2008 ICA Annual Meeting Tokyo - Final Outcome Statement

14 April 2008

FOURTH ANNUAL MEETING OF THE INFRASTRUCTURE CONSORTIUM FOR AFRICA (ICA)
Tokyo, Japan
13-14 March 2008

Final Outcome Statement

The fourth annual senior-level meeting of the ICA was held from 13 to 14 March 2008 in Tokyo. At the outset of the Japanese Presidency of the G8, the meeting was hosted by the Ministry of Foreign Affairs of Japan. The meeting was co-chaired by Dr. Mandla Gantsho, Vice President for Infrastructure, African Development Bank and H.E. Mr. Nobutake Odano, Ambassador Extraordinary and Plenipotentiary for the fourth Tokyo International Conference on African Development (TICAD IV).

The meeting was attended by senior representatives of G8 ministries and bilateral agencies in charge of infrastructure-related programs in Africa, multilaterals, China, India, Saudi Fund and key African institutions. A full list of participants is attached as Annex 1.

Participants were welcomed to the meeting by H.E. Mr. Yasuhide Nakayama, Vice-Minister for Foreign Affairs. In his opening remarks, he recalled the critical role Japan has played in keeping African development high on the international agenda. He called for boosting economic growth in Africa through infrastructure development, stressing the importance of shared plans for regional infrastructure development in the transport and energy sectors. He went on to explain that the ICA meeting was taking place at an opportune moment and that its messages will be fed back to the TICAD process and the G8 Hokkaido Toyako Summit planned for July 2008. Speaking at the same occasion, Dr. Bernard Zoba, African Union Commissioner for Infrastructure and Energy called upon the ICA to continue playing its important role of enhancing collaboration between donors in order to help rectify the situation whereby Africa has been “penalised by lack of infrastructure.”

1.  Financing
In 2007 commitments by ICA members to infrastructure in Africa were estimated at around US$10 billion. This represents a significant increase of over 20% from the US$7.7 billion committed in 2006. Multilaterals including the World Bank, AfDB, EIB and the EC have collectively scaled up their support to the sector. At the bilateral level, there have been considerable increases in funding from the USA, France and Japan.

Going forward infrastructure will continue to receive enhanced and sustained support from key multilaterals following successful replenishments of IDA 15, ADF 11 and EDF 10. The EU-Africa Infrastructure Trust Fund, launched in 2007, is already also receiving considerable financial pledges of support from a growing number of EU Member States. The Trust Fund will be key to attracting additional resources for cross-border infrastructure projects in Africa.

As part of scaling up efforts, ICA members committed to intensify their collaboration and dialogue with non-ICA members including China, India, Korea and Arab partners. The World Bank has a staff exchange programme with China Exim Bank and is currently exploring co-financing opportunities.

2.  Ongoing Support to Analytical Work
The interim findings of the Africa Infrastructure Country Diagnostic were presented. This included state of sector findings, key performance indicators, investment needs at the country level and country-level capital and maintenance expenditure. The importance of feeding AICD outputs through practical policy work, such as public expenditure reviews and sector reforms at the country level, was stressed.

France announced their intention to make an additional contribution for the subsequent phases of the AICD Study. AfDB will continue its discussions with the AICD Project Management Team on ensuring sustainability of the statistics generated by the study.

A decision was taken in October 2007 to merge the NEPAD Medium to Long-Term Strategic Framework (MLTSF) with the African Union Master Plans. The African Union Commission with support from the NEPAD Secretariat and the African Development Bank is coordinating the formulation of a single strategic framework for development of infrastructure in Africa. Stakeholders are committed to fast-tracking the study to ensure that it retains its strategic significance for Africa and relevance to donors. Preparation of the new framework will be as inclusive as possible and will be informed by the AICD, sub-regional master plans and existing growth diagnostic studies.

3.  Enhancing Collaboration on Regional Projects
Following a technical level meeting hosted by the EIB in Luxembourg in February 2007 to discuss regional project collaboration ICA members agreed to:

• Explore the use of a cluster approach involving lead donors for given regional projects/sectors
• Look at new ways to try to mobilise additional finance for HIPC and fragile states •  Continue to work together to harmonise procurement rules and allow for flexibility when co-financing projects
• Increase the number of joint-financing opportunities by playing a greater role in bringing China, India, Arab partners and the private sector into regional infrastructure projects. This is critical to the scaling up agenda and information sharing is an important first step.
• The ICA Secretariat will enhance its communication and analyses functions by developing a web-based collaboration platform on the ICA website to allow information sharing between its members on projects. For each project it will highlight any specific constraints to progress.

 
At a meeting of African Stakeholders held in Tokyo back-to-back with the ICA meeting, an agreement was reached on an approach to the prioritisation of regional projects. This approach should enable resources to be channeled to the highest-quality operations as measured by their development impact, and strategic alignment with regional and continental objectives (NEPAD programmes and specific plans of RECs). The criteria presented covered the four sectors of energy, transport, ICT and water. As a next step it has been agreed to set up a Task Team comprising representatives of the AU Commission, NEPAD Secretariat, DBSA and AfDB to finalize the work taking into account comments received from ICA members. In view of the importance of this work, it was agreed that the team submits its report by the end of April 2008 ahead of the forthcoming TICAD IV meeting.

ICA members welcomed the progress made by African stakeholders in the infrastructure prioritisation process since the Luxembourg meeting. There was broad agreement on the proposed criteria for prioritisation. The process will aid the selection of projects to be submitted for financing pending the finalisation of the single strategic framework for infrastructure development in Africa.

4.  Africa’s Energy Crisis
Early results from the AICD Study suggest that annual investment needs in Africa’s infrastructure sector are in the region of US$38bn per year over the next 10 years, equivalent to 5.3% of GDP. Nearly two-thirds of the investment needs are required for the energy sector.

Africa’s power utilities are central actors in any reversal of the current crisis, however their inefficiency continues to be a major bottleneck to progress in the sector and particularly the issues related to cost recovery. Projects cannot be implemented without efficient operators. Strengthening the performance of the continent’s power utilities must be considered a priority by African Governments.

ICA members agreed to support the AfDB in its study to examine utility performance and to identify areas for joint action arising from the study. Furthermore, ICA members will enhance collaboration around ‘transformational’ energy projects such as INGA and mobilise additional finance for project preparation.

5.  Boosting Economic Growth in Africa through Infrastructure Development
Japan presented their TICAD and G8 plans. Emphasis will be placed on boosting economic growth in Africa through the development of infrastructure networks that lay the foundation for developing industry and promoting trade and investment.

Japan called upon the African stakeholders to accelerate the formulation of a medium- to long-term strategic plan for infrastructure development, which prioritises regional projects. The plan should offer a blue print for governments, with the support of donors and the private sector, to develop region-wide infrastructure that is strategic and has maximum impact on trade and economic growth.

Japan presented the results of the survey on on-going projects on road corridors, highlighting ‘missing links’ and areas for collaboration, as well as challenges facing the development of regional power networks. ICA members agreed on the importance of donor collaboration on concrete project-basis. The ICA Secretariat will continue the donor mapping exercise on road corridors and energy networks initiated by Japan and will provide periodic updates on the ‘missing links’ taking into account African priorities. Japan indicated its willingness to share models of cross-border infrastructure development that have worked in Asia.

6.  Transboundary Water Resource Management
Recognising the importance of fair and sustainable water resource management in Africa using a basin-wide approach, a specific discussion was held on the theme, led by senior water experts from the World Bank, the African Water Facility and the African Network of River and Lake Basin Organisations.

Key messages from the session included:

• Achieving water security in Africa with its high hydrological variability requires small and large scale water storage infrastructure and effective institutions. Water projects remain disadvantaged in many African countries and there is an urgent need to decouple them from national political cycles.
• Capacities to store surface and groundwater must be significantly increased. Benefit sharing approaches for multipurpose infrastructure projects, including social and environmental aspects, are necessary tools for realistic investment planning and decision making.
• Effective River and Lake Basin Organisations are essential for fast-tracking cross-border water infrastructure investments. Collaboration between many African states is ongoing. So far only the ECOWAS and SADC regions have been successful in developing effective RBOs, though the Nile Basin Initiative (NBI) is also functioning well
• There is shortage of well prepared water projects for financing. Major water infrastructure projects are complex with long gestation periods. As such they are expensive and results are not immediate. African partners should pool their resources for the development of such projects whilst the NEPAD Infrastructure Project Preparation Facility (IPPF) should increase the share of water projects in its portfolio.
• The African Water Facility should continue its support to the African Ministers’ Council on Water (AMCOW) to advocate for political support by providing more information on tangible results of investments.
• ICA members need to offer strong advocacy for regional water infrastructure in order to close the gap caused by several years of low investment. The Secretariat will convene a technical level meeting in late 2008 covering all aspects of private sector participation in the water sector.

7.    Public-Private Partnerships (PPPs)
Lack of private finance is often not the only issue – the degree of private sector participation is strongly linked to political and economic stability, governance, investment climate and the technical management capacity to prepare well structured projects.

Individuals are willing to pay for quality infrastructure services. Ensuring self-financing solutions by setting fair tariffs and ensuring they are collected is crucial.

ICA members will continue to advocate at the highest levels in African governments for increased private sector participation. In this regard, members will work with the US Treasury to organise a high-level meeting on PPPs planned for late 2008. The target group will be African Finance Ministers and senior policy makers.

African Governments looking to increase participation by the private sector have to increase their technical capacity and financial support to structure and negotiate deals. ICA members will increase their support to this area and help to promote the development of more brownfield concessions.

The Secretariat will seek the support of members to disseminate the User’s Guide to PPPs that has been produced.

8.  REC Capacity Building
The final report of the REC Capacity Building mapping exercise was distributed to members. The report emphasised the importance of supporting capacity building based on demand driven approach. The capacity building facility has been incorporated into the NEPAD Infrastructure Project Preparation Facility (IPPF) managed by the AfDB. It will soon go live with seed funding from Germany and with prospects of additional funding from ICA members. Members reiterated that the initiative should be used to provide support in response to well defined roles, responsibilities, and well prepared infrastructure delivery plans from RECs, regional power pools and river basin organisations.

9.  UN MDG Africa Working Group
As part of the initiative of the UN Secretary General to refocus attention on the achievement of the Millennium Development Goals (MDGs), the AfDB, EC and WB and the ICA Secretariat will continue to support the work of the Infrastructure and Trade Facilitation Thematic Working Group. A high-level meeting on the MDGs will be convened by the Secretary General and the President of the General Assembly of the UN in September 2008.

The ICA Secretariat will require additional resources if it is to effectively track financial commitments to the infrastructure sector in Africa and at the same time measure the results of those investments and the progress towards attainment of the MDGs.

To read the complete outcome statement, download here