Roundtable for Enhancing Inter-Regional Cooperation on Agenda 2030 - Presentation made at the ACP House
Isabelle Ramdoo
Deputy Head,
Economic Transformation Programme
Brussels, 30 – 31 March 2016
Economic transformation, industrialization and extractives: At the core of Agenda 2030?
1. At the core of Agenda 2030?
Roundtable for Enhancing Inter-Regional Cooperation
on Agenda 2030
Presentation made at the ACP House
Isabelle Ramdoo
Deputy Head,
Economic Transformation Programme
Brussels, 30 – 31 March 2016
Economic transformation,
industrialization and
extractives
2. 1. Agenda 2030: extractive sector, economic
transformation and industrialization
2. SDG9: Special focus on regional infrastructure
3. Challenges and Policy prospects
4. Conclusion
Structure of Presentation
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5. Focus on Infrastructure: Why it matters?
Visualizing the deficits
Source: African Union
Energy Railways
6. Lack of infrastructure a significant barrier to mobility
(people, goods and services), productivity and economic
development
World will require US$ 57 trillion in infrastructure investment
from now to 2030.
Energy and transport infrastructure are particularly important;
Regional cooperation and integration matters: Scope to
leverage use of (regional) infrastructure for broader
economic development:
Africa’s geography is particularly challenging (biggest no. of
landlocked countries)
Essential benefit is to provide larger and more competitive
markets, reduce transport costs and establish connectivity
across countries.
7. ACP (and Africa in particular) infrastructure needs are enormous…
By 2030, Africa alone needs US$93 billion per year to bridge
infrastructure deficits (current spending is only about $45 billion per year
and the gap is therefore US$ 48 billion). More than half funded by public
sector.
Poor infrastructure and market fragmentation estimated to shave off at
least 2% of Africa’s GDP annually; High transport costs inflate the price of
goods by up to 75%; and reduce firm’s productivity by about 40%.
Underdeveloped infrastructures skim off at least 2% of Africa’s annual growth.
Access to electricity: 30% of the population compared to 70 - 90%
elsewhere in the developing world (Asia, Central America and the
Caribbean, Middle-East and Latin America)
Road access rate: 34% compared to 50% elsewhere
Access to water and sanitation: 65% of the population compared to 80 -
90% in other developing regions.
Telecommunications penetration rate: ~ 3% compared to ~ 40% in other
developing regions (very low penetration rate for broadband services)
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8. 2. What potential synergies?
Extractive sector provide an important
leverage
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9. Extractive industries are particularly large consumers, producers
and contractors of infrastructures
Extractives are expected to invest up to $ 2 trillion in resource-rich
countries by 2030
Capex in infrastructure in bulk ore minerals can go up to 40% (mostly in
transport)
But infrastructure is not sufficient in itself: it cannot be
transformative:
If not well connected and integrated in spatial development;
If it does not stimulate trade, investment and business development
Therefore, a strong case to be made to leverage, share and optimise the use
of mineral based infrastructure at national, but most importantly, at the
regional level
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10. (Too) few examples in the extractive sector. Where they exist,
partial successes (MDC – scope is narrow, roads only, short
corridor; SAPP, South Africa driven, low trade (7% of energy
needs)
Lessons can be learnt from elsewhere (non-extractives, but
regional focus) (Europe connectivity; Baltics; Central America)
Reasons for success:
1.Political leadership;
2.Proper planning and coordination;
3.Strong institutions;
4.Clear regulatory frameworks, implemented, monitored and
evaluated;
5.Incentives (Fiscal incentives for companies; industrial zones
and business prospects for the private sector etc)
But it is (really) happening? ….Yes but not enough….
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11. 3. Key challenges and policy prospects
Means of implementation
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13. As a benchmark, it is
estimated that developing
countries need to invest 5 -
6% of their GDP in
infrastructure to sustain
their economic growth;
Excluding IFIs, Govt budget
spending is quite high:
estimated to be 63% of
spending on infrastructure
(IMF: 2012)
Other instruments at
disposal of govt include:
(i) Financial markets;
(ii) Bonds
(iii) SWF
(iv) Sukuk finance
Who is currently financing Africa’s infrastructure?
(a) Govt finance: main single source of infrastructure finance
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19. 2. Synergies and project coordination at the regional
level: can the tripartite serve as a model?
Tripartite cooperation a good business case
Three pillars if implemented can be a game changer
• Market integration - establish a FTA to bolster intra-
regional trade through a wider market and value chain
development, increased investment flows, enhanced
competitiveness and development of cross-regional
infrastructure
• Infrastructure development - to enhance connectivity
and reduce costs of doing business and
• Industrial development to address productivity
constraints
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20. Underscore the importance of the ACP as a facilitator and hub for
cross-regional and cross-continental infrastructure.
A niche, in particular:
1) Given the its geographical composition (second largest
organization by size in the world; majority of sea-locked countries;
spans across all continents);
2) One common asset (relevant for maritime transport or ICT), which
is the ocean (not to underestimate its geopolitical importance);
1) The capacity of the ACP to leverage financing at a macro-level,
and hence can help put forward innovative mechanisms to access
large-scale funds; and
1) The only institution capable to federate inter-regional cooperation
to discuss common goods.
To conclude..
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