AFRICA URBAN INFRASTRUCTURE SUMMIT April 22 to 23 , 2013

1. AFRICA URBAN INFRASTRUCTURE SUMMITApril 22 to 23, 2013 Finance World Class infrastructure in Africa Charles Kwame Boakye

2. Factors influencing Infrastructure • Policy, Institutions and regulations • Land • Financing • Construction materials • Construction sector + labour

3. Key Points – AICD World Bank • Infrastructure is a long term fix • Infrastructure is inherently spatial • Requires a high level of trust • Begin with the end in mind – housing etc. • Craft National development strategies (Industrialization, Urban master plan, etc.) • Prosperity and density go together • In China, India land leases are the usual method to mobilize funds • Money alone is not the answer

4. Where do we get the money? Land financing/benefit capture – Shanghai, etc Industrialization - value addition of minerals Insurance, pensions Credit system Bulk const. materials (equity) Loans (Bonds, Microfinance) Private sector (FDI, ODA)

5. Benefit (Value) Capture Principle: Many public works investments—especially transportation projects, but also watersupply and environmental works—drive upsurrounding land values The public budget should share in these landvalue gains, created by public investment Shoup Anomaly: Why is it so difficult tofinance urban public infrastructure, when landvalues increase more than the investment costs?

6. Land financing – Overview Land Long a Financing Source for Infrastructure Re-building of Paris under Napoleon III Trans-continental Railroads in US, British Rail Japan Rail

7. Land financing/Benefits Capture Upfront generation of finance; lessens burden on borrowing Reinforces market signals in urban land markets Recognizing market value of land Pricing land development to reflect costs ofaccommodating growth

8. Tuesday, August 26, 2014 Thursday, October 8, 2009

9. Magnitude of land financing

10. Importance of Steel • Steel is the most important construction material, does most of the things done by Timber, concrete, etc • Used in Bridges and Culverts • Used in Construction – scaffolding, formwork, steel reinforcement, replaces rafters, noggins, • Household appliances – fridges, Stove, cutlery, etc. • Skyscrapers • Railway & Ports • Steel is a big job creator

11. State Supported Spider web development strategy • Similar to New Deal (United States) • Chaebol – South Korea • Keiretsu (Zaibatsu) – Japan • Dubai Inc.

12. Strategies for Infrastructure Development - AICD World Bank Create economic clusters/cities Clusters to function as engines of growth, Serve as economic drivers to create jobs on location Reduce flow of people from more to less developed areas Compact cities are efficient, prosperous

13. ECONOMIC & SPATIAL CLUSTERS Spatial because of agglomeration economies Activities clustered in space can generate synergies, economic activities Infrastructure can unleash a virtuous spiral of growth—in the extreme a “growth pole” Enhance the efficiency of production Sequencing and bundling of investments is a vital part of a growth enabling strategy

14. Financing Ghana’s Railway GRDA - Modern 2880km, Estimate $12 Billion Strong role of the State – policy, regulation, etc US Trans-continental Rail, British & Japan rail Acquire land – Right of Way more than needed Identify existing & new growth centers/clusters Potential clients – Steel, cement, Aluminium, Oil and gas, Bulk construction materials, salt, landlock countries Identify new industries - Railway takes equity Credit System – eg. Manganese as ballast Exit strategy for the State

16. Create National Investment fund – eg. SWF • Capitalize at say US$10 Billion • 10% of Mineral Wealth – US$100 billion • Cheap Concessionary loans/Credits • Pension funds/Insurance/Microfinance • Credit Creation • Bonds • Note – Money is not WEALTH

17. Housing – Why it create stimulus • Largest investments most individuals make in their lifetime • Status symbol, symbol of security and inheritance • Ensures citizens sleep well, think better for themselves and the nation, and help residents to innovate • Center of transformation of nations • A Big job creator

18. Job Creation Create employment for 2 million people within a period of 6 years involving: i) High level employment ii) Middle level employment iii) Skilled employment iv) and unskilled jobs

19. Worldwide trends • China building 220 cities with 1 mil. Pop by 2030 • India – 7 Megacities • South Korea – Songdo City and others • Sudan building new city between blue and red Nile • Emirates – Dubai, Abu Dhabi + several cities • Egypt – a number around the coast and along the Nile • Angola – Redeveloping Luanda and others • Lagos – Redeveloping Victoria islands – ECO-ATLANTIC • Ouagadougou – Ouaga 2000 • DRC – Two with Chinese help – exchange of minerals • South America - numerous

20. Why do we need a long term vision – min. 25 years • Creates national consensus • Allows time to establish several industries • A challenge – short term vision always an excuse for failure • Ensures development of linkages – HD, etc. • Industrialization provides cheap construction materials – waste products are someone’s raw materials

21. Conclusion Infrastructure is a great stimulus in times of economic crisis, eg. in the ff: • East Asia - 1997 • Mexico - 1992 • Argentina - 1992 • United States – 1933-1950, 2008/2009

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