November 8th, 2013 A Business Plan for Africa Breakaway Sessions 3: Operationalizing our Strategy Session 3: Operations Department – Upgrading Africa’s Infrastructure

2 C ALL FOR AN U PGRADE OF A FRICA ’ S I NFRASTRUCTURE “Economic and social services such as banking, retail, health, education cannot function effectively without a modern and efficient infrastructure system. Critical requirements such as defense and security must be supported by a sound and robust infrastructure. Information sharing, social mobility, individual choice and consequently, the quality of life of individuals depends on a responsive and efficient infrastructure system.” Source : Linking Africa Through Regional Infrastructure, AfDB, 2000

3 P OLICY R ECOMMENDATIONS WITHIN THE A FRICA 2.0 M ANIFESTO Powering Africa  Fix what is broken (this could immediately generate an additional capacity of 15GW).  Make electricity a National/Regional Priority.  Intensive Planning and Capacity Building empowering local industries.  Implementation of Power Trade Schemes. Telecommunications sector  Stimulate technology innovation and rapid adoption (4G, LTE etc.).  Increase competition to make telecommunications more affordable for the public.  Greater infrastructure sharing to reduce industry costs.  Stronger attention on terrestrial backbone/backhaul, and last mile connectivity.  Investments/subsidies on advanced handsets to allow dissemination of mobile broadband. Transport and water infrastructure  Priority Focus on Regional Transport Corridors to enhance regional integration and intra Africa trade.  Support and Implement the Africa Water Vision 2025 proposed by African Union, AfDB and UNECA.

4 K EY F ACTS AND F IGURES Fact 1: Africa has the world’s lowest electrification rate, totaling only around 100GW in generating capacity - compared to 70GW for Spain alone. Fact 2: Sub-Saharan African governments succeeded in expanding telecommunications network coverage of the population from around 10 percent to over 60 percent. Fact 3: Africa’s road density is estimated at 31km/km2 compared to 137km/km2 in other low income countries. Fact 4: More than 20 percent of the population in Cameroon, Ghana, Mauritania, Niger, and Tanzania must travel more than 2 kilometers to their primary water supply.

5 K EY F ACTS AND F IGURES Fact 5: If Africa addresses power inefficiencies and cost ineffectiveness, the continent could add 1 to 3% to its annual GDP Growth rate. Fact 6: According to the Infrastructure Consortium of Africa (ICA), poor road, rail and harbor infrastructure adds 30-40% to the costs of goods traded among African countries. Fact 7: It is estimated that about US$93-billion is needed annually over the next decade to overhaul sub-Saharan African infrastructure.

6 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS STRENGTHS 1.Development of strategic partnerships with Foreign Investors considering Africa as a continent with strong potential. 2.Awareness of the need for efficient infrastructure networks to increase the continent’s growth potential. 3.Liberalized regulatory framework allowing an increased engagement of the private sector supported by strong national and regional institutions that are committed to implementing the transport corridors. 4.International Support for Africa to develop its infrastructure – the World Bank, etc. IMPLICATIONS Moreover, the Africa Progress Panel, composed of such distinguished members as Kofi Annan, Michel Camdessus and Peter Eigen has ranked infrastructure development as a key priority for the advancement of the continent, and has urged the G20 leadership to continue to give it their highest support. Sources: AIDI 2013, AfDB Scores of the AIDI, AfDB’s infrastructure indicator, has been improving for the past ten years.

7 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS WEAKNESSES The World Economic Forum’s Global Competitiveness Index 2012–2013 confirms that Africa remains the least competitive global region. Inadequate infrastructure is cited as the third most serious constraint to doing business in the continent, after access to finance and corruption. Sources: AIDI 2013, AfDB In most African countries, infrastructure is a major constraint on doing business, depressing firm productivity by around 40%. Only 1/3 rural Africans have access to an all-season road & only ¼ Africans have access to electricity. 1.Serious infrastructural shortcomings and poor infrastructure quality across all the subsectors: energy, water, sanitation, transportation, and communications technology – see AIDI 2013, AfDB. 2.Low-skilled workers to build infrastructure – see Africa Infrastructure Investment Report, CBC. 3.High transportation costs - see the World Bank 2010 flagship report on Africa’s infrastructure. 4.No preventive maintenance. 5.Few guarantees of long-term policy stability and revenue certainty with institutional capacity within government to make projects happen. IMPLICATIONS Nigeria's 194,000-kilometer network of roads has deteriorated over the years and now poses grave danger to motorists. Bad roads are now one of the major causes of road deaths in Nigeria.

8 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS OPPORTUNITIES 1.Creation of an enabling environment for foreign, cross-border and domestic investment. 2.Promotion of development and integration of capital and financial markets. 3.Economies of scale – cost & knowledge. 4.Increased competitiveness. Development of Regional Integrations A Tremendous Human Potential 1.Africa has the highest population growth in the world – positive effects on the demand side. 2.By 2035, Africa will have a larger working age population than both India and China – positive effects on the supply side. Improvement of Public-Private- Partnerships 1.Better delivery times. 2.Risk-sharing. 3.Increased Innovation.

9 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS THREATS Funding Issues Lack of Human Capacity Development Initiative 1.Sluggish investments due to national budgetary restrictions. 2.Local banks unable to provide Governments with loans for long term infrastructure investments. 3.Immature domestic and regional capital markets. 1.Inadequate institutional capacity to manage the systems. 2.Few schools specialized in Infrastructures. 3.Lack of skilled manpower trainings. Difficulties to lower the borders and strengthen relationships between States 1.Fear to lose Sovereignty. 2.Conflicts between neighbor countries. 3.States’ reluctance to work together to build and use infrastructures.

10 B EST P RACTICES Inga Hydropower Site The Democratic Republic of Congo  Largest hydropower site in the world.  Capacity to generate 45 GW or two - thirds of existing installed capacity in sub-Saharan Africa.  One of the continent’s most cost- effective power sources (US$0.025/kWh).  Would allow for a transformational reduction in power costs across Africa.  Financing: approximate costs: $8 billion for Inga 3 and $80 billion for Grand Inga. North-South Corridor from Dar Es Salaam to Durban From Tanzania to South Africa Goals:  Simplify and harmonize requirements and controls that govern movement of goods within the Corridor.  Improve the quality and reliability of the infrastructure, transport, and other logistics services within the corridor.

11 K EY Q UESTIONS TO A DDRESS IN T ODAY ’ S S ESSION How is the Infrastructure of Africa Inc. in 2063? How to fund infrastructures investments in Africa? How to build human capacity to boost infrastructure development in the continent? How to provide high-quality infrastructure at an affordable price in every part of Africa including landlocked regions? How to upgrade infrastructure using public-private partnerships - where possible?

12 A CTION PRIORITIZATION M ATRIX AND S TAKEHOLDER E NGAGEMENT M ATRIX For each identified leapfrogging action, complete the Stakeholder Engagement Matrix below: Complete the Action Prioritization Matrix below with the key short, medium and long-term leapfrogging actions.