What would it take to transform Africa’s energy sector? This is the question we grappled with in a discussion on Friday with Energy and Finance ministers from across Africa. The discussion was part of a standing-room only event that took place during World Bank-IMF Spring Meetings. The discussion could have gone much longer than the scheduled two hours; this is because so many of us feel so strongly about Africa's energy situation.
In a blog post by Molly Norris and Joshua Powell for the End Poverty in South Asia blog, they talk about Bangladesh as "ground zero" at the intersection of climate change and food security.
"The country is widely recognized as one of the places most vulnerable to the effects of a changing climate, which strains food systems alongside rapidly growing and urbanizing populations. Yet, despite these dual challenges, the World Bank expects Bangladesh will meet its Millennium Development Goal (MDG) of halving the number of people living in extreme poverty by 2015," they write.
African countries lag behind their developing country counterparts on infrastructure, and the gaps are only widening over time. One of today’s keynote panels took a deep look at ways to close that gap.
Instead of defaulting to a call for more money, panelists talked about what’s impeding effective use of funds, both public and private, that are made available for infrastructure development on the continent.
To put the conversation into context, here are a few key stats:
- Africa needs $93 billion a year to catch up with its huge infrastructure backlog over the next decade—an amount that represents more than 35 percent of GDP for fragile states.
- Current spending on African infrastructure is higher than previously thought, at $45 billion.
- An estimated cost savings of $17 billion—the so-called “efficiency gap”—could be achieved if existing resources were used more efficiently.
Flanked by the finance and development ministers of France and Germany, World Bank Group President Robert B. Zoellick launched two initiatives today that together are expected to mobilize more than $55 billion in financing for infrastructure projects over the next three years.
The multibillion dollar initiatives—the Infrastructure Recovery and Assets (INFRA) platform and Infrastructure Crisis Facility—were created to address the falloff in funding for the construction of roads, water systems, power generation and distribution, and other critical infrastructure.
There is no doubt infrastructure plays a huge role in economic growth and development, Zoellick said.
“In this crisis, we will need more and more to identify creative ways to mobilize additional financing. This facility sends an important market signal,” encouraging the private sector to continue infrastructure investment and development.
France and Germany became the first to sign on to the Infrastructure Crisis Facility with commitments of about $660 million through German development bank KfW and roughly $1.3 billion through French development bank Proparco.
INFRA is designed to help countries offset the negative effects of the financial crisis on their infrastructure services and investment programs, with up to $45 billion available over the next three years. Assistance will be global, but Africa is expected to see a large share of the funding.
The Infrastructure Crisis Facility, administered by IFC, a private sector branch of the Bank Group, is expected to attract more than $10 billion to help bridge the infrastructure financing gap.
At today’s signing, German Development Minister Heidemarie Wieczorek-Zeul appealed to industrialized countries to support the initiative and take into account the situation in developing countries. “They’re not responsible for the crisis. We have a special responsibility to be at their side.”
French Finance Minister Christine Lagarde added: This is a time “when we can put our money where our mouth is and commit to deliver…I think the World Bank has done an outstanding job dealing with issues that are difficult. This is a good illustration of how projects should be conducted. They should be focused where they can actually make a difference.”
On a related note, I caught up earlier today with the Bank’s director for energy, transport and water, Jamal Saghir, who said the Bank’s Board has approved $9 billion in infrastructure projects already this fiscal year. That puts the Bank 47 percent ahead of the amount of infrastructure funding approved this time last year.
Saghir gave a shout-out to staff, who he credited with working hard to speed up project implementation to respond to the crisis.
For more information
- Press release: World Bank Group Launches Multi-Billion Infrastructure Initiatives to Help Developing Countries Weather Crisis
- Website: Infrastructure Recovery and Assets Platform
- Website: Infrastructure Crisis Facility
- Feature story: Infrastructure Financing Gap Endangers Development Goals