SADC to finalise proposed development fund

SANF 13 No 26 – by Kizito Sikuka in Lilongwe
The Southern African Development Community is finalising the modalities of a long-awaited development fund to accelerate the regional integration agenda. According to a document released ahead of the 33rd Summit of SADC Heads of State and Government taking place in Lilongwe, Malawi, work on the proposed Regional Development Fund has reached an advanced stage despite a few administrative and logistical challenges.

The SADC Regional Development Fund is a financial mechanism intended to mobilize resources from Member States, the private sector and development partners to finance programmes and projects to deepen regional integration.

According to the document, the sticking issues that are delaying implementation of the facility include negotiations on which country would host the Fund as well as staffing issues. What has been agreed so far is that member states will hold 51 percent of the shares in the facility, against 37 percent for the private sector and 12 percent for International Cooperating Partners (ICPs).

The Fund will have seed capital of US$1.2 billion, with member states expected to contribute US$612 million while the private sector will take up US$444 million of the share capital and US$144 million will come from ICPs.
Under the proposal, subscription to shares will be made over five years in equal instalments.The first subscription will be due within the first year of the Fund coming into force. Any shares not subscribed to by the end of the fifth year will be reallocated to other member states on the basis of ability to pay. “The proposal is to have the first 25 percent of the shares divided equally among member states and members will be obliged to contribute,” said Nations Msowoya, spokesperson of the Malawian Ministry of Finance.

The remaining 26 percent will be allocated based on economic ability. In terms of the administrative structure, the facility will have a board of governors comprising ministers responsible for finance in member states as well as a board of directors tasked with its day-to-day operations.

The board of governors will be the highest decision-making organ for the Fund and will have powers to admit new members; increase or decrease the share capital; amend the statutes governing the facility; as well as appoint directors. The Fund will have a chief executive officer who will be responsible for the daily running of its operations.
The creation of the facility comes at a time when there has been concern about the slow pace of implementation of regional programmes and projects, largely due to lack of funds and over-reliance on ICPs for support.

The first priority of the Fund will be infrastructure development and the second priority will be linking infrastructure to overall development. Progress on the creation of the Regional Development Fund will be one of the issues for discussion during the two-day SADC Summit to be held from 17-18 August.

Other issues include progress in the implementation of a regional infrastructure development programme estimated to cost US$64 billion over the next five years. SADC made a strong pitch for its transboundary infrastructure development programme when it hosted its cooperating partners, potential investors and financiers in Mozambique in June.

A chest of 106 cross-border infrastructure projects was showcased during the SADC Infrastructure Investment Conference held in the Mozambican capital Maputo in late June. The projects, comprising both “hard” and “soft” infrastructure, are contained in the five-year Short-Term Action Plan of the SADC Regional Infrastructure Development Master Plan approved in August 2012.

The transport sector had the largest number of projects showcased during the conference, with 40 projects valued at about US$16.3 billion presented to potential investors.

Priority transport infrastructure projects include those targeting the expansion, rehabilitation and modernisation of Durban and Walvis Bay ports; new rail projects and rehabilitation of existing ones; new road links connecting Angola and the Democratic Republic of Congo and rehabilitation of others around the region; and introduction of one-stop border posts at Beitbridge between South Africa and Zimbabwe.

A total of 16 energy projects estimated to cost more than US$12 billion were marketed at the conference, including the flagship ZiZaBoNa transmission line project to be implemented by Zimbabwe Zambia Botswana and Namibia as well as the proposed Namibia-Angola Interconnector that will connect the latter to the Southern African Power Pool (SAPP).

The food security situation in southern Africa is also expected to feature on the Summit agenda as will the political situation in the region.

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