Africa should open its borders, support infrastructure development, says Economic Commission

 

Regional integration in Africa can support trade through the development of transboundary infrastructure, Economic Commission for Africa (ECA) Executive Secretary, Carlos Lopes has said.

Lopes has called on sovereign wealth funds to support African development by investing in sustainable infrastructure which, he said, is the growth story of the future.

“Africa has suffered too long from unnecessary high cost of capital due to perceived investment risks rather than the reality on the ground,” said Lopes.

The latest report by Moody’s Investors Service (the bond credit rating business of Moody’s Corporation) on defaults and recovery rates for projects financed by bank loans shows that defaults from North America, Europe and South-East Asia accounted for 76.9 per cent, while only 7 out of 223 projects in Africa defaulted, about 3 percent.

Launching ECA and NEPAD Agency’s publication dubbed “16: Infrastructure Projects for African Integration” at the NASDAQ Stock Exchange, Lopes said the 16 infrastructure projects profiled in the publication were selected by African Heads of State based on the priorities of the continent and their potential impact for regional integration.

The report outlines 16 infrastructure projects capable of enhancing Africa’s regional integration in the framework of the Programme for Infrastructure Development in Africa (PIDA) and the Dakar Agenda for Action to increase private sector investment in regional infrastructure.

Lopes said the immediate challenge for Africa was to ensure that its infrastructure is sustainable, taking into account the impact of climate change and to increase intra Africa trade, which, he said, could be misleading on three grounds.

First, Lopes said, the trade data constitutes an African average, which includes all sub-regions of Africa including North Africa’s large economies with intra-Africa trade of about 3 per cent, and East Africa with intra African trade of about 26 per cent, equivalent to that of Southeast Asia.

Second, he said that the trade figures grossly underestimate the informal economy in many African countries and third, there were no quality statistics which take into account transboundary sophisticated transactions such as transboundary banks and telephone roaming, which makes Africa one of the most integrated regions.

The meeting was attended by about 70 investors and sovereign wealth funds as well as Dr Mukhisa Kituyi, Secretary General for UNCTAD, Andrew M. Herskovits, Coordinator for Power Africa.

 

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