well-maintained roads andrailways, access to electricity, theInternet, drinking water andsanitation.

The consortium is not a fundingagency. Rather, it is intended tocatalyse and facilitate the financing ofAfrican infrastructure projects andprogrammes, and works to helpremove some of the technical andpolitical challenges to make it easierto build more infrastructure.

Practical help is also a focus for theICA, which recently launched The

Fund Finder, an online searchabledatabase aimed at facilitating thecomplex process of project preparation– the entire spectrum of activities thathave to be undertaken before a projectfinancing structure can be put inplace. Fund Finder helps projectpromoters to locate finance for early-stage institutional, legal, social,environmental, financial, regulatory,engineering and advisory services.

Among other resources, the ICAKnowledge Center has been developedas an information-sharing database,holding and publishingdocumentation in the key areas ofenergy, transport, water, ICT andgeneral infrastructure.

The ICA has strong backing. Itsbilateral members include the G8countries: Canada, France, Germany,Italy, Japan, Russia, the UnitedKingdom and United States.Multilateral institutions include theAfrican Development Bank Group,European Commission, EuropeanInvestment Bank, Development Bankof Southern Africa and World BankGroup. The ICA decided in 2011 (atits annual meeting) to extend ICA

membership to all G20 countries inrecognition of the increasing role ofsome G20 countries in Africa’sinfrastructure development. Theexpansion to G20 will present greateropportunity for an enlargedconsortium to co-ordinate efforts toachieve greater impact forinfrastructure development on thecontinent.

Increasingly, the ICA is working toimprove the co-ordination of activitiesamong members, as well as betweenmembers and other significantsources of infrastructure finance,including China, India, Arab/Islamicfinanciers (who form the ICA’s ArabCo-ordinating Group), Africanregional development banks and theprivate sector.

The ICA helps to monitor progress,mobilise finance and resources, andpromote knowledge and best practicein support of Africa infrastructuredevelopment, with a particular focuson regional programmes and projects.In the ICA’s Strategic Business Plan2014-2016, the African Union’s PIDAwill be the central focal point of ICAregional programme activities. �

About the ICA

The ICA is supported by a small secretariat hosted by theAfrican Development Bank in Tunis. The Secretariat is fundedby voluntary contributions from ICA members and staffed bypermanent staff from the AfDB, consultants and experts onsecondment from ICA member countries.

The Secretariat works towards the ICA’s mission to help scaleup investment for infrastructure development from public andprivate sector sources.

A good example of this was the ICA’s co-sponsorship of thethird Lake Victoria Basin Donors Consultative Conference,held in Entebbe, Uganda, in June 2013. Some 22 projectconcepts were presented – and the majority of developmentpartners present expressed a firm interest in supporting them.To achieve this, the ICA Secretariat worked closely with staff ofthe Lake Victoria Basin Commission (LVBC) to fine-tune theproject concept notes, develop an agenda, promote theconference, invite international donors, set up matchmakingand networking sessions, facilitate break-out sessions andlead the follow-up sessions immediately after the conference.The 22 project concept notes reflected months of hard workby LVBC, supported by the ICA Secretariat.

Lake Victoria is the largest inland body of water in Africa andarguably its most important inland waterway, an important

resource for water supply and sanitation, for powerproduction and irrigation. Its full potential as a naturalresource is not fully exploited for lack of investment.

Yet sustainable development of the Lake Victoria Basin couldplay a pivotal role in unlocking the economic potential, andincreasing integration, of the East African Community partnerstates. The main objective of the Lake Victoria Basin DonorsConference in Entebbe was to solidify partnerships withdonors and development agencies – to support the LakeVictoria Basin Commission’s social, environmental andinfrastructure programmes.

The ICA, via its Energy Platform, also undertook a diagnostic ofpublic sector technical capacity in the area of Power PurchaseAgreements, with the objective of reviewing existing capacity,identifying needs and assessing the gaps in PPA negotiationin five Sub-Saharan countries (Kenya, Tanzania, Mozambique,Ghana and Senegal). The ICA also made recommendations toprovide Technical Assistance (TA) on issues related to poweragreements, with a particular focus on risks and riskmanagement in IPP projects. As a subsequent phase of thisdiagnostic, ICA is currently working with the AfDB-basedAfrican Legal Support Facility (ALSF) to provide TA to pilotcountries for negotiating and standardising PPAs.

ICA in Action


Interview

How does ICA develop and deployknowledge and analytical tools to help tomatch the demand for infrastructure withthe supply?

The question of filling the gapbetween the unlimited demand forinfrastructure tools and knowledgeand the limited supply is not easy.However, I am pleased to note thatICA has made substantialcontributions to address this issue.ICA produced a Project PreparationUser guide. This was later convertedinto a web tool called ProjectPreparation Fund Finder. This toolhelps project promoters looking forfunds at each stage of the projectcycle.

We also created an online knowledgecentre for sharing reports and studieson African infrastructure issues. ICAhas also produced a number of topicalknowledge products/studies, all aimedat deploying specialist knowledge onAfrica’s infrastructure landscape. Tocite a few examples:

(i) When the Power Comes: AnAnalysis of IPPs in Africa;

(ii) Regional Power Status in AfricanPower Pools report;

(iii) Study to assess the potential forenhanced private participation in themaritime and air transport sectors inAfrica; and

(iv) A study on the assessment ofproject preparation facilities in Africa,commissioned by the G20.

These studies and other updatesabout infrastructure development inAfrica are also promoted in ourquarterly electronic newsletter called@ISSUE. We also use thesepublications as advocacy tools – inthat we disseminate them to policy-makers – who then take the necessarysteps for implementing therecommendations within those

reports and publications.

So many planned African infrastructureprojects exist in a regional context, whichmakes project preparation even morecomplex than projects located in just onecountry. How does ICA, help monitorprogress, mobilise finance and promoteknowledge and best practice in thedevelopment of regional Africaninfrastructure?

It is a well-known fact that regionalprojects and programmes are muchmore complex in implementation thannational projects because of thediversity in the interest, outlook andstrategy of individual countries. ICAsupports efforts led by the AU and theRECs and specialised continentalinstitutions. The centre ofconvergence of all these efforts is thepromotion of the Programme forInfrastructure Development in Africa(PIDA). Some ICA memberschampion specific programmes underPIDA e.g. Eastern & CentralTransport Corridors, Horn of AfricaInitiative, North South Corridor, andWest African Power Pool. Priorityprojects under these four programmesare included in PIDA.

Under its regional programmesactivities, ICA assists in resourcemobilisation for project preparationand implementation of projects byadvising on sources of financing,supporting investment and donorconferences, disseminating projectlists and organising matchmakingevents. As an example, ICA recentlysupported the Lake Victoria BasinCommission’s (LVBC) InvestmentConference where 22 project conceptnotes were presented and receivedfirm commitments by participatingfinanciers.

There is now a widespread recognitionthat the private sector will need to play anincreasing role in funding PIDA’s priorityprojects. Recognising that ICA serves asa platform to broker increased financingof African infrastructure projects, how

“ICA has produced anumber of topicalknowledge products/studies, all aimed atdeploying specialistknowledge on Africa’sinfrastructure landscape”

MohamedHassanThe ICA Co-ordinator answers questions on key aspects ofthe consortium’s work


can ICA become involved in efforts tohelp mobilise private sector funding forPIDA projects?

ICA actively participated in the taskforce for PIDA implementation toprovide support on the mobilisation offunds. ICA is also currentlyundertaking financial structuring forPIDA projects to examine the possiblemodalities of financing the PIDA PAP.It is worth noting that, ICA’s secondStrategic Business Plan (SBP) 2014-2016 prioritises and will thus allocatemore resources to the facilitation ofregional infrastructure programmesparticularly PIDA PAP.

ICA will support more matchmaking,investment conferences and otherresource mobilisation activities. ICAmembers will continue to supportupstream project activities such asproject preparation (feasibilitystudies, economic and financialanalysis etc.) to improve thebankability of projects andprogrammes.

ICA’s added value and comparativeadvantage in this regard is itsconvening and coordination powerwhich is unparalleled. The consortiumencompasses 13 key members whichare the G8 countries, threemultilateral banks – World Bank,African Development Bank andEuropean Investment Bank –European Commission and theDevelopment Bank of South Africa, allof whom are significant players withleverage in terms of infrastructuredevelopment in Africa.

Respondents to our private sector surveyindicate that a lack of institutionalcapacity and/or insuZicient regulatoryframeworks deterred them from investingin certain countries. What needs to bedone to improve institutional capacityand regulatory frameworks, and how canICA help in this process?

ICA acknowledges that appropriateskills in local government agenciesand line ministries are ofteninadequate to assess and planappropriately for the formulation andmanagement of infrastructuredevelopment and services, as well asthe enforcement of policies andregulation. This lack of technicalcapacity leads to a coordinationfailure on the part of government,across the myriad of local agencies

involved in delivering infrastructureservices.

Effective institutions are a key part ofdeepening policy reforms in theinfrastructure sector with a view toattracting private sector participation.Such reform measures are necessaryto strengthen regulatory mechanismsin order to create a level and well-defined, playing field for participantsin infrastructure development.

Regulatory and institutional reformtargeted at the removal of bottlenecksto enhance private sector participationin infrastructure development is a keymandate of the ICA. ICA notes that itis important that policy reformsbalance national interests with privatesector incentives.

ICA members and partnerinstitutions are helping authoritiesand governments on the continent todetermine the optimum public/private split of duties andresponsibilities in infrastructuredevelopment and service provisionand helping with the establishmentof effective regulatory bodies that areindependent and have appropriatelydefined mandates.

ICA members have helped establishPPP units in countries like Senegaland Ghana. ICA is also supportinginstitutional capacity building acrossthe continent. The ICA Secretariat incollaboration with the African LegalSupport Facility (ALSF) is supportingsome African countries with thestandardisation of PPP contracts inthe energy sector with a particularemphasis on power purchaseagreements (PPAs).

ICA via the Initiative for RiskMitigation in Africa (IRMA, an ICAinitiative) will promote riskmitigation instruments and otherinnovative credit enhancement/financing instruments to the privatesector to help leverage additionalresources for infrastructuredevelopment on the continent. Westrongly believe that all these effortswill bridge the institutional capacityand regulatory constraints andcontribute to the enhancement of theprivate sector’s participation ininfrastructure development on thecontinent. �

“Regulatory andinstitutional reformtargeted at the removal ofbottlenecks to enhanceprivate sectorparticipation ininfrastructuredevelopment is a keymandate of the ICA...

ICA members and partnerinstitutions are helpingauthorities andgovernments on thecontinent to determine theoptimum public/privatesplit of duties andresponsibilities”


Definitions Budget DataBudget allocations: Total approvedgovernment budget for the respectiveitem.

Total infrastructure budget: Sumof energy, water and sanitation,transport, and ICT budget allocations.Where available, significant multi-sector or other infrastructureallocations are indicated separately.

ICAMembersAfDB, DBSA, EC, EIB, G8 countries,and the World Bank Group. In 2011all G20 countries were invited to jointhe ICA. The AU Commission,NEPAD Secretariat and RegionalEconomic Communities participateas observers at ICA meetings.

InfrastructureHard infrastructure: Where fundshave been allocated and used toproduce physical infrastructureoutputs.

Soft infrastructure: If measurable –where funds have been allocated tosupport or accompany the productionof physical infrastructure outputs,including capacity building, enablinglegislation, project preparation.

Project preparation: Theundertaking of all project preparationcycles or development activitiesnecessary to take an infrastructureproject from identification throughconcept design to financial close. Thisincludes feasibility testing andfinancial and legal structuring, as wellas raising capital.

FundingCommitments: Direct loans and/orgrants approved in a given year toprojects over their lifetime.

Disbursements: Money outflowgoing to infrastructure projects duringa given year.

ODA (official development aid):Grant or loan with public concessionalmodalities administered by donorgovernment agencies.

Non ODA/NC: Non-concessional

funding from public or privatesources.

LocationNorth Africa: Algeria, Egypt, Libya,Mauritania, Morocco, Tunisia.

Western Africa: Benin, BurkinaFaso, Cape Verde, Gambia, Ghana,Guinea, Guinea Bissau, Côte d’Ivoire,Liberia, Mali, Niger, Nigeria, Senegal,Sierra Leone, Togo.

Central Africa: Burundi, Cameroon,Central African Republic, Chad,Congo, Democratic Republic of Congo,Equatorial Guinea, Gabon, Rwanda,São Tomé and Príncipe.

Eastern Africa: Djibouti, Eritrea,Ethiopia, Kenya, Seychelles, Somalia,South Sudan, Sudan, Tanzania,Uganda.

Southern Africa excluding RSA:Angola, Botswana, Comoros, Lesotho,Madagascar, Malawi, Mauritius,Mozambique, Namibia, Swaziland,Zambia, Zimbabwe.

RSA: Republic of South Africa.

Regional DevelopmentBanksCentral African States DevelopmentBank (CASDB), DBSA, an ICAmember), EBID, EADB, West AfricanDevelopment Bank (WADB)

SectorTransport: Airports, ports, rail, road.

Energy: Generation, transmissionand distribution of electricity and gas(including pipelines, and associatedinfrastructure).

Water and sanitation: Sanitation,irrigation, (trans-boundary) waterresource infrastructure, water supply,waste (solid & liquid) treatmentand management.

ICT: Information and communicationtechnology, including broadband,mobile network, satellite.

Multi-sector: Not sector specific,crosscutting. Could includeimplementation of a PPP unit,capacity building programmes.


Acronyms ADF – African Development Fund

AFD – Agence Française deDéveloppement (France)

AfDB – African Development Bank

BADEA – Arab Bank for EconomicDevelopment in Africa

BDEAC – Banque de Développement desEtats de l’Afrique Centrale

BIDC – Banque d’Investissement et deDéveloppement de la CEDEAO (EBID)

bn – 1 billion = 1,000,000,000.00

BIO – Belgian Investment Company forDeveloping Countries

BOAD – Banque Ouest Africaine deDéveloppement

CADF – China-Africa Development Fund

CAGR – Compound annual growth rate

CAR – Central African Republic

CIF – Climate Investment Fund

COFIDES – Spanish DevelopmentFunding Company

DBSA – Development Bank of SouthernAfrica

DEG – Deutsche Investitions- undEntwicklungsgesellschaft (KfW Group)

DFI – Development Finance Institution

DRC – Democratic Republic of Congo

EAC – East African Community

EADB – East Africa Development Bank

EAPP – Eastern African Power Pool

EBID – ECOWAS Bank for Investment andDevelopment

EC – European Commission

ECA – Export Credit Agency

ECOWAS – Economic Community OfWest African States

EDFI – European Development FinanceInstitutions

EDF – European Development Fund

EIB – European Investment Bank

EXIM – Export Import Bank

G8 – Group of Eight (Canada, France,Germany, Italy, Japan, Russia, UK, US)

G20 – Group of 20 (Argentina, Australia,Brazil, Canada, China, France, Germany,India, Indonesia, Italy, Japan, SouthKorea, Mexico, Russia, Saudi Arabia,South Africa, Turkey, UK, US and the EU)

GIZ – Deutsche Gesellschaft fürInternationale Zusammenarbeit

IBRD – International Bank forReconstruction and Development

ICT – Information and CommunicationsTechnology

IDA – International DevelopmentAssociation (World Bank Group)

IDC – Industrial DevelopmentCorporation of South Africa Limited

IFC – International Finance Corporation(World Bank Group)

IPP – Independent Power Producer

IPPF – Infrastructure Project PreparationFacility

ISDB – Islamic Development Bank

ITF – Infrastructure Trust Fund

JICA – Japan International Co-operationAgency

KfW – Kreditanstalt für Wiederaufbau

LIC – Low-income country

m – 1 million = 1,000,000.00

MDB – Multilateral development banks

NEPAD – New Partnership for Africa’sDevelopment

NTF – Nigeria Trust Fund

ODA – OZicial Development Assistance

OeEB – Development Bank of Austria

OFID – Organisation of the PetroleumExporting Countries (OPEC) Fund forInternational Development

PAP – PIDA Priority Action Plan

PFM – Public Financial Management

PIDA – Programme for InfrastructureDevelopment in Africa

PPIAF – Public-Private InfrastructureAdvisory Facility

Proparco – French Investment andPromotions Company for EconomicCo-operation

RAPs – Resettlement action plans

RSA – Republic of South Africa

SADC – Southern African DevelopmentCommunity

SFD – Saudi Fund for Development

SME – Small- and medium-sizedenterprise

SSA – Sub-Saharan Africa

TA – Technical Assistance

UEMOA – West African Economic andMonetary Union

UNECA – United Nations EconomicCommission for Africa

$ – US dollar

WAPP – West African Power Pool

WBG – World Bank Group

WSP – Water and Sanitation Programme


List of Graphics andMaps

GraphicsFigure i: ICA commitments and disbursements, 2010-2012 9

Figure ii: ICA member commitments ODA/non-ODA, 2012 9

Figure iii: ICA members: Internal factors that cause delaysin disbursements 10

Figure iv: ICA members: External factors that cause delaysin disbursements 10

Figure v:Greatest challenge facing private sector participants 10

Figure vi: Private sector view: Top 10 countries most attractivefor investment 10

Figure 1: ICA members’ commitments & disbursements, 2010-12 12

Figure 2: Non-ICA major commitments, 2010-2012 12

Figure 3: Private commitments by sector, 2010-2012 12

Figure 4: Financing flows into Africa’s infrastructure, 2012 13

Figure 5:Who is financing Africa’s infrastructure in 2012 14

Figure 6:Geographical sources of finance, 2012 14

Figure 7: Shares of external finance, 2012 14

Figure 8: European bilateral sources, 2012 14

Figure 9: Arab Co-ordination Group, 2012 14

Figure 10: Asian sources, 2012 14

Figure 11: Multilateral financing sources, 2012 15

Figure 12: The Americas, 2012 15

Figure 13: ICA member commitments by sector, 2012 17

Figure 14: ICA commitments by sector and by region, 2010-12 18

Figure 15: ICA member commitments by region (%), 2012 18

Figure 16: ICA members’ commitments by region, 2012 19

Figure 17: ICA member’s disbursements by region, 2012 19

Figure 18: ICA members’ commitments by sector and region 20

Figure 19: ICA members’ disbursements by sector and region 20

Figure 20: Trends in selected ICA members’ regionalinfrastructure portfolios, 2010-2012 21

Figure 21: ICA members’ multilateral commitments by region 22

Figure 22: ICA members’ bilateral commitments by region 22

Figure 23: ICA members’ hard and soft infrastructurecommitments, 2012 23

Figure 24: ICA members’ hard and soft infrastructuredisbursements, 2012 23

Figure 25: ICA members’ hard and soft commitments by sector 24

Figure 26: Trends in ICA members’ hard infrastructurecommitments, 2010-2012 24

Figure 27: Trends in ICA members’ soft infrastructurecommitments, 2010-2012 24

Figure 28: Relation between commitments and disbursementsfor projects completed in 2012 25

Figure 29: ICA soft infrastructure commitments by type, 2012 26

Figure 30: Soft infrastructure commitments by category, 2012 26

Figure 31: Project preparation commitments by sector, 2012 26

Figure 32: Project preparation commitments by sub-component,2012 26

Figure 33:Most challenging project preparation phase:implementing projects 27

Figure 34:Most challenging project preparation phase:organising finance 27

Figure 35: Internal factors that cause disbursement delays 28

Figure 36: External factors that cause disbursement delays 28

Figure 37: Total non-ICA commitments by region, 2012 30

Figure 38: Regional development bank commitments by sector 31

Figure 39: China: projects and commitments, 2011 and 2012 32

Figure 40: Chinese commitments by sector, 2011 and 2012 32

Figure 41: Arab Co-ordination Group: projects and commitments 33

Figure 42:Arab Co-ordination Group commitments, 2009-2012 34

Figure 43: Arab Co-ordination Group commitments by sector 34

Figure 44: Commitments by selected European ICA members 35

Figure 45: EDFI members’ infrastructure commitments, 2012 35

Figure 46: Brazil – Total commitments by sector, 2012 36

Figure 47: India – Total commitments by sector, 2012 36

Figure 48: South Korea – Total commitments by sector, 2012 36

Figure 49: Infrastructure allocation as % of total budget,2012; Infrastructure sector with the highest allocation, 2012 38

Figure 50: Sector with the highest growth rate, 2010-2012 38

Figure 51: Trends in infrastructure allocation, 2010-2012 38

Figure 52: Trends in African national budget allocations 38

Figure 53: Total private investment by sector, 2008-2012 40

Figure 54: Total private investment, 2008-2012 40

Figure 55: Private investment by sector 40

Figure 56: Total private infrastructure investment, 2012 40

Figure 57: Top considerations when deciding to invest 41

Figure 58: Risks that must be mitigated to secure financing 41

Figure 59:Measures used to mitigate risks 41

Figure 60: Countries most attractive for investment 42

Figure 61: Challenges in implementing infrastructure projects 43

Figure 62: Challenges in organising finance 43

Figure 63: Most important factor causing bottlenecks inproject preparation 43

Figure 64:Greatest challenge facing the private sector 44

Figure 65: Use of finance (project, corporate and donor) 44

Figure 66: Revenue from African infrastructure 44

Figure 67: African portfolio intentions 44

Figure 68: Total infrastructure commitments by sector, 2012 46

Figure 69: ICA member commitments by sector, 2012 46

Figure 70: ICA member disbursements by sector, 2012 46

Figure 71: Trends of ICA funding to the transport sector 47

Figure 72: Trends of ICA funding to the water sector 51

Figure 73: Trends of ICA funding to the energy sector 53

Figure 74: Trends of ICA funding to the ICT sector 55

MapsMap 1: Infrastructure interconnections 8Map 2: Transport infrastructure and 2012 commitments 48Map 3: Nacala road corridor project (NRCP) 50Map 4: Transport corridors and projects 49Map 5:Water infrastructure and 2012 commitments 52Map 6: Energy infrastructure and 2012 commitments 54Map 7: ICT infrastructure and 2012 commitments 56


Infrastructure Interconnections

After a 59% slump from $29.1bn in2010 to $11.9bn in 2011, ICAmembers reported commitmentsof $18.7bn in 2012, up 57% on theprevious year, of which about 6% weresoft infrastructure commitments.

ICA members reported 2012disbursements of $12.8bn, up 47%from $8.7bn in 2011 and up 32% from$9.7bn in 2010.

Between 2010 and 2012 ICAmembers’ non-ODA commitmentsdecreased in absolute numbers and inrelation to overall commitments. TheEC and the UK have reported no non-ODA figures for the last three years.WBG (excluding IFC) reported reducednon-ODA lending from $5.7bn in 2010to just $11m in 2011 to zero in 2012(IFC $820m non-ODA data wasreceived post data analysis). EIB andAfDB reported a significantly higherproportion of non-ODA to ODA of 80%and 40% respectively. DBSA, incontrast, had non-ODA commitmentsonly. The bilateral with the highest non-ODA share at 73% in 2012 was the US.

The largest share of commitmentsby sector went to energy (41.9%),followed by transport (30%) and water(24.6%). ICT attracted just 1% andmulti-sector projects 2.5% of totalcommitments, with the remainderunallocated. The largest shares ofcommitments by region were made toEastern Africa and North Africa.

Strong growth is seen in regionalcommitments by ICA memberssince 2010 while data indicatesmomentum is building behind thePIDA initiative. Disbursements toPIDA projects remain low, withcommitments reported by ICAmembers standing at $3.5bn in 2012,though there is a pipeline of potentialfuture PIDA funding commitmentsworth more than $8.7bn. Thedisbursement rate may be negativelyaffected by the number of projects stillin the preparatory or resourcemobilisation phase.

Total ICA member disbursementsin 2012 were $12.8bn. In 2012,Eastern Africa received mostdisbursements (21.8%) followed byNorth Africa (18.1%), Western Africa(15.6%) and RSA (20.3%) withSouthern Africa and Central Africa at8.8% and 8.7% respectively.

Of 2012 disbursements by ICAmembers’, energy received most(37.5%), followed by transport(32.3%), water (20.7%), multi-sectorprojects (3.9%), and ICT (1.9%), with3.7% unallocated.

A group of twenty Africannational governments reportedinfrastructure spending to theICA of $42.2bn, a proportion of whichmay have come from donor sources.This data indicates that theirinfrastructure portfolios are generallyon the rise, growing 8.6% on averageper year between 2010 and 2012, withthe strongest sustained upward trendin the energy sector. Sectors with thehighest budget allocations on theAfrican continent are transport andenergy, with 36% and 30% of totalinfrastructure budgets respectively.

China’s lending continues to bestrong, although slightly down onlast year at $13.4bn but still largerthan any other single entity.Brazil, India and South Korea are nowsignificant contributors while therehas been a significant increase incommitments from the Arab Co-ordination Group, totalling $5.15bn in2012, up from $2.9bn in the previousyear.

Total reported commitmentsdiscussed in this report, includingthe sample of African nationalgovernments amount to $89.6bn,of which 21% came from ICAmembers while 23% came fromnon-ICA external public sectorfunding. This figure is incompleteand is based only on officially reported


Figure iiTotal ICA member commitments byODA/non-ODA, 2012

Figure iICA commitments and disbursements,2010-2012

1. KeyMessages and Findings

data. There may also be doublecounting in respect of the Africannational budgets where donor moneyhas gone into such budgets. Theprivate sector contributed just 9% oftotal reported commitments, much ofit focused on just a few big energyprojects.

Regional development banks lentmainly to South Africa almost entirelyfor energy projects and Western Africafor energy and transport projects.

There may be an increasedavailability of domestic/African/diaspora capital to fund projects,possibly boosted by new catalysts formobilising private capital, notably theAfrica50 Fund. It aims to mobilise


domestic capital in the form of pensionfunds and central bank reserves, plusdiaspora backing to financeinfrastructure projects, with somefocus on the PIDA project pipeline.

Excluding exceptional investmentsin energy in Morocco and SouthAfrica, the continent has seen ayear-on-year decline in privatecapital for infrastructure projects.Elsewhere in Africa, a decline ininvestment is evident, falling from$2.587bn in 2011 to $578m in 2012.This was a year of extremelyunbalanced investment. Energyprojects in Morocco and South Africaaccounted for 93% of total privateinvestment in infrastructure across thecontinent. According to PPI data, theseinvestments account for 34% of allprivate investment in infrastructureacross the continent from 2008 to 2012.

Across the continent, ICAmembers’ commitments to waterinfrastructure have risen. At$4.6bn, 2012 commitments to waterprojects are 35% higher than 2011 and21% up on 2010. Regional variance isproblematic, however. While Easternand Western Africa have fared well,for example, Central Africa hasgenerally received the lowest level ofinvestment compared to all otherregions.

ICA members’ investment intransport infrastructure has beengenerally on the rise, with 2012seeing a 47% rise in investment overthe previous year. However, CentralAfrica once again bucks the trend,seeing a 65% decrease in investmentin 2012 over 2011.

In the energy sector, ICA memberfunding substantially more thandoubled to $7.8bn in 2012 from $3bnin the previous year but is still lessthan in 2010, when memberscommitted $12.9bn to energy projects.North Africa received $2.4bn or 31% ofcommitments for 2012, while RSAreceived 21%, Western Africa received13%, Eastern Africa 16%, SouthernAfrica 7% and Central Africa 6%.

ICA members committed just$182m for ICT projects in 2012,with North and Western Africa

receiving the lion’s share. This isa very small amount compared withcommitments to other sectors. Whilethe private sector continues to investsubstantially in existing mobilenetworks, there were no substantialcommitments or financial closuresreported on new ICT projects acrossthe continent. Private sector interestin new ICT initiatives is waning,indicating that pump-priming fromoutside the private sector is requiredto stimulate investment in aspects ofICT that are still very much needed

Partner risk appeared to be themain consideration taken intoaccount by private sectorinvestors deciding whether toinvest, followed closely by concernsabout the legal and regulatoryenvironment and about political risk,which ranked second and thirdrespectively among respondents’concerns. Profitability and projectfeasibility ranked fourth and fifth. �

Figure vGreatest challenge facing private sectorparticipants

Figure viPrivate sector view: Top 10 countriesmost attractive for investment

Figure iiiICA members: Internal factors that causedelays in disbursements

Figure ivICA members: External factors thatcause delays in disbursements

Positive trends characterise asubstantial amount of this analysis ofAfrican infrastructure, at least on theface of it:

� In 2012, ICA members committedsubstantially more than they didin 2011, even though they did notcommit as much as they did in2010 (Figure 1, right).

� China remains by far the biggestfinancier of Africa’s infrastructure,although in 2012 it committedrather less than it did in 2011.

� High growth countries such asBrazil, India and South Korea areplaying a role providing supportfor infrastructure that will benefittheir domestic businesses as wellas Africa.

� African national governmentsappear to be investing more ininfrastructure, and regionaldevelopment banks continue toplay an important role.

Perhaps one of the most encouragingaspects of the headline trends is thatprivate sector capital is mobilisingfast, but scratch below the headlinefigure and some of the trends aredisappointing, with very fewsubstantial investments across Africain the transport and the water andsanitisation sectors and, with mobiletelephony on the continent maturing,nowhere near as much interest in theICT sector on the part of the privatesector.

Moreover, it seems that by strippingaway a few very large projects, oftenin North African countries or SouthAfrica, the underlying trends amongall financiers and across most sectorsis broadly flat.

Another disappointing trend is anapparent slowdown in disbursements,the reasons for which are somewhatunclear but may reflect challengesencountered by ICA memberscanvassed for this report who reportedthat they were struggling to meet

demand and attempting to stemgrowing backlogs.

Members also reported that theythought regional projects – muchfavoured in principle by manystakeholders in Africa’s infrastructure– may actually be a prime cause ofsuch delays. Thus, if the current cropof planned PIDA and other regionalprojects in the pipeline go ahead, evenmore delays in disbursements may beencountered. So far however, it seemsthat the upwards trend needed for theprivate sector capital required for itspipeline to become a reality has yet tobe seen.

There are limitations to the trendanalysis contained in this section,notably the lack of consistent datasetsand the absence of any centraldatabase of private sector investors’activities or commitments made byChina. Nevertheless, some of thetrends identified, though admittedlyindicative, appear to point inreasonably accurate directions. �


2. Trends

2.1 Introduction


Trends: The Big Picture

Figure 1

ICA members’ commitments & disbursements, 2010-2012

Figure 2Non-ICA major commitments,2010-2012

Figure 3Private commitments by sector,2010-2012

Figure 1 reveals some of the key trendsin commitments and disbursementsmade by ICA members for thedevelopment of Africa’s infrastructurein the three-year period 2010-2012.

It is immediately obvious there aresome very wide swings in levels ofcommitments, notably in the energysector and particularly in terms ofamounts committed to North Africaand RSA, which were exceptionallylarge in 2010. Energy remains themost committed to sector while wateris the only one of the four main sectorsthat received steadily morecommitments in the three-year period.

The level of disbursements lag behindcommitments, underlining that theprocess of deploying finance to makeprojects happen is subject to delays.It is very encouraging to see in Figure1 that disbursements of $12.7bn weremade in 2012 compared with $8.7bn in2011 and $9.7bn in 2010, as reportedin previous years’ ICA annual reports.But, over the three year period, nearly$60bn of commitments were madewhile disbursements amounted toaround $31bn.

Non-ICA members’ commitments toAfrica’s infrastructure have brokenthe $20bn ceiling for the first time,even though China’s contribution fellback from $14.9bn in 2011 to $13.4bnin 2012. Figure 2 shows that this wasmore than compensated by the ArabCo-ordination Group – which tends toinvest in a greater number of smallerprojects than some other funders –whose commitments surged from$2.9bn in 2011 to $5.1bn in 2012.South Korea and Brazil are emergingas potentially big future investorsalongside India.

Figure 3 indicates the overwhelmingpreference for private capital to flowinto the energy sector, apparentlyindicating a need for strategies toattract private investors to othersectors. The vast majority of theprivate sector’s investments in 2012were earmarked for projects in NorthAfrica and RSA, which seems to pointto a need for strategies to attractprivate investors to other regions.

Figure 4 does not show the totalamount of money committed to Africa’sinfrastructure development. It merelyshows, along with Figures 5,6,7,8,9 and10, the total of amounts of fundingverifiably committed by different actorsor groups of actors. For example,Figure 4 excludes amounts committedby more than half of Africa’s nationalgovernments and it excludescommitments from several sources –public and private – that have not beencaptured because they have not beenreported in any official or otherwisenoticeable or verifiable way.

But while its underlying dataset isincomplete, Figure 5 (right) doesidentify the main actors in Africa’sinfrastructure development andapproximates the relative importanceof their roles. It is apparent that, sofar, the private sector capital some sayis needed to breathe life into Africa’sinfrastructure development has notyet mobilised and later in this reportit appears to be on a downward

trajectory except in small segments ofthe energy sector. Hopefully,initiatives such as the Africa50 Fundwill succeed in raising private sectorcapital but, for the moment, it seemsthat, without external support orincentives, infrastructure developmentin Africa has yet to be seen by asufficient number of potential privatesector actors as a commerciallyattractive proposition.

But the key dynamic noticeable inrecent ICA Annual Reports has beenthe dramatic increase in bilateralcommitments by China toinfrastructure development. Chineseinvestments appear to have levelledoff but an increasing amount ofbilateral support appears to be comingfrom Brazil, India and South Korea,while commitments from Arab fundsrose significantly in 2012 comparedwith the previous year. The total ofnon-ICA member external publicsector commitments in 2012 exceededby 11% those of the membership.

Some of the projects supported by thisgrowing group of non-ICA membersclearly support businesses domiciledin the funding source’s country, forexample Brazil’s support for Brazilianconstruction giant Odebrecht andminer Vale in Mozambique. A similarparadigm is recognisable in projectsfunded by ICA members but may bemore prevalent among the growingsegment of bilateral investors inAfrica’s infrastructure.

So maybe the private sector is alreadyplaying a wider role than at firstappears as a catalyst of bilateralpublic sector sources of finance incountries keen to do business withand develop new relations withcountries in Africa.

Total external financial support forAfrica’s infrastructure development in2012 grew by 14% to reach $47bncompared with $41.5bn in 2011. Buttotal commitments are stillsubstantially less than was reportedin 2010.

13 |INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICAANNUALREPORT 2012

2.2 Who is financingAfrica’s infrastructure?

Figure 4Financing flowsinto Africa’sinfrastructure, 2012


Figure 6Geographicalsources offinance, 2012

Figure 5Who is financingAfrica’sinfrastructurein 2012

Figure 7Shares of externalfinance, 2012

Figure 8

European bilateral sources, 2012

Figure 9

Arab Co-ordination Group, 2012

Figure 10

Asian sources, 2012


In 2010, the ICA Annual Reportindicated a surge in investment to$55.9bn, after a significant increase of44% from 2009, when $39.6bn ofexternal support for Africa wasreported.

With total commitments appearing tobe reasonably close for three out of thelast four years, it seems that just a fewvery large commitments coinciding inone year may have spiked the figuresfor that year.

Certainly this is true in the analysisof external financial support forAfrica’s infrastructure development in2012, where a few big energy projectson the northern and southern tips ofthe continent vastly inflated privatesector investments, while across therest of Africa and in all other sectorsno such variations appeared.

Although the headline figure ofcommitments remains broadlyconstant for three out of the last fouryears, there has once more been achange in the proportion of supportprovided by different actors in Africaninfrastructure development.

Commitments made by ICA membersincreased to $18.7bn, an increase fromthe $11.9bn reported in 2011 but stillinsufficiently revived to reach the$29.1bn reported in 2010. Higherlevels of commitment from ICAmembers were supported by somesubstantial increases reported by theEC and AfDB. These gains were offsetby other multilaterals that, combined,committed only just over half of the$12bn committed in 2010.

Beneath the headline figures, there aresome significant shifts within the ICAmembership too in terms of bothregional and sectoral increases anddecreases.

Support from China, which committeda record-breaking estimated $14.9bnin 2011, has fallen back by onepercentage point to $13.4bn.External financial support from Indiaand South Korea is becoming a

significant factor in Africa’sinfrastructure development, with eachcountry committing at least $650mbased on known investments.

Signs are that Brazil is likely tobecome an even more significantstakeholder in Africa’s infrastructuredevelopment after a flurry of dealingsin Mozambique at the end of 2012.Several countries are also becomingvery aware that Africa’s infrastructuralshortage presents difficulties to theirprivate firms who want to do businesson the continent. As a result, publicfunding of projects will increase asstate-owned institutions, such asBrazil’s Banco Nacional deDesenvolvimento Económico e Social(BNDES), seek to support theircountry’s business ventures on thecontinent.

External financing from countriesother than China in 2012 amounted toaround $1.8bn, although the figurecould be much higher than that as itis based on reported investments anddoes not account unreportedcommitments.

There has been a surge in externalfinancing from Arab funds, driven bypost-‘Arab Spring’ sentiment andperceptions that Islamic financeprovides excellent tools forinfrastructure development, whichwas reported as substantially morethan the figure of $2.9bn recorded in2011 to $5.2bn in 2012. Increasedavailability of Islamic funding for

infrastructure projects across Africa isalso likely to continue in the mediumterm.

Regional development banks haveprovided an additional $1.5bn. Thismeans that during 2012, other publicsector sources of finance, includinglarge emerging economies, members ofthe Arab Co-ordination Group, DBSAand EBID combined to commit some$22bn to African infrastructureprojects.

Private sector commitments to theICT sector are no longer, as they werein previous years, buoyed byinvestments in genuinely new mobiletelephony projects, although operatorsare investing substantially to expandand improve existing mobilenetworks. The biggest private sectorinvestments in 2012 are thus not inthe ICT sector, but in the energysector where there has been multi-billion dollar interest in Morocco andSouth Africa.

External financing clearly continuesto play a very important role inAfrica’s infrastructure analysis.Budget allocations made in 2012 byselected African countries amountedto a total of $42.2bn, around 11% lessthan the $47.2bn of external financingcommitted to the continent,underlining the importance of theworld’s efforts to stimulateinfrastructure development acrossAfrica. �

Figure 11

Multilateral financing sources, 2012

Figure 12

The Americas, 2012


2.3 Momentumbuilds behind PIDA

Data provided by ICA membersconfirms the observations offinanciers and other stakeholders thatmomentum is building behind thecontinent-wide initiative to raise aswathe of the African population outof poverty by developing energy,transport, ICT and trans-boundarywater resources, the Programme forInfrastructure Development in Africa(PIDA).

In response to a question posed by theICA Secretariat, ICA membersreported that they had madedisbursements of $81.7m in 2012 tosupport PIDA projects. Butcommitments reported to the ICASecretariat from members alone stoodat $3.5bn and questionnairesexhibited a broad enthusiasm amongmembers to support PIDA projects.

This is a new dataset in the ICA’sreporting of African infrastructuretrends and, therefore, historiccomparisons will not be possible untilfuture reports. But questioning of ICAmembers’ future intentions showed apipeline of PIDA projects – 185different schemes were mentioned – ofmore than $8.7bn.

This build-up of support for PIDA isessential as the infrastructuredevelopment programme has some

very ambitious targets, includingachieving minimum 60% energyaccess for the African population by2030. PIDA is based on an initial listof some 51 projects, but as the ICAresponses show, there are many moreschemes included within theprogramme, given that many PIDAschemes involve multiple projects,such as transport corridor initiatives.Some of these transport corridorschemes are described and illustratedin some detail in this report (see pages47-50), using data from the PIDApartners – NEPAD, AUC and AfDB –and analysis of the Nacala RoadCorridor Project.

Transport features heavily among the2012 PIDA disbursements. Donorsprominent in this listing include theEC, which is actively supportingprojects in the energy and watersectors as well as several transportprojects. The AfDB, meanwhile,disbursed to as many transportschemes as it did to energy and waterschemes. Japan’s disbursements arealso heavily skewed towards transportprojects. The German agencies’portfolios are more balanced betweenenergy and water. The EIB providedsome of the biggest disbursementsduring 2012, including to the WestAfrican Gas Pipeline and theASECNA IV transport project. �

What is PIDA?An important element in the evolvingarchitecture that will help tostructure the continent’s acceleratedsocioeconomic development, theProgramme for InfrastructureDevelopment in Africa (PIDA) hasbeen designed to provide a visionand strategic framework for thedevelopment of regional andcontinental infrastructure – coveringthe four key sectors of energy,transport, ICT and trans-boundarywater resources.

PIDA is working to merge severalearlier continental initiatives, helpingto build momentum behindprogrammes previously included inthe NEPAD Short-Term Action Plan,NEPAD Medium to Long-TermStrategic Framework and AUInfrastructure Master Plans.

This is intended to accelerateprojects that will contribute tomeeting PIDA’s objective: to promotesocioeconomic development andpoverty reduction through improvedaccess to integrated regional andcontinental infrastructure networksand services.

PIDA is a huge undertaking. The hardinfrastructure will cost dozens ofbillions of dollars, but the politicalbacking and institutional rigour nowbeing channelled into PIDA suggeststhat the initiative’s ambitious targetsare achievable in the period to 2030.

The Priority Action Plan (PAP) withinPIDA lists selected projects due forcompletion by 2020. It comprises 51projects and programmes: 15 energy;24 transport; 9 trans-boundary waterand 3 ICT. They focus on: Energy:hydropower, interconnections,pipelines; Transport: connectivity,corridor modernisation, ports andrailways modernisation, air transportmodernisation; Water: multipurposedams, capacity building, watertransfer; and ICT: capacity building,land interconnection infrastructure,internet exchange points.

The overall capital cost of PIDA’s long-term implementation to 2040 iscurrently estimated at more than$360bn. The overall capital cost ofdelivering the PAP through 2020 isexpected to reach $68bn or about$7.5bn annually.

Selected projects in the PIDApipelineProject Sector Region Estimated total

($bn)

1. Inga III hydro Energy Central Africa 5.99

2. OMVG energy project Energy Western Africa 1.11at Kaléta and Sambangalou

3. Lesotho HWP II water Water Southern Africa 1.10transfer component

4. Zambia-Tanzania-Kenya Energy Southern Africa 0.74power link

5. Rusumo Falls hydro Energy Eastern Africa 0.57

6. Ruzizi III hydro Energy Eastern Africa 0.51

7. West Africa air transport Transport Continental 0.42

8. Central Africa air transport Transport Continental 0.42

9. ECOWAS-wide area network ICT Western Africa 0.25(Ecowan)

10. Bandajuma-Liberian border Transport Western Africa 0.08road and bridges


In 2012, overall ICA membercommitments totalled $18.7bn.Multilateral institutions contributed$12.2bn and bilateral members$6.5bn. The share of ODA was$13.6bn or 73% compared to $3.6bn or27% non-ODA commitments.

As the majority of ICA membersreported a slump in 2011, totalcommitments in 2012 are up 57%compared to the previous year’s reportand 75% higher on the basis of acomparable sample using data fromAfDB, EC, EIB, France, Germany,Japan, UK and WBG. Taking 2010 asthe reference year, ICA totalcommitments in 2012 reached 64% ofthe 2010 level.

Only the EC and German portfolioscontinuously grew since 2010, whilethere have been significant differencesin members’ commitments in relationto the relatively very high levels ofcommitments reported in that year.The EC’s commitments in 2012 areabout 3 times higher than they were in

2010 while the UK’s and Germany’scommitments have approximatelydoubled. In contrast, WBG’scommitments in 2012 are about half ofthose made in 2010 while France,Japan and AfDB’s 2012 commitmentsare respectively 37%, 23% and 22%lower than they were in 2010.

Non-ODA commitments all seem tohave decreased since 2010, except forDBSA, whose portfolio consists of non-ODA commitments only.

The largest share of ICA member totalcommitments in 2012 went to theenergy sector ($7.8bn or 41.9%),followed by transport ($5.6bn or 30%)and water and sanitation ($4.6bn or24.6%) (Figure 13, right).

At the same time, Eastern Africa wasthe favoured destination for mostcommitments ($4.98bn or 26.8%), veryclosely followed by North Africa($4.93bn or 26.5%) and then WesternAfrica ($3.3bn or 17.9%) (Figure 15, farright). While multilateral ICAmembers engaged most with Eastern

Africa, bilateral ICA members seem tohave concentrated on North Africa.

In both the transport and water andsanitation sector, the biggest share ofcommitments as well as disbursementswent to Eastern Africa. For energy, thesame was true for North Africa.

Overall commitments by selected ICAmembers grew by 27% on average peryear between 2010 and 2012.Germany and the WBG had the

3. ICAMember Financing

Figure 13Total ICA member commitments bysector, 2012

3.1 Introduction


highest relative additions, more or lessincreasing their regional engagementtenfold since 2010, while Europeaninstitutions and France scaled it down.

In 2012, AfDB, France, the EIB andGermany each made most newcommitments to North Africa. Japancommitted roughly the same amountsto North and Eastern Africa. TheWBG, the US and the UK focusedtheir commitments largely on EasternAfrica and the EC on Intra SSA. AfDBand DBSA disbursements were oneswith a large RSA share, while the EIBand France had most disbursementsin North Africa.

Comparing data in the two previousyears’ reports, Eastern Africa hasovertaken both North Africa andSouthern Africa as the preferredcommitment location.

In 2010, the year that ICA membersreported a record $29.1bn ofcommitments, RSA received $6.7bn,but it benefited from just $2bn in 2012.North Africa, with commitments of

$8.9bn in 2010 received just $2.2bn in2011, recovering somewhat in 2012 to$4.9bn. Eastern Africa receivedcommitments of $4.7bn in 2010, fallingaway to $2.7 in 2011 but more thanrecovering in 2012 to benefit from$5bn of commitments. Central Africareceived about the same amount ofcommitments in 2011 ($1.7bn) as in2010 ($1.6bn) but benefited from fewercommitments ($1.2bn) in 2012.

The highest shares of softinfrastructure commitments wereentered into by the UK, Germany andthe US. Canada, however, which doesnot report on commitments at all, had100% of its disbursements in softinfrastructure projects, followed by theUK and Germany.

In 2012, multi-sector projects had thehighest share of soft infrastructure(24%), followed by ICT (21%) andWater (10%). The energy andtransport sectors had a 4% and 3%share respectively.

Since 2010, the UK, the EC and

Germany have had the highestcompounded annual growth rates(CAGR) in hard infrastructure – 244%,76% and 40%, respectively, with theUK starting from a very low baseline.For soft infrastructure, the CAGRfigures were: EC 76%, Germany 67%and the EIB 62%. �

Figure 15Total ICA member commitments byregion, 2012

Figure 14ICA commitmentsby sector and byregion, 2010-2012


3.2 Trends in Commitments andDisbursements

Figure 17ICA members' infrastructure disbursements by region, 2012

Figure 16ICA members’ infrastructure commitments by region, 2012

The WBG committed $4.4bn toAfrican infrastructure in 2012, withnearly $2bn of that going to EasternAfrica and more than $1.5bn going toWestern Africa. Relatively smalleramounts of $357m, $319m and$158m went to North Africa,Southern Africa excluding RSA andCentral Africa respectively (Figure16, left).

Large commitments to North Africawere made by the AfDB with $1.1bnand the EIB with $1.2bn. The AfDBalso made substantial commitmentsto Eastern Africa of $716m and toWestern Africa, which received$553m.

While the majority of EIB’scommitments went to North Africa,much smaller commitments ofbetween $77m and $146m went toeach other region and $67m going tointra-African or intra-SSA projects.

Germany also gave more to NorthAfrica in 2012, providing commitmentsof $615m to that region comparedwith relatively small sums of between$71m and $144m provided to otherregions. France committed $758m toNorth Africa, representing 42% of itstotal commitments.

DBSA committed mostly to theenergy sector in RSA allocating atotal of $1.1bn in this respect with$76m going to commitments elsewherein Southern Africa.

The US, the UK, Japan and WBGeach ploughed more commitmentsinto Eastern Africa than any otherregion. The EC was the only memberreporting significant commitments inan intra-SSA context, committing atotal of $522m in this respect, ofwhich $516m went to the energysector.

The AfDB and WBG disbursed $2.7bnand $2.6bn in total, togetherrepresenting 42% of disbursementsmade by all ICA members (Figure 17,left). Other members reportingdisbursements of $1bn or more were


Figure 18ICA members’ infrastructure commitments by sector and region, 2012

Figure 19ICA members’ infrastructure disbursements by sector and region, 2012

the EC ($1.4bn), the EIB ($1.2bn), theUS ($1.1bn) and DBSA ($1bn).

Of the AfDB’s disbursements, rathermore than $1bn or around 39% wentto RSA, while $551m went to EasternAfrica. The WBG disbursed $800m toEastern Africa, $582m to WesternAfrica and made the most substantialof all ICA members’ disbursements of$435m to intra-African projects. TheEC, Canada, France and Germanyalso disbursed respectively $243m,$94m, $50m and $36m to similarintra-African projects.

At $817m, the EIB made substantiallythe largest amount of disbursementsto North Africa while the AfDB,France and the EC disbursed $369m,$344m and $212m respectively to thesame region.

Eastern Africa received $800m fromthe WBG as well as $551m from theAfDB, $413m from the US and $293mfrom the EC. Western Africa received$582m from the WBG as well as$351m from the US, $369m from theAfDB and $290m from the EC.

The UK disbursed more to EasternAfrica than any other region,providing $156m or 44% of its totaldisbursements of $352m. Germanyalso disbursed more to Eastern Africathan other regions, providing it with$83m or 27% of its total disbursementsof $303m. Canada provided more tointra-SSA projects than any otherregion, disbursing in this direction$94m or 41% of its total of $232m.

The AfDB made the mostdisbursements out of all ICAmembers to Central Africa providing$262m while Japan provided $201mwith the EC and the EIB disbursing$170m and $117m respectively.

Southern Africa excluding RSAreceived the most from the WBG, theEC and AfDB, which disbursed $197m,$172m and $164m respectively. �


In line with overall commitmenttrends, the total of selected ICAmembers’ regional infrastructureportfolios fell back in 2011 comparedwith 2010 but more than regainedtheir value in 2012. In 2010,portfolios totalled $2.8bn but declined25% to $2.1bn in 2011 before surging117% to $4.5bn in 2012.

Some ICA members’ regionalinfrastructure portfolios are growingvery substantially. The fastestgrowing portfolio between 2010-12was the WBG’s, which stood at just$193m in 2010 and has more thantripled in size in 2011 and more thandoubled in size in 2012 so that by2012 it stood at $1.6bn (Figure 20,above).

The WBG’s biggest commitment of$684m in 2012 was to the $1.3bnEastern Electricity Highway Project,which is co-financed by AfDB andADF with commitments of $354m and$118m respectively.

In the water sector, WBG committed$203m to the $785m Niger River BasinWater Resources project alongsidemultiple co-financiers comprising theAbu Dhabi Fund ($10m), AfDB($105m), BADEA ($10.3m), ECOWAS($7.5m), IDB ($76.15m), West AfricanDevelopment Bank ($71.37m), France($103.5m), Kuwait ($38.42m), SaudiArabia ($38.62m) and OPEC ($15m).

In the energy sector, WBG committed$176m towards the $472m West AfricanPower Pool APL4 (Phase 1) projectwith cofinanciers AfDB ($133m), EIB($105m) and Germany ($40m).

Japan’s portfolio reduced substantiallyin 2011 to $241m from $688 in 2010but more than regained its size in2012 when it surged up to $1.1bn. Allof Japan’s 2012 regional infrastructurecommitments went to the transportsector.

The largest of these was a $336m yenloan providing 100% of the finance for

the Mombasa Port Area RoadDevelopment project in Kenya whileJapan’s remaining commitments allwent to Southern Africa. Thesecomprised the Nacala PortDevelopment Project (Phase I) inMozambique ($95.7m); KazungulaBridge Construction Project in Zambia($34.9m) and Botswana ($105.9m).

The AfDB’s regional portfolio in 2012stood at $789m, slightly more than its2011 value of $751m but comfortablymore than the $327m it was reportedat in 2010.

The EIB’s portfolio value is less than itwas in 2010 when it was reported at$855m but, at $379m in 2012, it is morethan double its 2011 value of $184m.

Similarly, the EC’s portfolio reducedfrom $375m in 2010 to $39m in 2011but substantially grew in 2012 to$225m.

Conversely, Germany’s portfolio grewin 2011 to $194m from just $16m in

3.3 Trends in Regional Infrastructure Portfolios

Figure 20Trends in selectedICA members’regionalinfrastructureportfolios, 2010-2012


2010 but reduced slightly in 2012compared with the previous year to avalue of $156m.

Overall commitments from ICAmembers to different regions varysubstantially. In 2012, Eastern Africaand North Africa benefited fromcommitments of $5bn and $4.9bn,making up more than half ofcommitments $18.7bn recorded in thisreport.

Central Africa received the lowestamount ($1.2bn) while commitmentsto Western Africa stood at $3.3bn.RSA received $2bn while the rest ofSouthern Africa benefited fromcommitments of $1.6bn. Around$600m was earmarked for other intra-African regions.

In Eastern Africa, the transport sectorreceived the most commitments($2.1bn) while the water and energysectors benefited from $1.6bn and$1.3bn respectively.

In North Africa, the energy sector wasthe prime beneficiary withcommitments of $2.4bn while thetransport and water sectors received$1.6bn and $900m respectively.

The energy sector received mostcommitments in Central Africa,totalling about $500m, with $300mcommitted to each of the transportand water sectors.

In Western Africa, the water sectorreceived most commitments ($1.3bn)while the transport and energy sectorseach received $1bn. In SouthernAfrica excluding RSA, each of thetransport and water and energysectors received about $500m.

The ICT sector received commitmentsof just $182m across the entirecontinent.

Disbursements were highest in 2012in Eastern Africa which received$2.8bn or 22% of the $12.8bn

disbursed in that year. RSA andNorth Africa received disbursementsof $2.6bn (20%) and $2.3bn (18%)respectively with the rest of SouthernAfrica and Central Africa eachbenefiting from $1.1bn or 9% of totaldisbursements.

RSA benefited from the mostdisbursements in the energy sector($1.8bn), while North Africa received$1bn of energy sector disbursements.The rest of the continent received$2bn, with Eastern Africa benefitingfrom $700m of that.

Eastern Africa saw the mostdisbursements in the transport sector,receiving $1.2bn while Western Africareceived $1bn.

In the water sector, Eastern Africaalso saw the most disbursements($700m), with Western Africa andNorth Africa receiving approximately$600m and $500m respectively. �

Figure 21ICA members’ multilateral commitments by region,2012 (% share)

Figure 22ICA members’ bilateral commitments by region,2012 (% share)


3.4 Hard and Soft Infrastructure Commitments andDisbursements

Figure 23ICA members’ hard and soft infrastructure commitments, 2012

Figure 24ICA members’ hard and soft infrastructure disbursements, 2012

At 28%, the UK provided the largestproportion of soft infrastructurecommitments to total commitments.At the other end of the spectrum,the EIB directed 2% and the AfDB4% of their funds towards softinfrastructure commitments (Figure23, left).

Other members providing largerproportions of soft infrastructurecommitments include Germany,the US and the EC, providingrespectively, 17%, 14% and 10% offunds directed at soft infrastructurecommitments.

In absolute figures, the WBGreported the largest ($236m)commitments to soft infrastructurefollowed by Germany, the EC and theUK, which provided $185m, $177mand $129m respectively.

Canada provided $232m or 100%of its disbursements for softinfrastructure purposes. At $175m,the UK disbursed only slightly lessto soft infrastructure projects thanthe $177m it disbursed for hardinfrastructure purposes (Figure 24,below left).

Some 40% or $122m of Germany’s$303m of disbursements in 2012 weredirected towards soft infrastructure.Japan disbursed $114m or 15% andthe EC approximately 10% of theirtotal disbursements towards softinfrastructure.

Conversely, WBG, the US, AfDB andEIB directed 98% or more (99% inWBG’s case) of their disbursementstowards hard infrastructure, leavingthe EC as the only multilateraldisbursing as much as 10% ofdisbursements for soft infrastructurein 2012.

There was a marked differencebetween the proportions of soft andhard infrastructure commitmentsdirected towards different sectors in2012. Just 3% and 4% respectivelyof commitments to the transport andenergy sectors were directed at soft


Figure 25ICA members’ hard and soft commitments by sector, 2012

Figure 26Trends in ICA members' hardinfrastructure commitments, 2010-2012

Figure 27Trends in ICA members' softinfrastructure commitments, 2010-2012

infrastructure (Figure 25, right).

Contrastingly, some 24% and 21%respectively of commitments to multi-sector and the ICT sector weredirected at soft infrastructure. Of the$4.6bn committed to the water sector,around $448m or 10% of commitmentswere made to soft infrastructure.

The UK has reported the steepestgrowth of 244% in hard infrastructurecommitments between 2010 and 2012(Figure 26, below right). At the sametime, its commitments to softinfrastructure have declined by some14% (Figure 27, below far right).

The EC is the only member reportingsteep and consistent growth in termsof both hard and soft infrastructurecommitments, with a 76% increasefor both types of commitment.

Germany has recorded growth of 40%in hard infrastructure and 67% in softinfrastructure commitments between2010 and 2012. France reportedgrowth of 21% in hard infrastructureand 8% in soft infrastructurecommitments in the same period.

The WBG reported the sharpestdecline of 29% in hard infrastructurecommitments while the AfDBrecorded the steepest fall of 60% insoft infrastructure commitmentsbetween 2010 and 2012.

France, Germany, the EC and the UKare the only members reportingcontinuous growth in hardinfrastructure commitments between2010 and 2012.

The EIB, Japan, AfDB and WBGrecorded sharp declines in hardinfrastructure commitments in 2011compared with 2010.

While the EIB largely recovered to its2010 position in this respect, thelevels of commitments to hardinfrastructure were still 13%, 16%and 29% lower for Japan, AfDB andWBG respectively in 2012 than theywere in 2010. �


ICA Members reported disbursementsamounting to $12.8bn in 2012. ODAdisbursements amounted to $7.4bnand non-ODA disbursements amountedto $4.3bn representing 58% and 34%of total disbursements respectively.

There have been substantial increasesin disbursements among a selectedgroup of seven ICA members. The UKreported a massive 530% increase indisbursements of $352m comparedwith $66m disbursed in 2010 and aneven bigger (2260%) increase on the$16m disbursed in 2011. The EIBdisbursed $1.24bn in 2012, an increaseof 259% compared with 2011 and155% compared with 2010.

All ten ICA members that reporteddisbursements in previous yearsdisbursed more in 2012 than they didin either 2010 or 2011.

The consistent sample group of sevenICA members (the AfDB, the WBG,the EIB, France, Japan, the UK andCanada) made 50% more

disbursements in 2012 comparedwith 2010 and 39% more than itdisbursed in 2011.

Average disbursements rates based onprojects completed in 2012 stood at98%, with ODA disbursement ratesslightly lower at 96.7% compared withaverage non-ODA disbursement rateof 99.8% (Figure 28, above).

Out of a selected 140 projects completedin 2012, 84% of disbursements made in2012 were for commitments madebetween 2007 and 2011, while 92% ofdisbursements made were forcommitments made between 2005 and2011. This points to an average of fiveyears for project implementationand/or disbursements.

In 2012, more disbursements weremade against projects with originalcommitments in 2007 than any otheryear.

Some 2012 disbursements relate toprojects for which the originalcommitments date back as far as 1985,

with 17 relating to commitments madein 1999 or before, thus indicating thelag between commitments anddisbursements.

In this year’s survey of ICA members,several members when discussingdelays between commitments anddisbursements indicated that delaysbecame longer in bigger projects. Ofthe large projects where totaldisbursements reached in excess of$100m in 2012, all had originalcommitments made between 2005 and2010 which perhaps suggests – by thispurely indicative measure – that thegestation time for larger projects maynot, on average, be any longer thanthat for smaller projects.

Other likely causes of delays betweencommitments and disbursements wereidentified as internal factors such asmeeting conditions and lack of capacityas well as external factors suchas making financial arrangements,country-level institutional weaknessesand procurement-related factors. �

3.5 Commitments to Disbursements Lag

Figure 28Relation betweencommitments anddisbursements forprojects completedin 2012 (selectedcountries andinstitutions)


3.6 ICAMembers: Project Preparation

Several ICA members reportedworking with project preparationfacilities in the course of theiractivities (Figures 29-32, below).

The AfDB’s energy unit worked withthe Scaling Up Renewable Energy inLow Income Countries (SREP) ProjectPreparation Grant (PPG) under theClimate Investment Fund (CIF) whilethe bank’s water and sanitisation unitworked with the African WaterFacility.

The UK and Germany’s KfW workedwith NEPAD’s Infrastructure Project

Preparation Facility while the EUAfrica Infrastructure Trust Fund wasemployed by the UK and France(which also works with the AfricanWater Facility).

In the US, the Millennium ChallengeCorporation works with PPIAF whileUS Ex-Im Bank has an EngineeringMultiplier Programme (EMP) tofinance feasibility studies. While thisprogramme has been sporadicallyused, Ex-Im Bank is seeing increasedinterest in its EMP programme.

The regionally focused DBSA provides

soft infrastructure grant funding forpre-investment investigations oninfrastructure projects through theAFD/DBSA Project Preparation andFeasibility Study (PPFS) Fund, aswell as technical assistance facilitiesavailable to the South AfricanOperations Division and theInternational Division.

The DBSA also provides further softinfrastructure/grant funding forcapacity building support through itsVulindlela Training Academy as wellas the Capacity Development andDeployment Division. �

Figure 30

Soft infrastructure commitments bycategory, 2012

Figure 31Project preparation commitments bysector, 2012

Figure 32Project preparation commitments bysub-component, 2012

Figure 29ICA softinfrastructurecommitments bytype, 2012

Delays in disbursement happen.Sometimes because of a lack ofcapacity at DFIs, some of whichaccording to this year’s ICA survey ofmembers, appear to be deluged byapplications and working to preventgrowing backlogs. More often,blockages in the infrastructure projectpipeline are caused by a mix ofcomplex partner arrangements, cross-conditionality and financial planningwhile complex and especially regionalprojects are more likely to be delayedthan smaller ones.

According to ICA members, thebiggest external delaying factorsrelate to arranging finance, insuranceand guarantees. Insufficientinstitutional capacity, as indicated inthe 2011 ICA Annual Report, remainsa huge delaying factor. Moreover,substantial blockages in the pipelinebegin at the start of the infrastructuredevelopment cycle, at the projectpreparation stage.

ICA members were asked to rank sixkey challenges in project preparationin general and then rank the same setof challenges, specifically in the processof arranging finance during projectpreparation (Figures 33 and 34).

Members were also asked to identifyand rank what internal and externalfactors caused delays indisbursement, how they mitigatedthose delays and what measures theyemploy to build institutional capacityso it is there when it is needed.

Establishing the enabling environment– identifying legal, regulatory,institutional and other impedimentsand removing them – was ranked themost challenging aspect of projectpreparation, by some margin.Respondents ranked projectstructuring, project identification andconcept development as well as duediligence quite closely as, respectively,the second, third and fourth mostchallenging phases of projectpreparation. Transacting ranked asthe fifth most challenging aspect ofproject preparation while marketingwas perceived the least problematicactivity in the process.

In contrast, marketing was consideredthe second most challenging task inproject preparation – not so far behinddue diligence which ranked topmost –when members ranked the challengesspecifically connected with organisingfinance for a project. Establishingthe enabling environment followedby transacting and then project

“Implementing agenciesshould be morefamiliarised withprocedures andguidelines of DFIs”

“Strengtheningmanagement oversightand operational supportin legal, procurement,and financial matters”

“…formulation andimplementation ofdemand-driventechnical assistanceprogrammes under anintegrated approachwith other developmentpartners”

“Strengtheningimplementing agencycapacity, particularlyregional institutions”

“Regular execution oftechnical and financialaudits”


3.7 Qualitative Analysis of ICAMember CommitmentsandDisbursements

Unblocking thepipeline

Figure 33Most challenging project preparationphase: implementing projects

Figure 34Most challenging project preparationphase: organising finance


identification and concept developmentwere ranked third, fourth and fifthrespectively. Project structuring wasranked the least challenging aspect oforganising finance for a project, eventhough structuring was considered abig challenge in the overall projectpreparation process.

Meeting conditions emerged as thedominant internal factor causingdelays in disbursements because ofthe very high ranking given by twomultilateral respondents – only onebilateral donor and one regionaldevelopment bank mentioned meetingconditions as cause of delay (Figure35, below). However, several factorsconcerned with meeting conditionsrelate to those in the third rankedlack of capacity, indicating thatperhaps many respondents struggledwith finding sufficient humanresources to deal with high volumesof work.

Financing issues ranked second as adelaying factor. These included localcurrency arrangements, long valuationprocesses including financiers’ ‘noobjection’, insufficient equity, avoidinginequitable distribution of risks andrewards, systematic underestimationof project costs, identifying bankableprojects, cost overruns and complicatedcross-financing arrangements.

Mitigating delays andbuilding institutionalcapacityProviding project support tostakeholders was seen as a keyactivity in avoiding delays in projectpreparation. Support should startearly with, “launching workshopsincluding training of the members ofthe project management unit on…rules on project management.”Throughout the process, “regularfollow up with project implementationunits” and “close coordination withthe local oZice in the implementingcountry,” were typical activitiesconsidered vital by ICA members.

With institutional weaknesses rankedso highly as a delaying factor, manyrespondents said they prioritisedcapacity building or technicalassistance. “Technical Assistance hasproved the right mechanism toaddress some of the shortcomings ofthe promoters with weak projectimplementing capacities,” accordingto one respondent while another said,“ensuring that partner organisationsare adequately resourced and have thenecessary required capacity,” helpedto avoid delays.

To support implementing agencies,one respondent suggested that,“sector dialogue and sectordiagnosis,[can] identify the necessaryinstitutional reforms needed forincreased institutional capacityincluding contract and assetmanagement.” Another suggestedthat rather than blanket capacitysupport, specific support should betargeted at high potential projects.

Other tools for delay mitigationincluded close coordination amongdonors and other stakeholders as wellas regular supervision, follow-up andreminders both to internal teamsworking on a project and, more so, toin-country partners in a project,including beneficiaries.

Mechanisms for planning andimproving procurement process andmanagement systems also featured indelay mitigation strategies whileseveral respondents suggestedscaling back ambitions might be agood idea, with one respondentrecommending, a “reality/plausibilitycheck for modest planning.”

Figure 35Internal factors that cause delays indisbursements

Figure 36External factors that cause delays indisbursements

Finance-related factors, includinginsurance and guarantees, ranked asthe most likely set of externalities tocause delays, again due to the highrankings given to this set bymultilaterals, where finding capacityto put all the elements of finance inplace appears to be an issue (Figure36, above).

Country-level institutional weaknessesranked second but if added to sectorspecific institutional weaknesses, theninstitutional weakness across theboard becomes the prime cause ofdelays.

Political risk – highlighted as a bigconsideration for private sectorinvestors elsewhere in this report –did not feature highly. Procurementrelated factors and intrinsicdifficulties in complex, often regional,projects were ranked higher thanpolitical risk by respondents.“Difficulty in identifying the ‘client’ inregional projects,” neatly describesone of several frustrations in complexcross-border projects.

Other factors mentioned includedover-ambitious planning as well asenvironmental and social issues,especially resettlement. �

During 2012, other public sectorsources of finance, including Brazil,China, India and South Korea,members of the Arab Co-ordinationGroup and the EBID played a crucialrole in diminishing the continent’sinfrastructure deficit, committingsome $21bn to African infrastructureprojects.

Their participation, particularly thatof leading emerging marketeconomies such as Brazil and SouthKorea, but also of the regionaldevelopment banks, is demonstrativeof two trends:

� the continent is increasinglyimportant as a strategic partner ofrapidly industrialising countries;

� it is becoming increasingly possibleto raise capital for infrastructureprojects domestically and throughthe African diaspora.

Of the group, China was by far thelargest lender to African

infrastructure projects in 2012,committing some $13.4bn, or 64%, offinancing. Members of the Arab Co-ordination Group were the secondmost substantial contributor for theperiod, combined signing 25% of loanagreements for projects, at $5.15bn.

China’s fellow BRIC members, Indiaand Brazil, together with SouthKorea, lent $1.9bn, totalling 9% ofprojects. Regional development banks(including ICA member DBSA) andthe EBID provided some $1.5bn-worth of commitments.

It is possible to identify an overallupward trend in lending to Africaninfrastructure projects from leadingemerging market economies. This isin part due to the maintenance ofstrong funding from China’s Export-Import Bank and China-AfricaDevelopment Fund, an encouragingsign, but also because other rapidlygrowing economies are followingChina’s lead.

In particular, India, Brazil and SouthKorea are increasingly engaged asfinancers of African infrastructuraldevelopment, and more than ever,Africa is viewed as a strategicallyvital partner.

In part, the need to secure access tonatural resources to fuel growth andindustrialisation has crystallised thistrend, but, as African economiescontinue to grow at a rate of knots,these countries are increasinglyviewing Africa as a potentiallylucrative market for manufacturedgoods.

Brazil, with an affinity with Africa’sPortuguese-speaking countries,certainly looks very likely to expandits presence in commercial activitiesfrom agriculture through to the oiland gas sector in Angola andMozambique, and investment ininfrastructure will be needed tosupport Brazilian businesses andtheir African partners.

4. Other Public Sector Financing


4.1 Introduction


As a result, public funding of projectswill increase as state ownedinstitutions, such as Brazil’s BancoNacional de DesenvolvimentoEconómico e Social (BNDES), seek tosupport their country’s businessventures on the continent. As thecontinent continues to grow, thesetrends will develop and shouldprovide major source of capital forproject finance in the future.

In 2012, Arab and Islamic financingof African infrastructure projects wasalso strong, representing asubstantial increase on commitmentsmade by the Arab Co-ordinationGroup over the past three years.

To some extent, this is because, in thewake of the financial crisis, Islamicfinancing is increasingly perceived asa more sustainable alternative tomore conventional banking models,but also because the political changeswrought by the ‘Arab Spring’ haveencouraged an environment in NorthAfrica which is more favourable to

Islamic financing of projects. Inconsequence, increased availability ofIslamic funding for infrastructureprojects across Africa is also likely tocontinue in the medium term.

During 2012, African regionaldevelopment banks also madesubstantial commitments to Africaninfrastructure, with the DBSA mainlyfocusing on energy projects in RSAand EBID choosing to concentrate ontransport and energy projects withinWestern Africa. Both institutions haveendorsed the AfDB-led Africa50 Fund,an initiative which aims to addressAfrica’s infrastructural gap by 2063.

AfDB, which is spearheading thecreation of the Africa50 Fund, hasidentified a lack of capital as theprimary impediment to infrastructuredevelopment on the continent andwill seek to mobilise availabledomestic funds, such as central bankreserves, pension funds and Africansovereign wealth funds, as well as theAfrican diaspora to fund

infrastructure projects across thecontinent.

The domestic availability of capital isan important development, and itsmobilisation will be an increasinglyimportant source of funding forprojects in coming years.

As economies across the continentcontinue to grow, Africa will becomemore attractive as a potential marketfor manufactured goods and as aplace to do business, and, accordingly,funding for infrastructure projectsto support these developments,particularly from other rapidlygrowing economies, will continue toincrease.

Yet the African growth story is alsofostering another dynamic: theincreased availability of domesticcapital to fund projects. Both will playa crucial part in closing thecontinent’s infrastructural deficit incoming years. �

Figure 37Total non-ICAcommitments byregion, 2012

Regional development banks play animportant role in infrastructuredevelopment on the continent. In 2012,the regional development bank forsouthern Africa, DBSA (an ICA member),and its counterpart in the ECOWASregion, EBID, had a common focus onenergy. Energy investments accountedfor 81% of DBSA’s and 62% of EBID’sinfrastructure portfolios. Out of $1.5bn,DBSA committed $1.2bn to energy,$185m to multi-sector and $37m to ICTprojects. Transport and water projectseach received commitments of $29m(Figure 38, right).

In 2012, DBSA committed $1.5bn forhard infrastructure – about half theamount of 2010 – complemented by$6.3m of soft infrastructure, far less thanthe $25.2m committed in 2010. DBSA’sdisbursements – about two thirds ofdisbursements in 2010 – totalled$1.05bn for hard infrastructure andabout $4m for soft infrastructure.

EBID committed a total of $63m to hardinfrastructure projects in 2012, abouthalf the amount committed in 2011, ofwhich $39m went into energy and $24minto transport projects. EBID made nosoft infrastructure commitments during2012. EBID’s disbursements amounted

to $80.3m in 2012, compared with$65.7m in 2011, with about half of itdedicated to energy.

While no data was provided to ICA for2012, infrastructure is a priority for theEast African Development Bank as itprovides financial services to strengthensocio-economic development andregional integration in Kenya, Uganda,Tanzania and Rwanda. The bankconsiders investments in projects whichbuild capacity in both urban and ruralinfrastructure.

Banque Ouest Africaine deDeveloppement, which provided nodata to ICA for 2012, was activelysupporting infrastructure developmentin Francophone West Africa, lendingaround $51m to part finance upgrades toCote d’Ivoire’s electricity transmissioninfrastructure and its interconnectionwith Ghana. The upgrades impact on thecommercial capital of Abidjan and areasclose to the borders with Ghana andBurkina Faso.

Clearly regional development banks arenow playing an active role facilitatingcross-border infrastructure integration,and may play an increasing role asparticipants in projects.

4.2 Regional Development Banks

China’s contribution to closing Africa’sinfrastructure deficit continues to bethe largest of any single governmentor multilateral funding institution,when commitments over the year arecalculated. The proportion of thosecommitments that are actuallydisbursed are much harder to quantify,and will be the subject of research forfuture ICA reports.

During 2012, data culled from themonitoring of projects and agreementscarried out for the ICA Secretariat,suggests that China committed$13.4bn for African infrastructureprojects. This was down on the $14.9bnrecorded in 2011, but substantially upon the $9bn estimated to have beencommitted in 2010.

As it works to fuel its booming growthand maintain rapid industrialisation,China views Africa as a strategicallyimportant partner. In July 2011,former Chinese prime minister HuJintao pledged to offer the continent$20bn in loans between 2013 and2015, almost double the figure pledgedin 2009. Following Xi Jinping’snomination as state president inNovember 2012, he made Africa thedestination for his first officialoverseas visit, stopping in Tanzania,South Africa and Republic of Congo.

Although China Development Bank isexpected to become a big player, mostofficial loans are still administered byExport-Import Bank of China (ChinaEximbank) and the China-Africa

Development Fund (CADF).Commitments tend to be large – witharound half the agreements made in2012 worth more than $500m – butare relatively few in number: monitorsfor the ICA Secretariat recorded 31agreements in 2012 and 14 in 2011.

Chinese public funding followsopportunities across the continent’senergy and extractive industries.Countries that are well-endowed withnatural resources – notably Angola,Nigeria, Sudan, Algeria and Zambia –have been the main beneficiaries ofChinese loans. However, while Nigeriais again a major focus for commitments(reflecting an upturn after few of themulti-billion dollar commitmentsagreed in the last decade resulted in


4.3 China

Figure 38Regional development bankcommitments by sector, 2012

successful project implementation),other partners received fewercommitments in 2012 (when therewere no agreements signed with aNorth African country). Nigeria signedagreements for projects worth morethan $3.7bn with China in 2012(Figure 39, above).

Other countries have started toemerge as major recipients of Chinesefunding. In 2011, Ghana, whichdiscovered commercial reserves of oilin its offshore Jubilee field in 2007, hasbecome an oil producer with ambitionsto exploit associated gas reserves; itsigned a loan of $800m with CADF todevelop gas transmission andprocessing infrastructure. A further$2.2bn was committed by CADF in2012, also to be spent on gas-relatedinfrastructure.

Tanzania, with estimated in-placenatural gas reserves of up to 21tcf,signed a $1.2bn agreement with ChinaEximbank in July 2012 for a 230kmpipeline from Mtwara to Dar esSalaam to use gas reservesdomestically. Tanzania also plans todevelop LNG export capabilities, withChina among target markets.

Transport projects continue to receivethe lion’s share of Chinese publicfunding for infrastructure, accordingto monitoring by ICA data (Figure 40,right). The sector received $12.1bn ofcommitments in 2011, and $6.2bn in2012, of which $1.2bn was committedto developing Nigeria’s airports, nearly$1.6bn to Nigerian railways and$1.4bn for Ethiopia’s national railway.Also signed was a $467m agreement

to build a road linking Camerooncapital Yaoundé to the country’seconomic hub, Douala.

There was a substantial increase inenergy sector commitments, with Chinaagreeing $5.2bn funding in 2012,compared to the $1.9bn signed in 2011.In addition to the $3.3bn for gasinfrastructure in Ghana and Tanzania,commitments were made for threehydropower projects: the 700MWZungeru power plant in Nigeria($927m), a 275MW plant in Côted’Ivoire ($556m) and an additional$151m buyer credit facility for Ghana’sBui hydropower project. Western Africareceived the largest chunk of Chinesefunding in 2012, at $6.9bn. �


Figure 39China: projectsand commitments,2011 and 2012

Figure 40Chinese commitments by sector 2011and 2012


4.4 ArabCo-ordinationGroup

Figure 41Arab Co-ordinationGroup: projects andcommitments, 2011and 2012

In 2012, Arab Co-ordination Groupmembers signed nearly $5.2bn-worthof infrastructure agreements withAfrican governments.

This represented a near doubling ofthe $2.9bn committed in 2011, andthere was also a doubling the numberof projects that received commitmentsfrom the group.

Analysing the ICA dataset, it ispossible to identify a strong upwardtrend in Arab and Islamic lending toinfrastructure projects on thecontinent since 2009, when the groupcommitted $1.7bn (Figure 42, right).

The group tends to makecommitments to relatively smallerprojects or programmes, averaging$55m in 2012 and $33m in 2011. Inthe wake of the global financial crisis,the funding of projects using agrowing range of Islamic instruments

is proving an attractive option, notleast due to their perceivedsustainability in contrast toconventional funding.

During 2012, Arab Co-ordinationGroup members signed 32 loanagreements with North Africangovernments, followed closely by 26 inWestern Africa and 17 in EasternAfrica (Figure 41, below).

Yet despite the relatively even spreadin project numbers, 50% of total fundscommitted ($2.6bn) were directedtowards North Africa, while 46% wassplit roughly evenly between Westernand Eastern Africa ($2.4bn).

In percentage terms, this representsa small increase on the 42% of totalfunding committed to North Africa in2011, but less than the region’s 64%share in 2010, when the ‘Arab Spring’revolts had yet to unfold. In actual

terms, the 2012 number representsan overall $500m increase on the2010 figure.

To some extent, the ‘Arab Spring’,which brought sweeping politicalchange across North Africa in 2011,improved the fortunes of Islamiclending to African infrastructureprojects. Tunisia and Moroccoreceived big commitments of $460m(an increase of $83m on 2011) and$651m (an increase of $231m) fromthe Arab Co-ordination Group.

Among sectoral trends (Figure 43,bottom right), transport accounted for43% of total Arab Co-ordinationGroup commitments in 2012 ($2.2bn),an increase on 2011’s 34% ($967.3m).Transport commitments in 2012include the $709m Kétou-Igodja-Savèroad in Benin, funded by theKuwait Fund for Arab EconomicDevelopment (KFAED), the $200m

ArabCo-ordinationGroupMembers

Arab Fund forEconomic and SocialDevelopment,Islamic DevelopmentBank, Kuwait Fund forArab EconomicDevelopment,Abu Dhabi Fund forDevelopment,OPEC Fund forInternationalDevelopment,Arab Bank forEconomicDevelopment inAfrica, andSaudi Fund forDevelopment.

INFRASTRUCTURE FINANCINGTRENDS INAFRICA: ICA ANNUAL REPORT 2012 | 34

Tangier to Casablanca high-speedtrain project, (Saudi Fund forDevelopment) and a $106.4mcommitment to the El Jadida-Safimotorway in Morocco by the ArabFund for Economic and SocialDevelopment.

Energy projects accounted for 35% oftotal 2012 commitments ($1.8bn),compared to 42% in 2011 ($1.2bn).The Islamic Development Bank (IDB)supported the $142m upgrade of theJorf Lasfar Coal Quay project inMorocco and the $194m Sousse powerplant in Tunisia, as well ascontributing $250m to the Helwanpower plant in Egypt, to which theKFAED also committed $106m.

Loans for water projects remain lessof a priority for the group, althoughthere has been a steady increase infunding: $329m in 2010, $632m in2011 and $836m in 2012.

The Kuwait City-based KFAED is

responsible for 32% of Arab Co-ordination Group commitments in2012, its engagement to provide$1.6bn an enormous leap from the$173m committed in 2011, mainlybecause of the Benin road project.The IDB made 24% of the group’scommitments in 2012, its $1.2bnengagement up from $1.1bn in 2010and $1.15bn in 2011.

As in 2011, Mauritania, Morocco,Sudan and Tunisia continue toreceive the most substantialcommitments from the Arab Co-ordination Group, with Tunisiataking 12.5% of total commitmentsand Morocco a 9% share.

Both Sudan and Mauritania, whilecontinuing to be major recipients ofloans from the group, saw a decreasein funding, with Sudan down to$463m from $784m in 2011, andMauritania falling to $330m from$348m. �

Figure 42Arab Co-ordinationGroup commitments2009-2012

Figure 43Arab Co-ordination Groupcommitments by sector 2011 and 2012

While the substantial bulk ofEuropean direct commitments forAfrican infrastructure during 2012came from ICA members, there weresome interesting commitments fromnon-ICA member European DFIsduring the year.

Norfund committed around $14mequity funding to a solar project inSouth Africa of which around $2.8mwas disbursed in the same year. TheNorwegian DFI also committedapproximately $3.2m funding towardsproject development costs of two smallhydro and two wind projects inEastern Africa and of a waste toenergy project in Southern Africa.Around $2.5m was disbursed in 2012.

Belgium’s BIO made a newcommitment of $23m to the Azitoproject in Côte d’Ivoire, to which AfDBprovided $50m via its private sectorlending window. It contributed to a$350m debt package arranged by IFCand Proparco of France and whichalso included commitments of $30mand $27m from Germany’s DEG andFMO of the Netherlands respectively.

FMO provided funding for three solarenergy projects. It provided aconvertible €1.9m grant towards the€3.99m total investment in ToughstuffInternational, a commercial socialenterprise providing affordable solarpower solutions to the lower end ofthe market with activities in severalAfrican countries. Via Lereko MetierSolafrica Fund I it provided €7.9mequity funding to Solafrica ThermalEnergy, a 50MW concentrated solarthermal power in South Africa.

In Senegal, the Netherlands’ DFIprovided €1.6m via AEF out of the€4.03m funding needed for Inensus, atechnology oriented off-grid energycompany to fund electricity systemsin 30 villages in Senegal, making useof wind, solar and (bio-)diesel energysources.

Austria’s OeEB indirectly providedtwo credit lines to the African

infrastructure sector. One commits$32.5m to a multilateral institutionbut earmarked for private sectorprojects in Western Africa, with afocus on infrastructure and industryinvestments. The other provides$19.35m to local financial institutionsearmarked for SME and infrastructurefinancing in South Africa and Sub-Saharan Africa.

In December 2012, Spain’s COFIDESand South Africa’s IDC signed amemorandum of understanding toestablish a framework agreement forenhanced co-operation. COFIDESdescribes the agreement as acommitment to assist in establishingand developing comprehensive long-term co-operation and commits theSpanish DFI to up to €100m.

This could result in COFIDESfunding projects on a case by casebasis either alone or co-financingwith IDC in the Republic of SouthAfrica and other African countries,provided that Spanish companies will

hold directly or indirectly a relevantequity stake in the project companiesincorporated in African countries. �


4.5 Europe

Figure 45

EDFI members’ African infrastructurecommitments 2012

Figure 44Commitmentsby selectedEuropean ICAmembers, 2012

European Development Finance Institutions(EDFI) is the association of 15 bilateralinstitutions based in Austria, Belgium,Denmark, Finland, France, Germany, Italy, theNetherlands, Norway, Portugal, Spain, Sweden,Switzerland and the UK.

Commitments by selected EuropeanICA members’ have recovered towardsthe very high levels of commitmentsmade in 2010, which were largely dueto large commitments made by EIB inthat year. Most of these comprisednon-ODA funding in North Africa,amounting to more than $2bn, ofwhich around 73% of which was

committed to the energy sector and23% to the transport sector.

Excluding EIB, commitments reportedby selected European ICA memberswere more even over the three yearperiod, amounting to $4.9bn, $4bnand $5bn respectively in the threeyears up to 2012.

Other leading G20 economies, inparticular India, Brazil and SouthKorea, have been slower to engagewith African infrastructure projects,but of late have sought to takeadvantage of the continent’s potentialas a market or source of naturalresources.

Russia and Turkey have also takensteps to strengthen bilateral ties with

African governments, although neitherRussia’s Vnesheconombank, nor theTurkish International co-operation andDevelopment Agency (TIKA) signedagreements with African governmentsto fund infrastructure projects during2012.

TIKA has offices in Addis Ababa,Khartoum and Dakar through which itseeks to support local development

projects and, since 2009, has opened 15new embassies across the continent: itnow has 20 in Africa, 15 of which aresouth of the Sahara.

Similarly, Russian president VladimirPutin has sought to deepen ties withthe continent, hosting several Africanheads of state, including Uganda’sYoweri Museveni and South Africa’sJacob Zuma. �


4.6 Other G20Sources of Finance

BrazilBrazilian financing takes the form oflines of credit issued by statedevelopment agency Banco Nacionalde Desenvolvimento Económico eSocial (BNDES), which issued its first$149m line of credit to Africa in 2007.

BNDES’s commitment to infrastructureprojects in 2012 was $530m, with a$300m line of credit extended to thegovernment of Mozambique to

support infrastructure developments,including the construction of theNacala international airport, and a$150m loan agreed with thegovernment of Kenya to rehabilitatethe country’s roads.

Public financing of projects has beenslow to catch up with activities ofprivate Brazilian companies on thecontinent, and in consequence, loanshave tended to crystallise around theextractives sector. �

IndiaThe majority of Indian funding takesthe form of lines of credit extended bythe Export-Import Bank of India.During 2012, the Ex-Im Bank issuedseven lines of credit worth $667m tosupport infrastructure projects inAfrica, a substantial increase on 2011,when it funded only one energyproject, the $280m Katende Ihydroelectric power plant in southernDR Congo.

The bulk of Indian funding forinfrastructure projects tends to bedirected towards the energy sector,and 2012 was no exception, with$402m committed, including $250magreed with the government ofMozambique to improve power supplyin the country, and $100m agreedwith the government of Mali toprovide a transmission link betweenBamako and Sikasso. Water projectsalso received a substantial $255mcommitment from India in 2012. �

South KoreaIn 2012, South Korea, through itsEconomic Development Co-operationFund (EDCF), part of the KoreanExport-Import Bank, signed $677m ofinfrastructure loan agreements withAfrican governments, marking acontinued increase in the country’slending to Africa since the early2000s. At $463m, representing some70% of total commitments, energyprojects received the bulk of funding,

$350m of which was directed towardsthe 700MW expansion of Morocco’sJorf Lasfar power complex.

While oil comprises some 50% of itsimports from Africa, South Korea isalso keen to cultivate an exportmarket for its high-end technicalproducts. In October 2012, it pledgedto loan $590m to Africa in 2013 and2014, with around $370m to becommitted to infrastructure and theextractives sector. �

Figure 46Total commitments by sector 2012




African national government spendingon infrastructure appears to be on theincrease. A comprehensive look atdata collected for infrastructurebudgets from 20 selected Africannational governments reveals thatspending grew by 8.6% on averagebetween 2010 and 2012 (Figure 52,right).

The strongest sustained upward trendcan be seen in the energy sector(18.5% CAGR), while public funding ofICT – after an initial massive surge of51% between 2010 and 2011 –dropped to only 2% in the next year.

Overall budget allocations to waterand sanitation as well as transportslightly decreased between 2011 and2012 compared to the previous year.Nevertheless, water and sanitationinvestments seem to stay high on thepolitical agenda with an averagegrowth rate of 13.9% between 2010and 2012.

In 2012, the sectors with the highestbudget allocations on the African

continent were transport and energytotalling 36% and 30% of totalinfrastructure budgets, respectively.

In terms of absolute national budgetnumbers, South Africa’s $29.08bn,Kenya’s $3.04bn, Namibia’s $2.97bn,Tanzania’s $1.66bn and Ethiopia’s$1.65bn finances had the largestinfrastructure allocations in 2012.Regarding infrastructure share inoverall budgets, Cape Verde’s 44%,Namibia’s 39%, Uganda’s 28% andSouth Africa’s 24% proportion offunding allocated to infrastructureoutshine their African peers (Figure49, right).

Between 2010 and 2012, the highestincreases in total infrastructurebudgets were reported by Liberia,Zimbabwe and Kenya while São Toméand Príncipe, South Sudan and SierraLeone saw the greatest overallreductions.

In 2012, South Africa and Kenya wereagain far ahead with their energybudgets in absolute numbers of

$10.42bn and $0.99bn respectively.However, over the last three years, thehighest growth rates were in Liberia,Uganda, Ghana and the CentralAfrican Republic.

Water and sanitation sector budgetsare highest in South Africa at $2.76bn,Namibia at $1.10bn and Kenya at$0.48bn while increasing the most inEthiopia, Côte d’Ivoire, Zimbabwe,Kenya and Sierra Leone.

Transport features prominently inSouth Africa, which budgeted $9.04bnwhile Kenya, Namibia and Tanzaniaallocated $1.75bn, $1.69bn and$1.12bn respectively and is set for thehighest growth rates in Sierra Leone,Ethiopia, Liberia, Zimbabwe andKenya.

Average annual growth rates for ICTwere highest in Liberia – surging frompractically zero to $2m – and Kenyawhere ICT is one of the key sectors inits “Vision 2030” strategy. �

5. AfricanNational Budgets forInfrastructure

5.1 Trends


Figure 49 (top left)Infrastructure allocation as % of totalbudget, 2012; Infrastructure sector with thehighest allocation, 2012

Figure 51 (bottom left)Trends in infrastructure allocation, 2010-2012

Figure 50 (top right)

Infrastructure sector with the highestgrowth rate, 2010-2012

Figure 52 (bottom right)

Trends in African national budgetallocations per sector, levelised (2010 = 100)

Trends in AfricanNational Infrastructure Budgets


Some encouragingly large privatesector commitments to Africa’sinfrastructure in 2012 appear in thePPIAF’s PPI Projects Database. Butwhile the headline figures point to abig increase in private sector financialflows, the increase is related to bigcommitments in Morocco and SouthAfrica, where major thermal andrenewable energy developments havereached financial close (Figure 56,right).

Private sector investor interest inwholly new projects in all othersectors across Africa appearsnegligible in comparison, the PPIdatabase shows. No new money wascommitted by private investors toprojects reaching financial close inthe transport sector in 2012,compared with the $2bn committed in2008 (Figure 53, right).

Similarly, ICT, which receivedcommitments of more than $1bn inthree out of the four preceding years,

also failed to attract any investmentbeyond that fuelling considerableexpansion of pre-existing mobiletelephony in countries such as SouthAfrica and Nigeria. Commitmentsmade in the water and seweragesector in 2012 by private sectorinvestors was just $126m, accordingto the PPI database.

The question is whether stakeholdersin Africa’s infrastructure developmentshould be encouraged by the $7.3bn ofprivate capital committed to energyprojects in two countries at thenorthern and southern tips of thecontinent, or discouraged by the factthat only $522m was committed bythe private sector to projects in thetransport, water and ICT sectorscombined across the entire continent,including Morocco and South Africa.

For the first time, the ICA Secretariathas sought to garner the views ofprivate sector investors in an effort togain a more granular understanding

of the issues that need to beaddressed to mobilise private sectorinvestment in Africa’s infrastructure.Arguments for the mobilisation ofprivate capital to make the PIDApipeline of projects move forward arewell rehearsed. From the responsesgleaned from the ICA survey, there isa strong prospect of private sectorsupport building for big-ticketprojects.

This first ICA Survey of PrivateSector Investors is indicative; a largersample group of respondents isneeded to determine strategies formobilising private capital – whichwill be achieved by larger surveys insubsequent years.

Even so, the information gatheredfrom the initial group of 47 indicatessome trends quite clearly. For example,Kenya and South Africa are seen as theprime investment locations, while thebiggest consideration for private sectorinvestors by far is political risk. �

6. Private Sector Financing

6.1 Introduction


6.2 Public-Private InfrastructureAdvisory Facility (PPIAF)

The PPI Projects Database provides aconsistent source of data on privatesector commitments to infrastructureprojects across low- and middle-income countries. The data allows forbroad analysis of private capital flowsinto the water, transport, ICT andenergy sectors.

Apart from some very large 2012commitments to energy infrastructurein South Africa and Morocco andmulti-billion dollar investments toexpand existing mobile networks –particularly in South Africa andNigeria, in the five years from 2008 to2012 there has been a year-on-year

decline in the overall levels ofinfrastructure commitments from theprivate sector for projects reachingfinancial close (Figure 54, below).There have been some promisingsigns – investment in telecoms andwater and sewerage rose by 67% and22% respectively in 2010, for example –but the overall trajectory isdownwards.

A reduction in commitments to newrather than expanding mobiletelephony projects is a major cause:the market is maturing in the Africaninfrastructure sectors most favouredby private investment.

But sectors like water and seweragereceive little, compared to theirpotential, in part reflecting theperceived poor returns.

For the transport sector, 2012 was adisappointing year, with no newcommitments, confirming a trend ofdecline in private sector interest aftera promising 2008-09.

The undoubted bright spots forprivate capital in 2012 were SouthAfrica and Morocco, which attracted acombined commitment of $7,389m,with South Africa reeling in $4,084mand Morocco attracting $3,305m(Figure 56, below). �

Figure 53Total privateinvestment bysector 2008-2012(less South Africaand Moroccoenergy projects in2012)

Figure 54Total privateinvestment2008-2012 (lessSouth Africa andMorocco energyprojects in 2012)Figure 55

Privateinvestment bysector as aproportion ofyearly investment(less South Africaand Moroccoenergy projects in2012)

Figure 56Total privateinfrastructureinvestment, 2012

Respondents to the new ICA Survey ofPrivate Sector Investors were askedfor their main considerations whendeciding to invest in an Africaninfrastructure project. They werethen asked about the risksexperienced and mitigation strategiesemployed in African infrastructureinvestments.

Partner risk appeared to be the mainconsideration taken into account byinvestors deciding whether to invest(Figure 57, below), followed closely byconcerns about the legal andregulatory environment and aboutpolitical risk, which ranked secondand third respectively amongrespondents’ concerns. Profitabilityand then project feasibility rankedfourth and fifth.

At the top of risks that must be

mitigated to secure financing, by avery wide margin, was political risk(Figure 58, below). Credit andpayment risk and then transparencyand corruption were ranked secondand third respectively as risks to bemanaged in the process of securingfinance.

Contractual, as well as foreignexchange/currency risks, also featuredprominently. Respondents were alsoconcerned about legislative orregulatory stability.

Considerations such as security,stability of existing infrastructure andsupply, construction risks, economicand market stability as well asenvironmental and social risks werecited less frequently.

The survey responses highlighted the

important role played by multilateraland bilateral institutions and bodies– 30.3% of respondents citedmultilateral finance support orguarantees as important to mitigaterisks (Figure 59, below), while 54.5%reported that they arranged politicalrisk insurance (PRI), MIGA and otherinsurance and/or guarantees.

Respondents consistently said thatcorruption was mitigated throughinvestors’ internal controls, to ensuretransparent business partnershipsand practice, and by installingmeasures to avoid corruption.

No single mitigation strategy emergedto allow investors to deal with poorinstitutional capacity, although themost mentioned was, typically,“having a strong local partner and[being] well networked locally”. �


6.3 Investment Considerations andRisk

Figure 57Top considerationswhen deciding toinvest

Figure 58Risks that must bemitigated in orderto secure financing

Figure 59Measures used tomitigate risks

Respondents to the first ICA Survey ofPrivate Sector Investors were asked torank, in order, the five Africancountries they considered the mostattractive (Figure 60, above).

Kenya scored the highest averageranking, while South Africa wasmost consistently ranked the mostattractive country for investment. Inall manners of analysis, Kenya andSouth Africa gained significantlyhigher rankings than other countriesranked in the top ten, which areshown in the graphic above.

Kenya’s appeal to investors appears tobe a result of its established history ofsuccessful private sector investmentsin infrastructure.

Established investors reported thatKenya was an attractive investmentoption due, as one energy sectorrespondent put it, to its “costreflective-tariffs and good IPP trackrecord”.

Other respondents said establishingnew infrastructure projects in Kenyawas a relatively straightforward task

in comparison with a number of otherEastern African countries.

Other factors attracting investors toKenya were its “stage of development”and (despite negative newsflow)political and economic stability.Several companies were attracted byKenya’s growth prospects and whatthey saw as its transparent operatingenvironment.Typically, one respondentsaid Kenya’s “growing economy andemerging sector in ICT [and] lowrate of criminality and corruption”appealed.

Another respondent said the countrywas attractive because “the Kenyangovernment is very pragmatic in itsapproach” when dealing with privateinvestors, while others cited itsinstitutional capacity and its clearand fit-for-purpose regulatoryframework, which ensured projectsare run relatively efficiently.

Similarly, South Africa appears tohave been ranked consistently highlydue to its advanced stage ofdevelopment, economic and political

stability and sound regulatoryenvironment. One survey respondentsaid South Africa’s “establishedinfrastructure and sound governmentpolicy framework” was an appealingfactor to potential investors; severalother companies provided similarresponses.

Participants in the energy sectornoted the importance of South Africa’sRenewable Energy IndependentPower Producers Procurement(REIPPP) programme, which is likelyto attract very substantial investmentcommitments for years to come.

Kenya and South Africa were rankedmarkedly higher than other countries.Kenya’s average ranking was over 4.5times that of the tenth most attractivecountry, Zambia, which waspredominantly listed due to itsgrowing number of investmentopportunities and rapid development.

The survey results lead to theunsurprising conclusion thatinvestors feel more comfortable in amore established market. �


6.4 CountriesMost Attractive for Investment

Figure 60Countries mostattractive forinvestment: Top 10countries (left),and top three firstchoice investmentdestinations (right)


6.5 Project PreparationChallenges

The challenges posed by the stages ofproject preparation in general, andfinancing in particular, were rankedby respondents to the ICA Survey ofPrivate Sector Investors (Figures 61and 62, above). They also identifiedwhat they perceived to be the causesof bottlenecks in project preparation.

Stages in project preparation andarranging finance for projects were:project identification and concept,establishing the enabling environment,due diligence, project structuring,marketing and transacting.

The most challenging stage across thewhole process of project preparationwas identified as “establishing theenabling environment” – identifyinglegal, regulatory and institutionalimpediments and removing them.

Marketing and project identificationand concept development wereconsidered the least problematic.

Establishing the enabling environment

was ranked the most difficult stage ofraising finance for projects, followedby due diligence; marketing as well asproject identification and conceptwere found to be the least difficultstages.

Finance, along with red tape andbureaucracy, ranked equally as themost important factors causingbottlenecks in projects (Figure 63,right).

Other commonly cited factors wereinadequate legislative/regulatoryframeworks and local partnercapacity, each of which ranked equalthird. �

“There is an enormous lack in capacity of powerpurchasers… and host governments and other localrelevant actors – finance, insurance, legal – tomanage and support a transaction”

Figure 63

Most important factor causingbottlenecks in project preparation

Figure 61Challenges inimplementinginfrastructureprojects (graded1-6, where 6 isextremelychallenging and 1is not challengingat all

Figure 62Challenges inorganisingfinance (graded 1-6, where 6 isextremelychallenging and 1is not challengingat all

Companies provided a generaloverview of their investments inAfrican infrastructure projects in2012. The majority of respondents(75%) reported that their contractshad been won following competitivetendering.

In terms of different types of financeused, 80% of respondents said theyhad used project finance, 44% hadrecourse to corporate finance and 40%had access to donor finance (Figure 65,below).

Companies were asked what theyconsidered to be the single greatestchallenge facing private sectorparticipants in African infrastructureprojects. Obtaining finance wasreported to be the greatest obstacle(by 40% of the participants). Lack ofinstitutional capacity in the hostcountry was the biggest challenge for21% of respondents, while 10% saidcorruption was the major issue forthem (Figure 64, below).

A further 8% of respondents reportedthat understanding the localenvironment was the greatestchallenge, while finding a skilledworkforce was the biggest issue for 6%of respondents.

In terms of revenue from Africaninfrastructure projects, 51.3% ofrespondents reported an increase inrevenue, while 10.2% reported adecrease and 38.5% reported no change(Figure 66, below).

The vast majority (88%) of companiesexpressed intentions to increase theirAfrican portfolio over the next fiveyears; a further 7% wished tomaintain their investments in Africaninfrastructure at current levels(Figure 67, below).

Only 5% of respondents suggestedthat they anticipated decreasing thesize of their continental portfolio overthe next five years. �


6.6 Market Trends

Private sector view:the biggest challenges

“The unavailability ofearly risk capital makesit difficult for investorsto put money intoAfrica’s infrastructure”

“…government inertiaand lack of clarity…”

“Mostly, the privatesector doesn’t havesufficient capacity”

“Timeliness andtransparency of politicaldecisions”

“Inadequate venturecapital for all sectors ingeneral …”

“…the debt financingmarket is still dominatedby DFIs,the requirementsof which upon hostgovernments are sostringent so as to impactthe volume of transactionsthat can be developed andultimately lead tofinancial close…”

Figure 64Greatest challenge facing private sectorparticipants

Figure 66Revenue from African infrastructure:Change from 2011- 2012

Figure 67African portfolio intentions over thenext five years

Figure 65Use of project finance, corporate financeand donor finance


Each of the main sectors that arethe focus for ICA activities, andthe priority for consortiummembers’ infrastructure developmentdepartments, are confronted bydifferent specific challenges – such asthe problems associated withoperating across borders forstakeholders in the transport sector;access to fuel and vulnerability toprices for energy operators; or thevulnerability of trans-boundary waterresources to geo-political pressuresthat has emerged as an issue ofconcern for governments andpopulations along major rivers such asthe Nile.

A clear focus on new ICT projects isyet hard to see, and commitments to asector that could vitally connect Africawith global communities andeconomies with the rest of the world,receives relatively very little in termsof financial commitments. However,infrastructure development is alsosubject to more generalised politicaland economic pressures that have

been a constant theme of submissionsto the ICA by its members and otherpublic and private sector operators.

Among issues that weigh heavily onthe development of much-neededinfrastructure are the negativeimpacts of subsidies, state monopolies,poorly implemented laws andregulations (an important issue ineconomies blighted by sub-standardgovernance) and imbalances betweenpublic sector and private sectorownership. Such issues featured largein answers to the ICA’s new privatesector questionnaire, as well as incomments made by membergovernments and institutions.

As the data shows in this section,commitments to each sector varymarkedly from year to year. ICAmembers made their biggest sectoralcommitments in 2012 to the energysector (Figure 69, right).

However, the annual transport sectorcommitments in the 2008-12 periodhighlight the extent of volatility, with

Of ICA members’ 2012commitments tospecified regions andsectors, 41.9% went toenergy and 30% totransport. Some 24.6%was committed to water,followed by ICT with1%, and multi-sectorprojects accounting for2.5% of the total

7. Sectoral Analysis

7.1 Introduction


a $7.2bn peak in 2009 and a $3.7bntrough in 2011.

The development of integratedtransport corridors is a focus forinitiatives such as the revitalisedPIDA initiative, the policyorientations and activities of whichare described on page 16, and whichare expected to see more integratedsocioeconomic developments such asthe Nacala Road Corridor Project.

Total commitments of $7.8bn went toenergy in 2012. This was up from$3bn in 2010 but still dwarfed by the$12.9bn committed in 2011 – $4.9bnof which went to North Africa while$8bn was committed in SSA.

The map on page 54 gives an overviewof the continent’s electricity supplyindustry infrastructure, whosemodernisation and expansion isexpected to continue apace in the nextthree decades as major projects toimprove levels of access get under way.Huge investment is essential, as levelsof electrification and access to modern

cooking fuels remain unacceptablylow in much of SSA.

The water sector received 2012commitments of $4.6bn ($3.7bn forSSA). A map in this section (page 52)shows the potential for developingwater resources by exploiting thecontinent’s ‘water towers’, but also thechallenges posed by Africa’s variablewater resources and too manypopulations’ sustainable access toclean water.

On a regional basis, the biggest shareof commitments to the transport andwater sectors went to Eastern Africa.Southern Africa was the biggestrecipient for private sector capital forenergy, as financial support lined upbehind thermal and renewablesdevelopments in South Africa. After asevere dip, as the impacts of the ‘ArabSpring’ political transitions were felt,there was an upturn in commitmentsto most sectors in North Africa. �

Figure 68Total Africaninfrastructurecommitments bysector, 2012

Figure 70ICA member infrastructuredisbursements by sector, 2012

Figure 69ICA member infrastructurecommitments by sector, 2012


Projects to develop transport networksare confronted by the general politicaland economic pressures that weighheavily on infrastructure projectsacross the continent.

But the development of transportinfrastructure is subject to sector-specific complexities too. Developmentsmay find themselves prey to thecompeting claims of nationalgovernments, service providers andother stakeholders.

Looking to protect their perceivednational or local interests, neighboursare often reluctant to accept theharmonisation of rules and procedureswhose introduction might significantlyspeed project delivery.

Analysis of ICA member fundingacross the 2008-12 period shows amixed performance (Figure 71, below).It is encouraging to see that totalinvestment in transport across thecontinent increased by more than 50%in 2012 over 2011. But data from ICAmembers’ reporting of trends show

significant annual differences incommitments, spanning a high of$7.2bn in 2009 and a low of $3.7bn in2011.

The development of transportcorridors and other planned initiativescan be expected to strengthenperformance in coming years, andthere is huge demand for support: themovement of goods for import/exportrequires developing a range oftransport modes.

Performance in some regions givescause for concern. Central Africa –much of which is landlocked – receivedjust $347m in 2012 compared witharound $1bn in 2011 and the lowestannual amount in the 2008-12 timeperiod.

With the exception of 2011 – whenCentral and Eastern Africa receivedthe highest share of investment (27%each) – Central Africa attracted thelowest portion of investment by regionduring each year of the time series,just 6% in 2012.

Eastern Africa consistently receives ahigh proportion of transportinvestment. Even considering adecline in investment (down 52%) in2010, which levelled off in 2011 beforesurging in 2012 to $2.1bn, the regionhas generally attracted a highpercentage of ICA members’investment – especially in 2012, whenEastern Africa received the highestshare of investment by region (37%).

North Africa received the largestinvestment in volume terms in 2008-12, at around $7.7bn. It has alsoreceived generally high levels ofinvestment. This was most evident in2010, when the region attractedroughly 41% of ICA members’ totalinvestment across Africa ($2.8bn) –more than double the investmentmade to any other region of thecontinent. This figure dropped backsharply in 2011, as the region wasconfronted with popular uprisings andgovernment changes; an increase to$1.6bn in 2012 reflects a resumption ofdevelopment activity. �

7.2 Transport

Figure 71Trends of ICAfunding to thetransport sectorby region, 2008-2012


Transport Infrastructure and 2012Commitments


Transport Corridors and Projects

The goal of linking landlocked marketsand populations with major ports andtransport links has long been central toeconomic development planning inCentral and Southern Africa. However, inmany cases integrated projects havetaken decades to get off the drawingboard.

This is now changing, reflected in thesense of collective purpose that nowunites the stakeholders developing andmanaging transport infrastructurenetworks in Malawi, Mozambique andZambia, partners in the Nacala RoadCorridor Project (NRCP).

In the wake of Mozambique’s devastatingcivil war there has been only sporadicprogress during the last two decades inrehabilitating and developing the NacalaCorridor. A concession for the railway inMalawi was granted in 1999, but it wasnot until 2003 that the complementaryconcession in Mozambique was granted,opening up the potential for a cohesiverail network linking Nacala Port tolandlocked Malawi.

With further expansion and modernisationof the rail network and development of amodern road network, the process ofunlocking socioeconomic potential in thehinterland of Southern Africa’s deepestport is now gaining yet more momentum.

The Nacala Corridor has also seensome paradigm shifts in developmentfinancing, with private sectorinvolvement.

US operator Railroad DevelopmentCorporation is taking an early rolealongside donors such as the UK’s DfIDand USAID, by participating in aninnovative financing mix that evenincluded Malawi’s army.

The Nacala Road Corridor Project aims tobreak new ground. It goes beyondtarmac, incorporating Michi no eki – theroadside stations familiar to Japanesemotorists that connect highways withlocal communities. They aim to foster aninclusive employment environmentbased on trade and farming, in whichyouth and women can actively engage inthe economy alongside the highway.NRCP aims to provide a route towardsgreater regional mobility and prosperityfor individuals and businesses alike.

Recognised as a SADC priority project,the Nacala Corridor is included in PIDA.Local, regional and internationalfinancing has been mobilised, includingfrom the AfDB, JICA and the NordicDevelopment Fund; their involvementleverages value-added from partners’previous experiences.

A key element in the Spatial DevelopmentInitiative for Mozambique, Malawi andZambia, NRCP will connect thosecountries to the global economy. Itshould also provide a paradigmaticexample of intelligent developmentfinancing, offering strong returns acrossthe socioeconomic spectrum.

Shorter journey times and maintenancecost reductions due to upgraded roadsare expected to bring substantialeconomic advantages to ruralcommunities close to the 1,033km NRCP.The project has been split across fourphases with January 2016 set as ananticipated completion date.

Work on Phase I began in 2010 andcovers 361km of land acrossMozambique and Malawi – including anupgrade of the Nampula-Cuamba Roadand the construction of Lilongwe bypass.Phase II comprises 360km of road

connecting Luangwa in Zambia with theMalawian border at Mwami; it includesthe rehabilitation of the Nyimba to Sindaroad. Phase III consists of work inMozambique, upgrading 175km of theMuita–Mandimba–Luchinga Road, whilephase IV involves work in Malawi,covering 125km of the Nsipe-Liwonde-Mangochi Road. Work on phase IV isexpected to run from January 2014 untilJune 2016.

Additional projects are taking shapealongside NRCP within the NacalaCorridor. In Mozambique, the authoritiesare leveraging finance from private andpublic sector Brazilian partners toimprove rail and air infrastructure. TheMozambique government, in a jointventure with Brazilian mining companyVale, is to upgrade and build 912km ofrailway from the Moatize coal basin toNacala port.

Assistance in the shape of an $80m loanfrom Brazilian development bank BancoNacional de Desenvolvimento Economice Social (BNDES) enabled work to beginto transform a former airbase in theNacala Corridor into the NacalaInternational Airport. BNDES is alsofunding significant work at Beira port.

A generation ago, infrastructure on theNacala Corridor – Malawi’s lifeline to theIndian Ocean – was damaged anddestroyed during Mozambique’s civil war.Thanks to some innovative mixes offinance from regional developmentbanks, DFIs, national governments and,significantly, with the private sectorplaying a substantial role, the prospectsin this region are far brighter for the nextgeneration.


Case Study: Nacala RoadCorridor Project (NRCP)


7.3 Water

Of all the primary infrastructuresectors, it is the development of water-related infrastructure projects thatarguably best tracks the globalcommunity’s desire for an improvedstandard of life across the continent.

The rational mobilisation of waterresources is an essential condition forsustained economic prosperity inAfrica. The challenges are significantat a national and regional level,particularly given the trans-boundarynature of African water resources, suchas the Congo, Nile and other rivers thatspan several countries.

Africa’s economic emergence demandsthat water resources, which are oftentrans-boundary in nature, areeffectively used and managed throughcross-border programmes.

The increased political will reflected ininitiatives like PIDA (and those ofriver-based organisations such as LakeVictoria Basin Commission (LVBC) is

helping to drive ambitious projects thatwill help Africa overcome thepreventable consequences of highhydrological variability aggravated bythe impact of climate change.

ICA members reported promisingindicators, with $4.6bn of investmentcommitted in 2012. This represents a35% rise over 2011 and is the highestrecorded level of investment by ICAmembers during the 2008-12 timeseries (Figure 72, below).

While water receives less investmentthan either energy or transportinfrastructure, ICA members stillcommitted $3.7bn in Sub-SaharanAfrica in 2012 – representing a 54%increase on equivalent investment in2011.

But there are nuances to this broadaccount. Despite its huge potential,Central Africa has received the lowestshare of investment in waterinfrastructure projects year on year

compared to all other regions. Ataround $1.7bn, total investment from2008 to 2012 in Central Africa is onlyslightly above half that achieved bySouthern Africa (around $3.1bn),which is the second lowest figure.

The picture in North Africa is morepositive. The region experienced an11% drop in investment from ICAmembers in 2012 – a year of politicalturmoil in several countries – butNorth Africa has generally seen highlevels of water sector investment, withtotal investment at nearly $4.2bn in2008-12.

North Africa has thus consistentlygarnered 20-30% of reported annualcommitments to water infrastructureacross the continent.

Given the cross-border nature of waterresources, more investment is expectedacross the continent as PIDA and otherwater-specific regional programmesare accelerated in the coming years. �

Figure 72Trends of ICAfunding to thewater sector byregion, 2008-2012


Water Infrastructure and 2012Commitments


ICA members committed $7.8bn toenergy projects in 2012, substantiallymore than double the $3bn committedin 2011, but nevertheless considerablyless than 2010, when the continentbenefited from commitments of$12.9bn, of which $4.9bn was directedto North Africa; it was also less thanthe $6.4bn committed in 2009 (Figure73, below).

North African projects received 31%of all energy commitments, at $2.4bn– a substantial increase on 2011’s$500m commitment.

SSA received $5.4bn, of which $1.6bnwent to RSA, $1.3bn went to EasternAfrica, $1bn to Western Africa, $517mto Southern Africa excluding RSA and$486m to Central Africa.

Exceptionally in 2010, commitmentsfor Eastern Africa spiked at $2.5bnbefore falling to around $800m in2011 and then recovering to nearly$1.3bn in 2012.

Funding for Western African projectsincreased from $800m in 2011 tonearly $1bn in 2012.

Southern Africa, over a four-yearperiod, has witnessed a decrease inpublic external funding commitments,from $3.7bn and $4.8bn in 2009 and2010 to $500m and $925m in 2011and 2012 respectively. The region’sshare of funding also steadilydecreased.

Central African energy projects havewitnessed a steady increase infunding: the region has received morethan 10% of total commitments forthe past two years, in contrast to 2009and 2010, when it averaged around3%.

This trend could continue given ICAmembers’ stated interest in backingInga, Ruzizi and other projects in theregion. Indeed, the huge hydropowerpotential of DRC, Ethiopia and other‘water towers’ should support the

much-increased cross-border trade inelectricity over the next decade,reducing the cost of electricity forconsumers. But more funding isneeded and current investment levelsmust be quadrupled if the continent’senergy requirements are to be met.

For many ICA members, energyprojects compete with transportprojects for the bulk of funding. TheAfDB committed the most to energyprojects by putting up $1.5bn, whileWBG reported $1.3bn ofcommitments. The DBSA committed$1.2bn to energy infrastructure,mainly to projects in South Africa.

Only one-fifth of the SSA populationhas direct access to electricity and,with sustained economic growthcausing demand to boom, increasedinvestment is essential to tap thecontinent’s enormous thermal andrenewable (such as wind, solar,geothermal and hydropower) energypotential. �

7.4 Energy

Figure 73Trends of ICAfunding to theenergy sector byregion, 2008-2012


Energy Infrastructure and 2012Commitments


During 2012, ICA members reportedjust $182m of commitments to ICTprojects. North Africa received themost commitments ($55m), followedclosely by Eastern Africa ($53m) andRSA ($37m).

Central Africa’s $15m lagged someway behind, but not as much as themeagre $4m and $2m of commitmentsthat went respectively to Southernand Western Africa.

Historically, Western and SouthernAfrican ICT projects have beenprimary beneficiaries of ICA memberfunding, with the former receiving 70%of total commitments in 2011 and 38%in 2009, and the latter receiving anaverage of 44% of total fundingbetween 2008 and 2010 (Figure 74,below).

ICA members’ 2012 fundingcommitments are broadly the same asin 2011. In terms of trends,commitments to the sector have beenrelatively irregular, with funding

spiking at $690m in 2009, but falling to$255m in 2010.

Most ICA members appear to considerfunding ICT less of a priority thanwater, energy and transport, with thesector receiving substantially fewercommitments over the past five years.During 2012, ICT projects receivedjust 1% of total ICA member fundingfor projects, down from 1.5% in 2011.

In 2012, just four members madecommitments to ICT hardinfrastructure, with WBG providingmost of these commitments (a total of$91m), and much smaller amountscoming from the DBSA, the UK andthe US. The WBG’s commitment toICT has been consistent over the pastfew years, funding $105.5m-worth ofprojects in 2010 and $95m in 2011.

Members commented that perceptionsof a highly connected continent whichbanks by mobile phone have divertedfunds to other sectors.

Respondents to an ICA private sectorsurvey covered elsewhere in thisreport noted that their commitmentswere lower in 2012, down frompreviously very high levels, as anincreasing number of African mobilemarkets matured.

Despite the rapid growth in mobileuse in urban and rural areas, criticalinfrastructure is still lacking.

Expansion in fixed-line telephonesand broadband internet has been lesssuccessful than mobiles – that anyhowdo not affordably connect users withglobal communities and economies– and in remote areas suchinfrastructure is absent.

Thus, while ICT in Africa hasdeveloped into a multi-billion dollarbusiness, driving growth andgenerating revenue, project developersneed access to more finance so that allAfricans can have access to theinternet and other forms ofcommunication. �

7.5 Information andCommunications Technology

Figure 74Trends of ICAfunding to the ICTsector by region,2008-2012


ICT Infrastructure and 2012Commitments


Annex 1 –GroupDefinitions

GroupDefinitions

ICA Members

The governments and development agencies of all G8countries:

Canada, France, Germany, Italy, Japan, Russia, UK, andUS.

As well as:

African Development Bank Group, Development Bank ofSouthern Africa (DBSA), European Commission, EuropeanInvestment Bank (EIB), and the World Bank Group.

Participants as observers in ICA meetings:

AU Commission, NEPAD Planning and Co-ordinatingAgency, and Regional Economic Communities.

ICA recently decided to extend membership to all G20countries.

Arab Co-ordination Group

Arab Bank for Economic Development in Africa

Arab Fund for Economic and Social Development

Islamic Development Bank

Kuwait Fund for Arab Economic Development (KFAED)

OPEC Fund for International Development (OFID)

Saudi Fund for Development

Multilateral Development Banks

African Development Bank Group, European InvestmentBank, World Bank Group.

Regional Development Banks

Central African States Development Bank (CASDB),DBSA, an ICA member), EBID, EADB, West AfricanDevelopment Bank (WADB)


Annex 2 – Selected PIDAProjects in the Pipeline

Country/Institution

Project Sector Hard or softInfrastructure

Region Commitment$m

Est totalcost $m

AfDB Ethiopia-South Sudan Transmission Interconnection Energy Hard Eastern 345.3

WBG Rusumo Falls Hydroelectric Energy Hard Eastern 340.0AfDB INGA III Hydroelectric and Interconnections Energy Hard Central, Southern 307.0EIB Zambia-Tanzania-Kenya Power Interconenction Energy Hard Southern 193.5 774.0

AfDB STE/CESUL transmission project: Mozambique/SouthAfrica Energy Hard Southern 191.9

AfDB OMVG Energy Programme (Gambia-Guinea-GuineaBissau-Senegal) Energy Hard Western 184.2

WBG South Sudan/Kenya EAC Transport Corridor Transport Hard and Soft Eastern 181.0

AfDB Cameroon–Gabon–Equatorial Guinea Interconnection Energy Hard Central 154.3

WBG Rusizi Hydroelectric Rehabilitation Energy Hard Eastern 150.0

WBG Mozambique-Malawi Interconnection Energy Hard Southern 150.0

AfDB Malawi-Mozambique Interconnection Energy Hard Southern 138.1

WBG Kenya-Tanzania Interconnector Energy Hard Eastern 135.0

EIB Lesotho HWP II Water Transfer Component Water Hard Southern 129.0 1,096.5

WBG WAPP–Adjarala Hydropower Energy Hard Western 120.0

WBG Senegal River Basin Water Resources Management APL 2 Water Soft Western 110.0

WBG Regional Communications Infrastructure Program APL 5 ICT Hard and Soft Eastern 110.0

EIB OMVG: Kaleta and Sambagalou Energy Hard Western 103.2 1,105.8

AfDB ECOWAS-wide area network (ECOWAN) ICT Soft Western 100.0 252.0

WBG Central Africa Backbone APL 5 ICT Hard and Soft Central 100.0

EIB Inga III Hydroelectric Energy Hard Central 96.8 5,998.5

EC Bandajuma-Liberian Border Road and Bridges Transport Hard Western 80.3 80.3

AfDB Rusumo Falls Hydroelectric (phase 1: Rwanda – Tanzania) Energy Hard Eastern 79.2

WBG West Africa Regional Communications InfrastructureProgram ICT Hard and Soft Western 71.5

AfDB Kenya-Tanzania-Zambia Power Interconnection (Phase I) Energy Hard Eastern, Southern 69.1

EIB Ruzumo Falls Hydroelectric Energy Hard Eastern 64.5 567.6

EIB Cote d’Ivoire-Ghana interconnection Energy Hard Western 64.5

AfDB Ruzizi Hydroelectric (Phase I: Burundi, Rwanda) Energy Hard Eastern 64.5

WBG Southern Africa Trade and Transport Facilitation APL 2 Transport Hard Southern 60.0

AfDB Ruzizi III Hydroelectric – RDC Energy Hard Central 53.7

EIB Ruzizi III Hydroelectric Energy Hard Eastern 51.6 513.4

AfDB Inga III Hydroelectric Preparotory Phase Energy Soft Central, Southern 50.7

WBG Inga III Feasibility Studies Energy Soft Central, Southern 50.0

AfDB CAR-DRC Electrical interconenction (Boali phase 2) Energy Hard Central 38.4

EC Rehabilitation and strengthening of Community RoadCu2a: Koupéla-Fada N’Gourma (Burkina Faso) Transport Hard Western 32.8 32.8

AfDB Central African Backbone ICT Soft Central 30.0 155.0

EC Transport facilitation on EAC Central Corridor:One Stop Inspection Stations Transport Hard Eastern 27.1 29.7

AfDB EAC Backbone/Maritime Communication for Safetyon Lake Victoria Project ICT Soft Eastern, Central 25.3

EC Zinder-Bande Border Road Rehabilitation Nigeria/Niger Transport Hard Western 23.2 23.2

WBG Regional Communications Infrastructure Program APL 4 ICT Hard and Soft Southern 22.0

AfDB Rusumo Falls Hydroelectric (Phase 2 : Burundi) Energy Hard Eastern 6.1

WBG Kariba Dam Hydroelectric Energy Hard Southern Africa

KfW Ruzizi III Hydroelectric Energy Hard Central, Eastern

KfW Rusumo Falls Transmission line (Tanzania) Energy Hard Eastern

EIB Yamoussoukro Decision Implementation Transport Soft Continental 5.0

EIB West Africa Air Transport Transport Hard Continental 420.0

EIB Central Africa Air Transport Transport Hard Continental 420.0


Annex 3 –DataNotes

AfDB

The AfDB total consists of data from the Transport andICT; Water and Sanitation; Energy, and Private Sectordivisions. The Energy division reported on AfricanDevelopment Bank (ADB); African Development Fund(ADF); the Nigeria Trust Fund (NTF) and the ClimateInvestment Fund (CIF). The Water and Sanitation divisionreported on the Water Partnership Programme, the RuralWater Supply and Sanitation Initiative Trust Fund, andthe AWF Trust Fund.

BADEA

All data has been assumed as ODA (no indication inresponse).

DBSA

The DBSA provides hard infrastructure non-ODAinvestment funding via two operating vehicles: the SouthAfrica Operations Division and the International Division.

EBID

EBID reported on the Fonds Spécial des Télécoms and theFonds des garanties des industries cultuelles.

The conversion rate applied was 1 EBID UA = $ 1.518227.

EIB

EIB resources in North Africa are: EIB own resources; ;Risk Capital Envelope; FEMIP Technical AssistanceSupport Fund, and NIF Trust Fund. EIB resources in Sub-Saharan Africa are: EIB own resources; InvestmentFacility, and EU-Africa Infrastructure Trust Fund.

EC

The EC reported on the European Development Fund (forsub-Saharan Africa countries), and the DevelopmentCooperation Instrument (for Northern Africa countries).The EC also reported the contribution of the EuropeanDevelopment Fund to the EU-Africa Infrastructure TrustFund (ITF), excluding projects approved and implementedwith a contribution of the ITF.

The amount committed to hard infrastructure is estimatedat 90 % of the total amount committed. Hard and softinfrastructure components are mixed in individual specificcommitments.

France

France reported on the Agence Française deDéveloppement, Proparco, and the Fonds Français pourl’Environnement Mondial.

Germany

The German total consists of KfW and GIZ data. In thewater sector, GIZ committed another $59.2m with co-financing partners. In the energy sector, a GIZ programmeco-financed commitments of $42.27m across Africa withoutan explicit regional focus. Co-financing not included underBMZ’s commitments are not included in Regional/PIDAProjects to avoid double counting.

Japan

Japan reported on Japanese Grant Aid, Yen loan projectsand technical assistance projects through the JapanInternational Co-operation Agency as well as loan projectsby the Japan Bank for International Cooperation.Commitments include Export credit finance.

Spain

Spain reported on the Fondo de Inversiones para elExterior” and the Compañía Española de Financiación delDesarrollo, (Cofides), S.A.”

UK

UK infrastructure data provided relates to DFID bilateraland regional programmes. Data excludes DFID corefunding of multilaterals and global programmes which arepartially spending in Africa such as the PrivateInfrastructure Development Group and humanitarian aidprogrammes which may include an undefined element ofinfrastructure provision. It includes DFID contributions tomultilateral Africa-specific funds such as the EU AfricaInfrastructure Trust Fund and DFID budgetary support toAfrican countries for infrastructure provision.

US

The US government response for this report includes datafrom four agencies: Export-Import Bank of the UnitedStates; the Overseas Private Insurance Corporation; USAgency for International Development, and the MillenniumChallenge Corporation.

The data reported is for US Government fiscal year 2012(October 1 – September 30). Soft infrastructure may beunderrepresented due to the fact that there were ‘softinfrastructure’ components within predominantly ‘hardinfrastructure’ projects that were not broken out asseparate projects.

WBG

The WBG reported on IDA credits, IBRD loans, GlobalEnvironment Facility, Guarantees, Special Financing,Carbon Fund and the Reliable Energy Trust Fund.

IFC 2012 data (Annex 4) was submitted post data analysis.The data is not included in the main report (Section 3.ICA Member Financing).


Annex 4 – International FinanceCorporation (IFC)

2012 Data Reported

Commitments: $819m, of which:

Hard infrastructure: $817.5m

Soft infrastructure: $1.5m

Commitments to hard infrastructure:

(All non-ODA)

*Excludes intra-Africa commitments listed below.

Commitments to soft infrastructure:

All commitments to soft infrastructure are non-ODA forproject participation.

Soft infrastructure delivery uses InfraVentures, the IFCfund created to support and proactively develop privateand public- private partnership infrastructure projects.

Commitments and disbursements to intra-Africaprojects

Commitments to intra-Africa projects: $50m

Disbursements to intra-Africa projects*: $13.5m*Intra-Africa disbursements only reported:

Transport($m)

Water($m)

ICT($m)

Energy($m)

Total($m)

North Africa 100.6 6 69.53 176.13

Western Africa 320.84 320.84

Eastern Africa 25 30 124.06 179.06

RSA 147.51 147.51

Total ($m) 25 100.6 36 661.94 823.54

Project Sector Commitment($m)

Disbursement($m)

SunEdison Energy 100.6 6

SunEdison BV Energy

IHS Africa Energy 30

Energy($m)

Total($m)

Western Africa 1.5 1.5

Documents

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