Development finance institution, the African Development Bank (AfDB), has approved its first strategic framework for the development of public-private partnerships (PPPs) in an attempt to address and close Africa’s investment gap, which is estimated at over $100 billion a year.
According to banking and financial experts, PPPs offer the potential to increase private sector investments while promoting efficiency in the development and operation of infrastructure projects in Africa, thus promoting higher standards of living and global competitiveness.
“This eagerly awaited strategic framework will go a long way to enabling the Bank to provide much required assistance for the development and implementation of public-private partnerships in our regional member countries, and we look forward to its success,” stated Bank Group President, Akinwumi A. Adesina, adding that the strategic framework will provide a foundation for the AfDB’s engagement in the infrastructure sector.
To achieve its development goals, the AfDB is already engaged in a number of key PPPs, most notably in several key transport and energy sector projects and will root its framework in three pillars that streamline the Bank’s efforts across various departments, providing financial and resource assistance.
The first pillar will focus on upstream support, ensuring a conducive environment for exploration and production within the AfDB’s member countries. Pillar two will provide midstream support, through project planning and advisory services in an attempt to assist in the procurement of financial closure. Pillars one and two will be supported by the newly established Africa Public-Private Partnership Development Fund. The third pillar will focus on downstream support through the facilitation of an enabling environment that supports financing and investment.
Implementation of the framework will be coordinated by the AfDB’s Private Sector, Infrastructure and Industrialization Complex over a period of ten years, which will begin in 2022, and will enable countries in Africa to expand private sector investment in transport, energy, healthcare, and education, among other sectors, while also ensuring better debt sustainability, management, and efficiency, thus facilitating more economic competitiveness within the continent.
“The current global and African context, widening infrastructure gap and limited fiscal space, due to the Covid-19 pandemic, among other factors, builds a strong case for the Bank to scale up its support for public-private partnerships, to crowd in more private sector investment in both economic and social infrastructure, and provides a foundation for the Bank to become a leading voice and financier of public-private projects in Africa.” Solomon Quaynor, Vice President for Private Sector, Infrastructure and Industrialization at the AfDB, stated.
Serving as a key driver to support progress across Africa, infrastructure development will be a critical enabler in the facilitation of productivity and economic growth in the continent, thus contributing to human development, improved standards of living, a reduction in poverty, and the attainment of sustainable development goals.