Southern African News Features                                           SANF 12 No 30 , August 2012

SADC creates fund to accelerate infrastructure development

by Joseph Ngwawi

Southern Africa is taking steps to accelerate investment in infrastructure, considered one of the key facilitators of regional integration. The Council of Ministers of the Southern African Development Community (SADC) has approved the setting up of a long-awaited Regional Development Fund, one of whose main priorities will be the financing of infrastructure in the region. According to SADC Deputy Executive Secretary responsible for regional integration, João Caholo, the proposed fund will have a subscribed capital of US$1.2 billion.

“We have been mandated by Council to look into issues to do with the development fund such as the voting and management structure,” Caholo said at the close of the two-day Council of Ministers held ahead of the 32nd Summit of SADC Heads of State and Government in Maputo, Mozambique. He said the SADC Secretariat was also mandated by Council to ascertain how much the fund’s issued capital will. “We are looking at something between US$10 and US$250 million,” he said. Funding for the proposed facility is expected to come from member states, but “we will not shun away from the private sector”.

“We want to bring them on board so that they show their willingness to develop the region. We also hope to bring on board our development partners,” Caholo said. The proposed fund will be used for regional integration. The first priority will be infrastructure development and the second priority will be linking infrastructure to overall development Although the focus for regional cooperation has shifted to investment promotion and production over the past 32 years, infrastructure development remains a key driver of regional integration in the SADC region and was prioritised in the Regional Indicative Strategic Development Plan (RISDP) in 2003 as a facilitator of intra-regional trade and economic growth.

The RISDP is SADC’s 15-year development blueprint. The main sectors of focus for the SADC infrastructure programme are Energy, Transport, Telecommunications, Water and Tourism. The major development strategy followed by SADC is the corridor development concept, otherwise known as the Spatial Development Initiative (SDI), a strategy that recognizes the interdependence of various sectors. For example, the SDI concept recognizes that sectors such as tourism, agriculture, mining or commerce cannot reach their full development potential without being supported by a vibrant and adequate energy, water, transport and communications infrastructure.

The main attraction is that the strategy basically takes advantage of the existence of proven, inherent, underutilized economic development potential within the SDIs. The concept of SDIs was popularized in SADC with the advent of the generally successful Maputo Development Corridor in 1995. Hailed as a successful model that attracted private sector investment in support of the public sectors of Mozambique and South Africa, the Maputo Corridor was the first of its kind at a regional level that brought about integrated development tracing what is both a transport and trade route.

Despite its limitations, for example failing to divert traffic from the North-South Corridor (from Durban port through Johannesburg in South Africa to Zimbabwe and further north), the project was a huge success in terms of job creation, especially on the Mozambican side where as many as 15,000 jobs were created at the aluminium smelting Mozal and other projects. The development strategy has been used to inform regional development predominantly along transport or trade routes, energy transmission grids, tourism conservation areas, river basins, and regional and international telecommunication backbones. However, most SDIs are still at planning stage waiting to be fully funded and, therefore, taken to the implementation level.

Southern Africa’s long-awaited regional infrastructure development master plan is now ready for approval by the SADC Heads of State and Government Summit to be held in Maputo from 17-18 August. This follows the finalisation of the master plan by ministers responsible for infrastructure who met in Luanda, Angola in late June. The master plan will guide development in key infrastructure such as road, rail and ports, and would also act as a framework for planning and cooperation with development partners and the private sector.

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