NAIROBI, Kenya Sep 20 – Infrastructure development in the region is being touted as one of the pillars needed to unlock intra African trade.
Ministry of Trade Chief Economist Antony Muriu said regional trade has remained relatively low, as lack of proper infrastructure has hampered transportation of goods across borders.
Speaking ahead of the Tripartite and IGAD investment conference next week, Muriu says that regional blocs need to start attracting investment that will go into developing regional infrastructure in Eastern and Southern Africa.
“Intra trade in Africa is only about 10 percent which if you compare to the European Union that is doing close to 60 percent trade, is very little. The biggest constraint has been the lack of connectivity between the markets,” Muriu said.
The two-day conference slated for September 28-29, involving all the major regional trading blocs including the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) will seek to highlight ongoing infrastructural projects in the region to attract investment.
Regional leaders and investors are expected to discuss such regional projects as those situated along the Lamu, Djibouti, Northern, Central and Berbera transport corridors.
Muriu said that it is the position of the tripartite conference that such projects should provide network connectivity throughout EAC, SADC, COMESA and IGAD.
“The projects when pulled off will have a direct and significant effect on transport efficiency, reducing both the cost and the time for transport of goods and people both within the countries and internationally,” he said.
Muriu said the key for the conference would be to look at the feasibility and bankability of a number of major infrastructure projects allowing investors from both public and private sector to finance them.
“There are projects that are going to be privatised so that they can have a return on investment. Africa has a return on investment of between 10 to 12 percent which is high compared to other parts of the world,” he said.
Public Private Partnerships have the potential to ensure that investments, particularly in infrastructure are both attainable and sustainable in the long term.
The private sector generally takes up financially lucrative projects and PPPs give them a unique opportunity to be involved in projects where the risk is shared with government through loans or equity shareholding.
Muriu says loans and grants from development partners play a key role in providing initial capital investment for infrastructure projects.