Greater donor mobilization is needed to support the project preparation process that is so strategic for investment on the continent." These are the words of Patricia de Lille, South Africa’s Minister of Public Works and Infrastructure. She was part of the "Building early stage pipeline" panel discussion held at the Africa Investment Forum 2019 in Johannesburg, the economic capital of South Africa.
The discussion was moderated by Adam Iqbal, representative of Boston Consulting Group in Johannesburg, while the other panel members included Koffi Klousseh, Director of Project Development for Africa50, Jurie Swart, CEO of African Infrastructure Investment Managers (AIIM), Mohan Vivekanandan, Executive Committee member of the Development Bank of South Africa (DBSA), Kofi Adomakoh, Director of Project Finance at Afreximbank, and Manish Vasistha, Senior Infrastructure Advisor at the Department for International Development (DFID).
Africa needs $150 billion every year to finance its development. This means that the continent is faced with a funding challenge if it is to support its increasing population, growing urbanization and ever-increasing demand for goods and services
Governments and multilateral development banks cannot meet these needs alone. The African private sector can play a much greater role, not only by providing more innovative financing solutions, but also by doing so on a much larger scale. There is no shortage of investment opportunities, but more needs to be done to increase the interest of institutional and private investors, who are hampered by the lack of preparation for investment projects.
It is not, therefore, simply a case of attracting more capital. It is equally important to make better, more effective and more efficient use of it. Ways of thinking and acting need to be reinvented in order to better prepare projects which have more meaningful impacts, and improved funding methods. These need to be tailor-made to suit each transaction's context and requirements, whether domestic or international.
Increase partnerships to multiply successes
It is crucial to involve more partners to support this process and convince investors to deploy funds. "The African Development Bank is particularly active in this area. We need to involve more African and international donors in this process," said Jurie Swart.
Koffi Klousseh expanded on this, "In project preparation, the feasibility study is strategic. Expert assessments and advice are crucial to the success of this key step that then feeds a pipeline of bankable projects that are ready for funding."
The financial effort is paramount, as DBSA Director Mohan Vivekanandan explained, "Nearly $7.5 billion are needed every year for preparing investment projects in Africa. Private operators not only need more public capital to fund the preparation process, but also consistency and transparency of regulation and public policy."
In order to meet this major challenge, the African Development Bank launched the inaugural Africa Investment Forum last year, a multi-party and multi-sector transactional platform aiming to organize, facilitate and implement transactions.
The Africa Investment Forum inaugural edition was launched in 2018 in partnership with Africa50, Afrexim Bank, the Trade Development Bank, the Development Bank of South Africa, the Islamic Development Bank, the Africa Finance Corporation, the European Investment Bank.
The Forum runs from 11 to 13 November in Johannesburg, South Africa.