The International Finance Corporation (www.ifc.org, the private sector investment arm of the World Bank group) will invest and mobilize more than $1 billion into private infrastructure in Africa during 2012, up from $200 million 5 years ago. But it still does not close the infrastructure finance gap, with an estimated $93bn a year needed.
Private sector infrastructure includes roads, ports, and power stations across Africa, and the pace of investment is both driven by the huge demand from the continent’s people and its growing economies and by the beneficial effects of continued reform programmes.
According to an IFC website, infrastructure and services development is hampered by lack of know-how to develop and guide infrastructure projects so that African governments can benefit from private-sector expertise, management and finance. This is an even more serious hurdle than shortage of funding. Developing deals requires time, effort, experience, and the ability get the right balance between private and public interests.
IFC focuses on the building blocks of any modern economy: ports, railways, telecoms, and power, including renewable energy. But it is also leading the way in advisory services and has successfully advised African governments, including local municipalities, on ways to engage the private sector in essential public services, and on how to restructure state-owned enterprises.
$4bn in public-private partnerships (PPPs)
IFC’s support to private-public partnership (PPP) arrangements between fiscal years 2008 and 2011 is expected to facilitate more than $4bn in private financing for infrastructure and health, providing improved services to approximately 19m people.
Recent highlights include:
• Senegal: IFC was the global coordinator of financing for a €230m ($302m) toll road project, which, when complete in 2013, will run 25 km from Diamniadio to Dakar, cutting travel time to and from the capital city from 2 hours to less than 30 minutes. France’s Eiffage won the project’s 30-year concession, which is supported by the World Bank and for which IFC provided €22.5m ($30m) in long-term debt alongside €40m ($52.3m) from the African Development Bank, the West African Development Bank, and local bank CBAO.
• Cameroon: IFC advised the Government in 2001 on privatizing its power sector. Since then, new owner-operator AES Sonel has invested more than $1bn and has connected nearly 340,000 people to its system. The most recent transaction was the 2011 financing for the company’s 216 MW Kribi project, the first commercial use of Cameroon’s substantial offshore natural gas reserves. In addition to providing €60m ($86m) in direct financing to the €263m ($360m) project, IFC coordinated a larger loan package from partner institutions, and worked with the World Bank on an IDA (International Development Association, part of the World Bank group) partial risk guarantee to facilitate Cameroon’s first long-term, local-currency loan for infrastructure.
