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OECD Secretary-General

OECD EMnet Business Meeting on Africa: “Infrastructure and Regional Connectivity”

 

Opening Remarks by Angel Gurría

OECD Secretary-General

Tuesday, 30 October 2018 - OECD, Paris

(As prepared for delivery) 

 

 

Minister Gigaba, Excellencies, Ladies and Gentlemen,


I am delighted to open the meeting of the Emerging Markets Network – the EMnet – on Infrastructure and Regional Connectivity in Africa.

 

Quality infrastructure underpins virtually every policy area. It forms the links that bind our interconnected economies and societies together, enabling goods, services, energy, data, communications and people to move easily. Connecting Africa through world-class infrastructure is critical for its growth, its development, its intraregional integration and its integration into the world. This is why infrastructure is at the heart of the Africa Union’s “Agenda 2063” , and why infrastructure will be essential to make the proposed African Continental Free Trade Agreement a success.

 

African countries are investing in infrastructure, but important gaps remain

The good news is African countries are investing strongly in public infrastructure. This has led to significant capital accumulation, moving from an annual average growth of less than 3% in 1992 to more than 6% in recent years, a percentage which is close to Asia’s capital expansion.

 

And yet despite these efforts many countries in Africa are still far from closing the infrastructure gap in transportation, telecommunications and energy. In sub-Saharan Africa, around 650 million people do not have access to electricity. And yet, energy demand will only continue to grow, with rapid demographic growth, urbanisation, and increasing regional integration.

 

Urgent action is needed, however, financing gaps are a major challenge. A forthcoming review by the European Investment Bank and the OECD Development Centre shows the scale of the investment needs for the entire continent - as high as USD 150 billion per year over the next decades - almost 7% of Africa’s GDP.

 

To harness the potential of infrastructure to deliver better lives and greener growth in Africa, we must turn infrastructure gaps into investment opportunities.

 

Turning infrastructure gaps into investment opportunities through reforms

We still have a long way to go. In 2016, companies contributed only 4% of the total infrastructure financing in Africa. This has to change. Let me mention just a few ways to increase this percentage:

 

  • First, improve the business climate. Only nine countries in Africa rank amongst the top 100 globally for ease of doing business. 

  • Second, focus on green energy infrastructure. Morocco, for example, is completing the world’s largest concentrated solar power farm. This project is a public-private partnership that is expected to increase the share of renewables in the national electricity mix to 42% by 2020. 

  • Third, improve public governance and transparency, particularly with procurement to fight corruption and streamline bureaucracy.

  • Fourth, involve institutional investors, including domestic pension funds. Institutional investors are increasingly looking for portfolio diversification and new sources of long-term revenue. Yet, only around 0.5% (roughly USD 10 billion) of the total foreign investment from OECD country pension funds is currently directed to Africa. This is due to a range of supply- and demand-side constraints, including regulatory obstacles in home jurisdictions, limited investment opportunities through local capital markets and weak sovereign credit ratings.


The OECD is working across many fronts to support African countries to deliver quality infrastructure that promotes inclusion and ensures environmental protection.

OECD can help find ways to increase public-private collaboration

Since 2005, the OECD has been working with the New Partnership for Africa's Development (NEPAD) to raise the profile of the African continent as an investment destination. The OECD Development Centre also continues to strengthen its dialogue with African stakeholders through tomorrow’s 18th International Economic Forum on Africa, co-organised with the African Union (AU). We are also working with the AU to develop new tools, such as the first edition of our joint report, Africa’s Development Dynamics, which we launched this summer.

 

These activities are complemented by our country-specific programmes, including with Côte d’Ivoire, Morocco and Senegal through our Multi-Dimensional Country Reviews, aimed to improve their policy environment and address key constraints across all dimensions of national development.

 

The OECD is providing ongoing support to governments, through our guidelines and standards, to improve the quality of infrastructure service provision – across many dimensions such as governance, safety, efficiency, affordability, as well as environmental, social and economic sustainability. These include: the OECD Framework for the Governance of Infrastructure, the OECD DAC Principles on Blended Finance, the OECD Policy Guidance for Investment in Clean Energy Infrastructure and the OECD Recommendation on Effective Public Investment across Levels of Government, to name just a few.


In particular, our recent report, Enhancing Connectivity through Transport Infrastructure, discusses the role of bilateral and multilateral development partners in helping the private sector invest in transport infrastructure in Africa and in other regions. The OECD Centre for Green Finance and Investment provides a platform for public-private dialogue to help catalyse investment in green, low-emissions and climate-resilient infrastructure.

 

This is an area where multilateral collaboration in key global fora like the G20 can make a lasting difference. Building on the G20/OECD Principles on long-term investment financing, the OECD is supporting the Argentinian Presidency in developing the Roadmap to Infrastructure as an Asset Class. The roadmap will also set the stage for quality infrastructure investment as a priority for Japan’s G20 Presidency. In fact, the Development Centre has recently launched an international dialogue on quality infrastructure from a development angle at Japan’s specific request.

 

But how do we get from policy guidance and tools to real action and implementation? The OECD is supporting the G20 Compact with Africa, initiated under the G20 German presidency to promote private investment in Africa, including in infrastructure. In particular, we have been working to support reform efforts in Côte d’Ivoire, Egypt, Morocco, Senegal and Tunisia, focussing on some of the basic building blocks of a solid climate for investment, including the implementation of BEPS and other global tax standards; and the broader policy and legal frameworks for investment, building on the OECD Policy Framework for Investment.

 

Ladies and Gentlemen,

The presence today of so many leaders and experts from the public and private sectors is a positive sign that we can harness the collective will and deliver on Africa’s infrastructure and connectivity needs.

 

I urge you to be ambitious, bold and creative as you seek innovative solutions. In a phrase coined by one of Nigeria’s leading start-ups, “do the difficult things differently”. I look forward to hearing your many different solutions on unlocking private investment to ensure better infrastructure and connectivity for better lives for more than one billion Africans. Thank you.

 

 

See also:

OECD work on Development

OECD work with G20

 

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