Africa - increasing investment in infrastructure

Africa: World Bank Group to Scale Up Infrastructure Investments Significantly

The World Bank Group is moving ahead with an action plan to significantly scale up infrastructure support to developing countries in their growth and poverty reduction efforts, following a Board of Directors meeting that discussed and commended the plan.

The Sustainable Infrastructure Action Plan (SIAP), to be implemented over the next three years, will help countries improve the reach and quality of infrastructure investments through increased financial and analytical support.The value of World Bank Group financing and advisory services in energy, transport, water, and information and communications technologies is estimated to reach US$59-72 billion in fiscal years 2008-2011, compared with US$41 billion over the previous four-year period.

“Modern, cost-effective, reliable, and affordable infrastructure services are critical for sustainable development,” said Katherine Sierra, World Bank Vice President for Sustainable Development. “Our client countries are asking us to do more to help bring these services to the almost 900 million people without access to safe water, the 1.6 billion people without electricity, the 2.5 billion people without sanitation services, and the estimated one billion people without easy access to an all-weather road. The Action Plan is a roadmap to guide our scaled up investments in infrastructure in a way that also supports environmental sustainability and social inclusion.”

The World Bank Group intends to use its financing, knowledge capital, risk mitigation activities, and environmental and social safeguards to mobilize additional financing. Until the end of FY11, the World Bank Group estimates it will leverage its US$59-72 billion in investments to provide an additional US$109-149 billion through Official Development Assistance, as well as public and private sector investments.

The SIAP foresees increased cooperative approaches among different institutions of the World Bank Group, such as World Bank and IFC (International Finance Corporation) cooperation on sub-national transactions and collaboration between the World Bank, the Multilateral Investment Guarantee Agency (MIGA) and IFC on large and complex infrastructure projects, particularly energy sector projects in Africa.

“IFC finances private sector projects which play a major role in satisfying the huge infrastructure needs in developing countries. We expect our investments to double over the next three years from levels during the previous three years,” said Rashad Kaldany, IFC Vice President for Middle East/North Africa and Infrastructure. “In carrying out the Action Plan, IFC puts a special emphasis on public-private partnerships in building such things as power plants and water and transportation systems as the basis for economic growth and poverty reduction.”

The Sustainable Infrastructure Action Plan is an umbrella framework that will provide direction to the many individual efforts to increase infrastructure support by the different World Bank Group institutions through multiple product lines. A key element of the Action Plan is to support continued strengthening of government capacity to design, finance, and implement infrastructure, partner with the private sector, and use new products that address the financial and non-financial risks faced by investors and reduce the overall project costs.

“As part of the World Bank Group, MIGA helps mitigate the risks that typically affect infrastructure investments, such as contract breaches when dealing with untested local governments,” said Edith Quintrell, Director of Operations at MIGA. “By removing noncommercial risks, our investment insurance also helps investors secure the large amounts of financing, at better rates and for longer terms, needed for infrastructure investments.”

The Action Plan is accompanied by emphases on several areas:

• developing more focused approaches to complex cross-sectoral issues, such as the role of infrastructure in climate change mitigation and adaptation efforts, the role of public-private partnerships in the provision of infrastructure services, and new ways to provide infrastructure support for rural-urban integration and development;

• paying greater attention to improving results monitoring and evaluation of sustainable infrastructure interventions; and

• putting sustainability at the core of infrastructure interventions through focus on the “triple bottom line”—economic/financial, environmental, and social sustainability-based on a platform of strong governance and anti-corruption efforts.

As part of its approach to sustainability, the Action Plan calls for enhancing the environmental outcomes of infrastructure interventions, particularly in areas such as the urban environment (wastewater, solid waste, and air quality management), the household environment (improved sanitation and air pollution, the latter through provision of modern fuels and cookstoves), and the regional environment (sustainable water resources, hydropower, and energy generation infrastructure).

“This is an ambitious plan for the World Bank Group but it is needed at this time if the international community is to reach the Millennium Development Goals” said Jamal Saghir, World Bank Director of Energy, Transport, and Water. “We will harmonize efforts within the World Bank Group, just as we will harmonize efforts with other development partners and the private sector, to ensure that necessary infrastructure investments take place expeditiously for the benefit of the poor.”