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

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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3. 1. Agenda 2030
Extractive sector, economic transformation and
industrialization
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4. Page 4ECDPM
SDGs and the extractive sector: Where do they intersect?

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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12. 1. Funding requirements and deficits in Africa
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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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14. (b) external sources
ECDPM Page 14Source: The Infrastructure Consortium for Africa Report, Dec 2014.

15. (i) Official Development Finance (ODA + IFC + AfDB)
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Source: Brookings, 2015

16. (ii) Private participation in Infrastructure
ECDPM Page 16Source: Brookings, 2015

17. (c): Non-OECD Financing: Eg. Chinese Finance
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Source: Brookings, 2015
Chinese infrastructure investment commitments in SSA by sector, 2007 - 2012

18. Sector v/s finance matrix
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Source: Brookings, 2015

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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21. Thank you
www.ecdpm.org
www.slideshare.net/ecdpm
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