SADC targets private sector for infrastructure financing

SANF 23 no 4 –  By Clarkson Mambo

The SADC region has to find creative ways of getting the private sector to participate in funding infrastructure development programmes for mutual benefit as governments in the region cannot do it alone.

Infrastructure development is a critical cog in the regional integration agenda, with priority projects across different sectors having been identified in the SADC Regional Indicative Strategic Development Programme (RISDP 2020-2030).

The SADC RISDP 2020-2030 sets out a comprehensive 10-year development agenda to address social, economic, political, and governance issues in the region.

To strategize on the way forward on regional integration, the SADC Council of Ministers met in Kinshasha, the Democratic Republic of Congo (DRC) on 18 and 19 March 2023.

SADC Executive Secretary, Elias Mpedi Magosi told the Council that the region has a huge infrastructure financing gap ranging between US$30 to $40 billion a year.

“This scenario calls for innovative ways of financing programmes and projects, including establishing win-win partnerships with the private sector,” he said.

SADC recognizes the important role that the private sector plays in supporting its work, its ability to mobilize funding for projects and has signed Memoranda of Understanding with associations such as the SADC Business Council, which is made up of different business associations from SADC Member States, and the Association of SADC Chambers of Commerce and Industry.

Institutions such as the African Development Bank (AfDB) have pointed to the need for clear and sound legal policies to enable the private sector to participate in Public-Private Partnerships and other arrangements with governments due to the huge exposure and risk these projects pose to investors as infrastructure investments are mostly large scale and financed over time for investors to recoup their profits.

Economic transformation that SADC is targeting, especially through its industrialisation agenda as enunciated in the SADC Industrialisation Strategy and Roadmap (2015–2063), requires the provision of integrated and quality seamless infrastructure and networks to facilitate the movement of people, goods and services within and outside the region.

This will be complemented by harmonised policies, strategies, and initiatives in support of cross-border infrastructure and services.

The SADC Secretariat has also struck partnerships with institutions such as the AfDB for the establishment of the SADC Regional Development Fund (SADC RDF).

Proposed nearly a decade ago, the SADC RDF is a self-financing and revolving mechanism intended to end the reliance on external support to drive the region’s development agenda.

The Fund will provide a window for financing economic development and sustainable growth through supporting regional infrastructure development, industrial development, integration and economic adjustment as well as social development at concessionary rates.

The SADC RDF will help to address the question of ownership and sustainability of regional projects which have been funded largely by international cooperating partners. A study by the SADC Secretariat seven years ago, established that only 9.2 percent of regional projects implemented were funded by Member States.

Turning to energy, the Council of Ministers approved the establishment of the Regional Transmission Infrastructure Financing Facility (RTIFF). This facility is aimed at channelling and leveraging funding towards priority regional transmission projects as a means to accelerate implementation of projects that interconnect all the mainland states and allow new generation sources to augment the regional power pool.

Some SADC Member States are facing severe energy shortages which could stunt economic development.

On a related matter, the Executive Secretary said a study on the viability of projects to develop batteries in the region had been completed and had identified 20 potential regional projects spread across 9 of the 16 Member States.

If implemented successfully, the projects have potential to replace the importation of batteries worth US$2.3 billion as well as enhance the development of mineral value chains.

SADC Member States such as the DRC and Zimbabwe are endowed with vast resources of minerals such as cobalt and lithium, which are highly sought after in the production of batteries used to power electric vehicles, among other technologies.

The Council of Ministers is made up of mainly ministers responsible for foreign affairs and cooperation or trade, and is responsible for overseeing the functioning and development of SADC, as well as ensuring that policies are effectively implemented.

The Council meets twice a year, in the first quarter of the year usually in March, and again just before the annual Heads of State and Government Summit which is held in August.

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