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					Developments in Infrastructure and Natural
                Resources

  7th Session of the Committee on
   Regional Integration and Trade

            2 - 3 June 2011
         Addis Ababa, Ethiopia
                       Structure of Report


• Report gives overview of developments in infrastructure
  and natural resources at
   • Global
   • Regional; and
   • National levels
• Identify challenges impeding development
• Provides an overview of what ECA is doing. Also
  identify what ECA could do
                              Infrastructure


• Infrastructure section excludes ICT and Water
• Efficient infrastructure and services key to Africa’s social
  and economic development
• Electricity powers health and education services as well
  as boosts business productivity
• Road networks provide links to global and local markets
  for goods and services
• Safe water supplies save time and stop the spread of
  diseases
• ICTs provide access reduces transaction costs
• Functioning infrastructure is key to human well being
  and poverty reduction
                             Infrastructure


• Much of Africa’s current infrastructure is in poor state,
  depressing productivity by 40% and contributes to
  higher cost of doing business
• Road density is extremely low
• Rail density is low, variations in gauge types, most pre-
  existing rail lines damaged or destroyed
• Poor transport infrastructure accounts for 40% increase
  in transport costs for coastal countries, up to 60% for
  landlocked countries
• 80 Ports, small, inaccessible by large modern vessels,
  inadequately dredged, inappropriate berths; old
  merchant fleet
• 15 States with no access to ports; Africa’s freight costs
  at about 250% of the global average
                       Africa’s Infrastructure deficit

                             Low Income countries
                       Sub Saharan Africa       Rest of the world
Paved road density     31                   134
Total road density     137                  211
Mainline density       10                   78
Mobile density         55                   76
Internet density       2                    3
Generation capacity    37                   326
Electricity coverage   16                   41
Improved water         60                   72
Improved sanitation    34                   51
                         Developments in
                          infrastructure
At the global level…
• G-20 meeting in Seoul, South Korea pledged support
    for Africa’s integration agenda through the promotion of
    trade facilitation and regional infrastructure
• Created a high level panel to report to report back to
    next meeting
• The Infrastructure Consortium for Africa (ICA)
    established by G8 to coordinate financing for Africa’s
    infrastructure
• This is likely to be expanded to G20 to accommodate
    some of Africa’s large funders
                          Developments in
                           infrastructure
At the regional level…five key programmes..
• The NEPAD STAP (2002-2010) developed some 120
    priority projects (studies, capacity building, facilitation
    programmes, and investment projects
• Commonly acknowledged that success was limited and
    projects slow to implement
• African Action Plan 2010-2015 (AAP) – infrastructure
    side aimed at speeding up implementation of STAP
•   Key strategy is to highlight high impact, quick gains
    projects
•   23 projects (5 energy, 9 transport, 6 ICT and 3 water)
    identified with a net resources requirement of US$ 9.3
    billion
                             Developments in
                              infrastructure
•   Programme for Infrastructure development (PIDA)
    seeks to establish long term (2010 – 2040) harmonised
    strategic framework and programme for infrastructure
    development in Africa
•   Has five sequential stages (to Jan 2012) –
    –   Inception phase;
    –   Planning phase (methodologies, identify challenges);
    –   Programming phase;
    –   Consensus building phase; and
    –   approval by Heads of State
•   Presidential Infrastructure Champion Initiative – seeks
    to facilitate infrastructure projects
•   7 initial projects identified –
                            Developments in
                             infrastructure
•   Missing links of Trans-Saharan Highway and Optic Fibre project–
    Algeria;
•   Dakar-Ndjemena-Djibouti Road and Rail project – Senegal;
•   North-South Corridor Road and Rail project – South Africa;
•   Kinshasa-Brazzaville Road, Rail and Bridge project – Republic of
    Congo;
•   Water management, river and rail transport projects – Egypt;
•   Nigeria-Algeria gas pipeline – Nigeria; and
•   ICT Broadband and link to fibre optic project into neighbouring
    states – Rwanda.

    Institutional Architecture for Infrastructure Development in
    Africa (AIDA)
•   Main objective is to create an integrated infrastructure
    development environment by streamlining efforts into a
    single platform
                                                           DECISIONS FOR IMPLEMENTATION


                          DECISION MAKING STRUCTURE                                 IMPLEMENTATION STRUCTURE



                             African Union Assembly of                                                 AfDB +ICA+
                           Heads of State and Government                                              DEVELOPMENT
                                                                                                        PARTNERS



                               Executive Council                                 NEPAD                Private Sector




                                                                                                                            IMPLEMENTATION PROCESS
                                                                                PLANNIG
                                                                                   &
DECISION MAKING PROCESS




                                                   PRC
                                                                                COORDIN
                                                                                 ATING            Regional
                                                                                                  Economi        Countrie
                           Council for Infrastructure
                                                                                AGENCY
                                                                                                  c Comm-           s
                                Development                                                        unities



                                                             Infrastructu
                                                                  re
                          African Union Commission             Advisory                                 Specialized
                                                                Group
                                                                                                       Institutions &
                                                                                                         Agencies




                                                     PROJECTS AND PROGRAM PROPOSALS & REPORTING
                       Developments in
                        infrastructure
At sub regional level..
• RECs have developed infrastructure master plans –
   these are to be part of PIDA programming phase
• Regional power pools (SAPP, WAPP & EAPP) working
   towards full interconnection
• Regional regulatory bodies (RERA) and ERERA) now
   functional to facilitate harmonized regulations
• In transport, good progress is being made to improve
   transport and trade facilitation measures – several one
   stop border posts have been implemented (eg Chirundu
   and Malaba) to minimize delays in border crossings
• Progress has also been made in corridor management
   groups
                         Developments in
                          infrastructure
At national level..
• Reforms in both energy and transport areas is
   progressing
• Energy mix is generally widening to improve acces eg
    – use of gas (West African gas pipeline to deliver gas
      to Benin, Togo & Ghana), Tanzania, Mozambique
      and SA
    – Biomass for electricity generation
    – Wind energy being exploited (Egypt, Morocco, SA,
      Kenya, Ethiopia, etc)
• In transport investment in ports being scaled up (eg
   Tema and Walvis Bay)
• Dry ports becoming common to ease port congestion
   and improve tax collection
                       Challenges of infrastructure
                              development
• Lack of coherent policy framework
   – policies are not harmonized
   – Strengthen policy coordination at all levels
• Institutional structures for regional projects not well
  defined
   – Ownership and responsibility issues persist
   – Underwriting major power projects difficult
• Inadequate financing sources
   – Projects poorly prepared
   – Risk perception and underwriting complicated
   – Increase PPP participation through long term financial markets
• National commitment to regional projects is weak
   – Deepen regional cooperation and integration
   – Integrate regional projects in national priorities
                     Developments in mineral
                           resources


At the global level..
• Most significant is dramatic increase in demand for
   mineral commodities since about 2002
• Demand increased by 1-2% between 80s and 90s but
   by about 7% between 1990 and 2000
• High demand caused mainly by growth in China
• Between 1995 and 2005, China’s contribution to global
   output grew from 6% to 12%
• With growth in India and Brazil, mineral commodities are
   assumed to be on a super cycle
• High demand has created strong geopolitical
   competition for Africa’s minerals
                        Developments in mineral
                              resources

 Chinese influence on world demand for metals

                          Refined   % Share    % Share
                          use       of China   of China
                          (2007)    (2007)     (2000)
Aluminium (kt)            12267     32.5       13.0
Copper (kt)               4800      26.2       11.8
Zinc (kt)                 3750      32.1       14.9
Lead (kt)                 2548      30.6       10.1
Nickel (kt)               345       24.9       6.0
Tin (kt)                  150       39.9       18.6
Crude steel (Mt)          437       32.3       16.3
Iron ore imports (Mt)     379       48.2       15.6
                          Developments in mineral
                                resources


At the regional level..
• The African Heads of State and Government adopted
   the African Mining Vision in February 2009
• Over-arching objective is to create a -
    “Transparent, equitable and optimal exploitation of mineral
       resources to underpin broad-based sustainable growth and
       socio-economic development”
•    It is seeks to integrate Africa's natural resources sector
    into continent's social and economic development thru
    –   Value addition to mineral products
    –   Social and economic Infrastructure development
    –   Transparency and equity
    –   Building human and institutional capacities
                     Developments in mineral
                           resources


At the regional level..
• ECA and AUC created an international study group to
   explore how Africa’s mineral regimes can transform
   mining into a broad economic development tool
• Work of the ISG group is complete and an analytical
   framework report compiled
• Report being edited prior to printing
• An action plan is also being developed for implementing
   the vision
• The action plan and ISG report will be considered by the
   African Ministers of Mining in September 2011
                     Developments in mineral
                           resources


Main findings of ISG Report:
• Exploit current global competition and resource glut by
  encouraging contracts that promote development
• Strengthen environmental and social practice through
  greater local and community participation – explore
  legislated CSR to provide certainty and uniformity
• Improve revenue transparency, sharing and use on
  developmental projects through improved governance
  eg EITI, EITI++
• Improve use of tax instruments, especially strategic use
  of royalties and resource rents
                      Developments in mineral
                            resources


• Explore use of price discovery instruments eg auctions
  to include development objectives – for ex infrastructure
  and economic linkage development
• In optimizing mineral linkages, pay attention to collateral
  economic and social use to promote integrated spatial
  resource use
• Strengthen institutional capacities to manage mineral
  sector especially in tax structuring, contract
  negotiations, value chain auditing, monitoring transfer
  pricing, etc
• Encourage regional cooperation to share developmental
  capacities eg developing regional economic and social
  infrastructure
                    Developments in mineral
                          resources


At the sub regional level..
• RECs are harmonizing their mining policies and codes
• SADC has developed and is implementing a framework
   for Harmonizing Mining Policies
• ECOWAS has also adopted a draft ECOWAS Directive
   on Harmonization of Guiding Principles and Policies in
   the Mining sector
• These efforts aimed at sharing capacities for mineral
   development
• RECs are also the implementation vehicles for the AMV
                     Developments in mineral
                           resources


At the national level..
• A number of African countries are rewriting their mining
   codes (DRC, Ghana, Namibia, Tanzania, Zambia, etc)
• New codes seek to improve competitiveness of mining
   sector to private sector investment
• More important, new codes also seek to re-negotiate
   fiscal aspects of mineral contracts which are seen as
   unfair (eg Tanzania, Zambia)
• CSR issues are also being strengthened - issue is
   whether CSR should be mandatory of discretional
• New codes also seek to strengthen public participation
   especially by communities affected by mining
                          Challenges in mining



• Mineral regulatory regimes continue to be ineffective in
  promoting broader social and economic inclusion
• The mineral sector is not integrated in domestic economies, still
  commodity export oriented. Need to emphasize local content
  and value addition
• Human and Institutional capacities are very weak – promote
  more capacity building programmes eg in contract negotiations,
  tax structuring, value chain auditing to check transfer pricing
• Implementing of environmental and social responsibilities is
  weak. This needs strengthening
• Small scale and artisanal mining is not making its full
  contribution – this needs institutional support in a number of
  areas.
• Mainstreaming AMV into national mineral development regimes
                         Thank You



7th Session of the Committee on Trade, Regional Cooperation and Integration
                              2 - 3 June 2011
                           Addis Ababa, Ethiopia

				
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