Experts say infrastructure in sub-Saharan Africa is key to the fight against rural poverty. They say African leaders and donor nations are strongly committed to increasing the quality and quantity of infrastructure investment to help the poor. Mima Nedelcovych is the managing director of Africa Global Partners, a project development and finance group. In this fourth of a five-part series, he told VOA English to Africa reporter Cole Mallard there are several simple answers as to why private investment is needed.
He says one is that governments cannot afford to undertake these projects on their own. Another reason is that adequate infrastructure is needed to attract larger investment available only from private funding. He says, “It’s the very lack of infrastructure that actually is making Africa non-competitive.” For example he says no electricity means no competitive industry, and no industry -- such as an effective system of transporting agricultural products -- means no jobs, and no jobs means poverty.
A SWEET DEAL
Nedelcovych mentions a $300 million sugar processing complex in Mali as an example of the need for infrastructure. He says the project is on hold while the government works to fund an inter-connecting power line that costs less than two million dollars and that “is holding up the ability for $320 million to flow.” Nedelcovych says government funding for the major grid-work is expected over the next two years, and meanwhile, private sector “pre-financing” is being sought.
He says the ultimate objective for private investors is to weigh the risks to determine whether to invest, whether they think they can make a profit. He says the objective for public investment is to protect the public welfare, adding, “The key here is how…you meld those two. I mean both sides have got to walk away from the table feeling that they’ve got something out of the deal.”
He says Africa has the greatest potential but also the greatest obstacles to overcome, and the bigger the investment, the more complicated it is. Another example of public-private investment in Africa is in Liberia, where bio-mass (a wood chip byproduct used as fuel to produce electricity) from rubber trees is being rejuvenated for export to Europe, as well as for consumption within the country.
Nedelcovych says the appeal for private investment in Africa depends on the ability to afford the risk: “We look at Africa because there is a great potential for return; if you can handle the risks on the front end, the rewards on the back end are very strong.”