Lamin Barrow, the African Development Bank’s director general for its Nigeria Country Department, has told Africa’s infrastructure industry that there is a financing gap across the continent of almost $100bn per year.
The AfDB’s director general for Nigeria has told an international audience of infrastructure specialists that resilience, finance and efficiency need to improve.
Lamin Barrow, speaking in the Nigerian capital of Lagos on behalf of the bank’s president Dr Akinwumi Adesina, stressed that Africa has an annual infrastructure investment need of between $130bn and $170bn, and that with spending only reaching $83bn, this left a huge gap to be addressed.
That investment need is made up of between $35bn and $50bn for power, $4bn and $7bn for ICT, $56bn and $66bn for water supply and sanitation, and $35bn and $47bn for transport (road, rail, air, and seaports). And he warned the consequences of this had become all the more clear lately.
Barrow said: “The Covid-19 pandemic has brought to the fore this glaring deficit to achieve universal access to basic infrastructure services such as clean water, sanitation, energy access, and healthcare. Buffeted by tightening fiscal space that have been compounded by the huge budgetary outlays to mitigate the impacts of the pandemic and other global and regional shocks, African governments should redouble their efforts to improve the enabling environment to stimulate greater private sector investment in infrastructure delivery.”
“We must also improve the efficiency of public investments through better design of projects, more transparent and competitive procurement processes,
and timely execution”.
The AfDB has a strategy around the ‘High 5s’ which it lists as:
- Light up and Power Africa
- Feed Africa
- Industrialize Africa
- Integrate Africa
- Improve the Quality of Life for the People of Africa.
For this to happen, however, Barrow said there was a need to distil some lessons from recent experience.
He explained Africa must “ensure that infrastructure investments are future-proofed to be resilient to shocks and stresses associated with climate change induced extreme events.” And he said: “The African Development Bank is spearheading an initiative to set up an Alliance for Green Infrastructure in Africa, which seeks to mobilize $500m for development of greener infrastructure project preparation and development across all sectors.”
According to the Global Centre for Adaptation, integrating resilience only adds an average of 3% to total costs, but every dollar spent will yield four dollars in benefits.
However, Barrow pointed out that money was only part of the issue for Africa.
“We must also improve the efficiency of public investments through better design of projects, more transparent and competitive procurement processes, and timely execution. To develop quality infrastructure, there is need to embrace life cycle costing approaches in project selection and in procurement of services, following extensive stakeholder consultations,” he said.
Capacity building is a challenge. The AfDB has adopted international standards for its projects, including the FIDIC suite of international contracts. But along with calling on industry to support governments to make the right changes, Barrow pointed out that training was also crucial.
“The African Development Bank has been a major user of FIDIC contracts to guide its operations, starting with the use of the Pink Book since 2010,” he explained. “The bank also signed a five-year agreement in 2020 to use the FIDIC Rainbow Suite of Conditions of Contract for Construction that enables the incorporation of FIDIC contracts in some of our standard bidding documents.
“This notwithstanding, many of our borrowers continue to face challenges in contract management and oversight, mainly attributable to capacity limitations, and that has frequently resulted to time and cost overruns during project implementation. By organising regular training courses on its standard forms of contracts, FIDIC is helping to close the knowledge and skills gap that are critical to improve understanding and application of contractual provisions,” Barrow said.
Other private partnerships are also of growing importance to the AfDB. In January 2022, its board of directors approved the first strategic framework for development of public-private partnerships. This framework seeks to harness the bank’s resources and experience as financier, trusted adviser and knowledge broker, to provide integrated services to support PPPs in various sectors and mitigate political and non-political risks.
Barrow explained: “Public-Private Partnerships (PPPs) portend great prospects for increasing private sector investment in infrastructure in Africa and enhancing efficiency in operation and management of key infrastructure assets. Further improvements in the policy, legal and regulatory frameworks will be necessary to minimise risks and uncertainties.”
Lamin Barrow was speaking at the FIDIC Africa Infrastructure Conference in Lagos, Nigeria on 16 May 2022.