Challenges to Regional Infrastructure Development in the SADC Region

1. Challenges to Regional Infrastructure Development in the SADC Region Presentation to TIPS By Ellen Hagerman, TIPS Research Fellow

2. Focus on Infrastructure in Africa • African Infrastructure Country Diagnostic (AICD) • Infrastructure Consortium for Africa • G20 High-Level Panel on Infrastructure • Program for Infrastructure Development in Africa (PIDA) • Presidential Infrastructure Champion Initiative (PICI) • Focus on North-South Corridor • Focus on the Tripartite Agreement • SADC Regional Master Plan for Infrastructure Development

3. Corridors • Gather and share lessons learned and best practices from the North-South Corridor • Adopt an integrated, sequential and inter-modal approach to corridor development • Examine relationships between and among projects along the corridor • Undertake a study to identify the best options for managing corridors

4. Regional Integration • Undertake further study with relevant stakeholders on the barriers to regional integration linked to regional infrastructure • Investigate other regional bloc models • Identify models for overcoming regional dominance • Establish regional coordinating mechanisms e.g. SPV,PSDPE • Explore ways to improve awareness raising among the general population about the merits of regional integration

5. Planning • Promote the merits of early rigor including pre-feasibility to assess bankability • Establish coordinating committees to ensure all relevant gov’t departments are involved • Integrate trade and industrial analysis including value chains and linkages among industries • Assess and promote findings about the financial losses from PPF funding when tenders do not advance • Centralize planning and build in contingencies • Identify a champion

6. Planning (2) 6. Allocate sufficient funds for feasibility studies 7. Plan and budget for monitoring/oversight and undertake a preliminary baseline 8. Undertake an upfront skills assessment 9. Build capacity to assess and negotiate contractual agreements 10. Factor in environmental and social considerations

7. Capacity Building (CB) • Gather lessons learned from programs that undertake capacity gap analysis • Assess the best pedagogical methods/capacity building programs e.g. learning by doing • Adopt a programmatic approach that incorporates building local capacity as part of the program design • Adopt a cradle-to-grave approach to CB • Gather lessons learned/pros and cons of using external consultants/consortium • Negotiate the use of local capacity and skills transfer

8. Financing for Project Preparation • Improve Coordination of PPFs but look at previous efforts e.g. Tunnel of Funds, MRI • Assess the feasibility and approach to establishing a continental/regional project development facility • Assess the number of projects that go to bankability and assess the obstacles and recommend ways to remove them • Undertake a study to identify an instrument to ensure that PPF money is spent effectively • Bundle PPFs and increase the ceiling (HLP)

9. Financing for Project Preparation 4. Undertake a study to determine if increasing upfront funding (fatal flaw financial model) will reduce likely investment in unbankable projects 5. Assess the merits of capping the grant equity at 20% for project preparation

10. Financing Infrastructure • Assess and document the pros and cons of different financing mechanisms including new financing mechanisms • Investigate options and ways to support governments in dealing with inefficiencies to recoup financing • Investigate ways to finance and incentivize pro-poor infrastructure development

11. Financing Regional Infrastructure • Assess the merits of establishing a continent or region-wide risk facility • Assess the merits of regional infrastructure bonds and other financing options • Assess the merits of a regional surcharge, regional payment systems • Gather lessons learned on the involvement and role of regional development banks worldwide • Assess the pros and cons of mechanisms to incentivize MDB staff to leverage additional resources for regional infrastructure (HLP recommendation)

12. Financing Regional Infrastructure 6. Assess the pros and cons of mechanisms such as Special Purpose Vehicles to enable countries to jointly support regional infrastructure 7. Assess the experiences and lesson learned of different financing mechanisms when working with countries with different income levels

13. Social and Environmental Considerations • Undertake further analysis to determine how the private sector can be incentivized to incorporate social considerations • Assess the value of externalities of social and environmental considerations as part of the overall project cost • Build the capacity of governments to negotiate and integrate CSR considerations and ensure CSO consultation

14. Private Sector Engagement • Assess the capacity of African government departments to engage in PPPs • Case studies with the private sector to document challenges and recommendations • Investigate ways to improve the relationship between the public and private sector • Establish an official forum for dialogue between the public and private sector • Draw lessons learned from PPPs

15. Emerging Economies (EEs) • Gather lessons learned on building capacity of governments to negotiate with EEs • Gather lessons learned from negotiating favorable contracts e.g. DeBeers • Gather lessons learned from joint ventures of North-South collaboration • Use platforms such as China-DAC, G20 and ICA to share lessons learned and best practices