SADC binds states on US$500bn infrastructure development financing
Unpredictable funding mechanism and an apparent lack of commitment from the 15 member states on infrastructure development financing has forced the regional body to require countries to append their signatures to adeclaration on the same.
At the conclusion of the 34th summit being held at resort town of Victoria Falls in Zimbabwe among other things heads of States will sign a declaration, which the body touts as a sign of commitment and ownership.
SADC Director of Infrastructure and Services Remmy Makumbe confirmed the new development during a media conference in Victoria Falls ahead of the meeting of heads of states and government.
“This is a landmark development… and is consistent with developments elsewhere around the world. Also this would also open up opportunities financing by financiers both wit and outside the region,” Makumbe said.
SADC is facing uncertainty in terms of funding and commitment to roll out the first phase of the ambitious Regional Infrastructure Development Master Plan (RIDMP) estimated at US$500 billion. The phase has a projected cost of US$64 billion.
“However, it is also acknowledged that these Governments are mostly faced with tight socio-economic choices based on the scarce resources they have,” said Trade Law Centre Researcher William Mwanza.
Mwanza observed that the RIDMP does not seem to have a comprehensive financing model or strategy in place to streamlines the different sources and actors into effective financing arrangements.
Western governments and multilateral lenders cold-shouldered the plan forcing SADC to revisit its 1992 founding treaty for inspiration hence the creation of a regional fund.
The region’s private sector has also expressed pessimism on the fund and the region’s proposed projects.
“The private sector cannot not come on board where they see no concrete returns in the end,” said Head of economic diplomacy programme at the South African Institute of International Affairs (SAIIA) Catherine Makokera.
Modelled on the European Investment Bank and other regional funding ventures, SADC countries will initially pump US$1.2 billion while the private sector is expected to shore up 37 and 12 percent by international partners.
The RIDMP among other things aims to deal with the region’s deficit in road, rail, ports, power, communication, water infrastructure and meteorology.
Currently,reports indicate that respective SADC Governments are independently pursuingsourcing of financing.
For instance, Zambia offered international bonds of up to US$750 million to funding its infrastructural projects and Tanzania had US$600 million in international bonds in March, 2013, and Angola had intended to follow suit.
“It would be interesting to monitor the extent to which the new-found approach to funding infrastructural projects…could be replicated in other SADC countries,” said Mwanza.
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