2004 stap review report - final

NEPAD Infrastructure Short-Term Action Plan (STAP) Second Review of Implementation Progress and

the Way Forward

Continental Synthesis Report

NEPAD STAP Review 2004 - Continental Synthesis Report


Table of Contents Acknowledgements i Table of Contents ii List of Tables v List of Figures vi List of Footnotes vii List of Abbreviations viii

1 Executive Summary 1 1.1 Key Achievements Since Last Review 1 1.2 Implementation Status by Sector 3 1.3 Private Sector Participation in STAP 10 1.4 Key Challenges and Constraints 11 1.5 Key Recommendations 16

2 Introduction 19 2.1 Background: The NEPAD Infrastructure Agenda 19 2.2 Current NEPAD STAP project portfolio 20 2.3 Review Process 23

2.3.1 Purpose/Terms of Reference 23 2.3.2 Methodology 24

2.4 A "Road Map" to the Report 24

3 Overview of Issues Arising from the First NEPAD STAP Review 25 3.1 ‘Lack of clarity as to what NEPAD really is and the roles of the key stakeholders’ 25

3.1.1 NEPAD 25 3.1.2 RECs 25 3.1.3 ADB 26

3.2 ‘Lack of Definition Regarding Linkages between Countries and RECs’ 27 3.3 ‘Overlapping RECs’ Responsibilities’ 28 3.4 ‘Lack of Financial and Technical Capacity in the REC 29 3.5 ‘Aligning Programme and Project Priorities of RECs with those of NEPAD 30 3.6 ‘Inadequate Knowledge and Co-operation on Shared Water Resources Issues’ 31

4 Overview of the Status of Implementation of STAP by Sector 32

4.1 Energy 32 4.1.1 Power Pools and Regional Interconnectors 32

4.1.1.1 SAPP 32 4.1.2 WAPP 38 4.1.3 EAPP 42 4.1.4 CAPP 42 4.1.5 UMA 42 4.1.6 Challenges for Power Pools and Associated Projects 43 4.1.7 Recommendations for Power Pools and Associated Projects 44

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Contents (continued)

4.1.8 Grand Inga Integrator Study 00 4.1.9 Gas and Oil Pipelines 46 4.1.10 Establishing Regional Linkages for African Energy Commission 49 4.1.11 Energy Sector - Way Forward 50

4.2 ICT 52 4.2.1 ICT policy and Regulatory Frameworks at Regional Level - 52 4.2.2 ICT policy and Regulatory Frameworks - Recommendations 54 4.2.3 COMTEL Transmission ATM Network 54 4.2.4 RASCOM 56 4.2.5 Other Projects within the ICT Sector 58 4.2.6 Proposed New Projects 60 4.2.7 ICT Sector Challenges 61 4.2.8 ICT Sector Recommendations 62

4.3 Air Transport 63 4.3.1 Institutional Support for the Yamoussoukro Decision 63 4.3.2 Co-operative Development of Operational Safety and

Continuing Airworthiness Programme (COSCAP) 71 4.3.3 Global Navigation Satellite System (GNSS) 75 4.3.4 Upper Airspace Control Centres (UACC) 78

4.4 Road Transport 83 4.4.1 COMESA 83 4.4.2 EAC 84 4.4.3 ECCAS 89 4.4.4 ECOWAS 90 4.4.5 IGAD 92 4.4.6 SADC 94 4.4.7 UMA 96 4.4.8 Sector Overview 97 4.4.9 Challenges and Recommendations 97

4.5 Rail Transport 98

4.6 Maritime 101

4.7 Water 106 4.7.1 Summary of Progress 106 4.7.2 New Initiatives in the Water Sector 107

4.8 REC Capacity Building Projects 109 5 Catalysing Private Sector Participation in the implementation of STAP 112 5.1 The Private Sector Opportunity 112 5.2 Constraints 115

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Contents (continued)

6 Overarching Constraints 118 6.1 An Overview of Project Implementation Time-frames 118

6.1.1 Facilitation Projects and Programmes 118 6.1.2 Investment Projects 119

6.2 Factors Contributing to Lengthy Implementation 120 6.2.1 Bottlenecks in the Delivery of Facilitation and Harmonisation Programmes 120 6.2.2 Lack of Dedicated Regional Project Preparation Facilities 122 6.2.3 Limited Financial Resources within RECs 123 6.2.4 Weak or Ineffective Institutional Relationships between the

Key Stakeholders 124 6.2.5 Development Partner Systems and Practices do not always

Align with NEPAD Priorities 124

7 Recommendations 126 7.1 Streamline REC Decision-making Processes 126 7.2 Consistently and Effectively Implement Regional Decisions 126 7.3 Boosting the Capacity and Resources of RECs 127 7.4 Accelerating the Preparation of Bankable Cross-Border Projects 127 7.5 Increasing the Financial Resources of RECs 128 7.6 Strengthening Institutional Relationships between Stakeholders 128 7.7 Review, Improve, and Expand the Capacity of the ADB NEPAD

Unit and the NEPAD Secretariat Unit and the NEPAD 129 7.8 Improve Donor Co-ordination and Alignment with NEPAD Priorities 129 Appendix 1 REC Priority Projects under NEPAD STAP

Appendix 2 REC Membership Appendix 3 Tunis STAP Workshop Recommendations for Accelerated

NEPAD STAP implementation iv


List of Tables

Table 3-1 REC NEPAD STAP Priority Projects - March 2005

Table 4-1 SAPP Short Term Generation Projects

Table 4-2 SAPP Long Term Generation Projects

Table 4-3 WAPP (Zone A) Priority Interconnection Projects (330kv)

Table 4-4 WAPP (Zone B) Priority Interconnection Projects (225kv)

Table 4-5 Priority Hydro Power Projects

Table 4-6 Priority Hydro Power Projects (2004 - 2011)

Table 4-7 Priority Thermal Power Projects (2004 - 2008)

Table 4-8 East African Road Network Summary Statistics for ‘Original Plan’

Table 4-9 East African Road Network Summary Statistics for ‘Additional Links’

Table 4-10 SADC regional Trunk Road Network (RTRN)

Table 5-1 Projects Offering Potential Opportunities to the Private Sector

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List of Figures Figure 1-1 ADB Financing of STAP

Figure 1-2 An overview of a Typical Facilitation Project Process

Figure 1-3 An overview of a Typical Investment Project Process

Figure 2-1 NEPAD STAP Projects by Type - 2004

Figure 2-2 NEPAD STAP Projects by Sector - 2004

Figure 2-3 NEPAD STAP Projects by REC - 2004

Figure 4-1 Current and Proposed SAPP Interconnectors

Figure 4-2 WAPP Planned and Existing Interconnections

Figure 4-3 West Africa Gas Pipeline A Case Study

Figure 4-4 WAGP Project Governance Framework A Best Practice

Figure 4-5 Capacity Building for Energy AFREC - A Flagship Project

Figure 4-6 The COMTEL Transmission ATM Network

Figure 4-7 Existing and Potential Fibre Optic Cable around Africa

Figure 4-8 Consistency of Bi-lateral Agreements with YD - 2004

Figure 4-9 Strengthening Stakeholders Associations for Trade Facilitation Case Study

Figure 4-10 East African Road Network - Revised Corridor Designation

Constraints: Support for Yamoussoukro

Figure 4-10 East African Road Network - Revised Corridor Designation

Figure 4-11 SADC Regional Trunk Road Network (RTRN)

Figure 4-12 LVBC Organisational Structure

Figure 5-1 Private Sector Investment

Figure 5-2 Limited Private Sector Participation in Infrastructure

Figure 5-3 Approaches to Address Key Investment Obstacles

Figure 6-1 An overview of a Typical Facilitation Project Process

Figure 6-2 An overview of a Typical Investment Project Process

Figure 7-1 Proposed ECOWAS PDIU Approach

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List of Footnotes 1. 1-1 ‘Workshop on Mechanisms for Capacity Building of Regional Economic Communities

(RECs) and Speeding up Implementation of NEPAD Short Term Action Plan (STAP) Projects’ (Abuja, Nigeria, March 2005)

2. 2-1 By the NEPAD Secretariat with support from the African Development Bank (ADB) and

in close collaboration with the RECs, World Bank, and European Union (EU) 3. 2-2 With support from the NEPAD Secretariat and inputs from the RECs 4. 2-3 ‘NEPAD STAP - Review of Implementation Progress and the Way Forward’ (May 2003) 5. 3-1 ‘Workshop on Mechanisms for Capacity Building of Regional Economic Communities


6. 4-1 Source: ‘Financing Pakistan's Hub Power Project - Review of Experience for future

projects’ / RMC Discussion paper series 118 - World Bank 7. 4-2 ‘ICT Policy and Regulatory Assessment Report - Year 2004’ 8. 5-1 ‘Report prepared by the African Development Bank for the NEPAD Summit on

Accelerating Implementation of NEPAD Programmes - Abuja, Nigeria - March 7-8, 2005’, p3

9. 5-2 Seminar on Fostering Private Investments in NEPAD Infrastructure Projects organized

by the African Development Bank in Collaboration with The NEPAD Secretariat and The African Business Roundtable - Abuja, Nigeria - May 15, 2005

10. 6-1 However, even in such cases, the other three problem areas are contributory factors to

the inconsistent implementation of policy reforms. 11. 7-1 ‘Workshop on Mechanisms for Capacity Building of Regional Economic Communities


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List of Abbreviations ABR African Business Roundtable ACBF African Capacity Building Foundation ADF African Development Fund AFD French Development Agency (Agence Française de Développement) ADB African Development Bank AFREC African Energy Commission AMESD African Monitoring of Environment for Sustainable Development ASAL Arid and Semi Arid Lands ASECNA Agence pour la Sécurité de la Navigation Aérienne en Afrique et à Madagascar ASYCUDA Automated System for Customs Data and Management ARICEA Association for Regulators of Information and Communications for Eastern and

Southern Africa ATM Air Traffic Management AU African Union BOAD West African Development Bank BOT Build Operate Transfer BOOT Build Own Operate Transfer CAPP Central African Power Pool CEMAC Communauté Economique et Monétaire de L’Afrique centrale CENSAD Communauté des Etats Sahelo-Sahariens (Community of Sahel-Saharan States) CDE Chemin de Fer Djibouti - Ethiopia CDN Corredor de Desenvolvimento do Norte COFACE French Export Credit Bank COMESA Common Market for Eastern and Southern Africa COSCAP Cooperative Development of Operational Safety and Continuing Airworthiness

Program DANIDA Danish International Development Agency DBFO Design Build Fund Operate DBSA Development Bank of Southern Africa DFIs Development Finance Institutions DFRC Development Finance Resources Centre DfID UK Department for International Development EABC East Africa Business Council EAC East African Community EAPMP East African Power Master Plan EAPP East African Power Pool EARNP East African Road Network Programme EASSy East African Submarine Cable System EBID European Investment Bank ECA Economic Commission for Africa ECCAS Economic Community of Central African States ECGD UK Export Credit Guarantee Department

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List of Abbreviations (continued)

ECOWAS Economic Community of West African States EDF European Development Fund EGNOS European Geostationary Navigation Overlay Service EIB European Investment Bank ESA Eastern and Southern Africa ESA/RSP Eastern and Southern Africa Regional Strategy Paper ESA/RIP Eastern and Southern Africa Regional Indicative Programme EU European Union FMO The Netherlands Development Finance Company GNSS Global Navigation Satellite System GSM Global Satellite Mobile GTZ German Agency for Technical Co-operation, Deutsche Gesellschaft für Technische

Zusammenarbeit (GTZ) GmbH GuaranCo UK DfID led initiative to provide partial risk guarantees for local investment in

infrastructure works HSGIC Heads of State and Government Implementation Committee HIPC Heavily Indebted Poor Country HYCOS Hydrological Cycle Observation System ICAO International Civil Aviation Organisation ICPAC IGAD Climate Prediction and Application Centre ICT Information and Communications Technology IDA International Development Association IDF International Development Fund IsDB Islamic Development Bank IFC International Finance Corporation IGAD Intergovernmental Authority on Development IGADD Intergovernmental Authority on Drought and Development IMO International Maritime Organisation InfraCo UK DfID led initiative for infrastructure development in emerging markets IOC Indian Ocean Commission IPP Independent Power Producer IRCC Inter-Regional Coordination Committee ISPS International Shipping and Ports Security Code ISRT Inter-State Road Transit Convention ISRTD Inter-State Road Transit Declaration IST Inter-State Road Transportation Convention KFW German Credit Institution for Reconstruction MFIs Multilateral Finance Institutions MIGA Multilateral Investment Guarantee Agency MLTSF Medium to Long Term Strategic Framework for NEPAD Infrastructure Development MOU Memorandum of Understanding NHMS National Hydrological and Meteorological Services OPIC Overseas Private Investment Corporation NEPAD New Partnership for Africa’s Development

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List of Abbreviations (continued) N EPAD IPPF NEPAD Infrastructure Project Preparation Facility NORAD Norwegian Development Agency PDIU Project Development and Implementation Unit PEAC Pool Energétique de l’Afrique Centrale PHRD Policy and Human Resources Development PIDG Private Infrastructure Development Group (funded by UK DfID, the Netherlands,

Swedish and Swiss Governments and the World Bank) PPI Private Participation in Infrastructure PPIAF Private Participation in Infrastructure Advisory Facility PPP Public Private Partnership P ROPARCO Promotion and Participation for Economic Co-operation PUMA Portable University Model of the Atmosphere PUK Partnerships UK RAO Regional Authorising Officer RASCOM Regional African Satellite Communications Organisation REC(s) Regional Economic Community(ies) RISDP (SADC) Regional Indicative Strategic Development Plan RMB Rand Merchant Bank SADC Southern African Development Community SCA Supplementary Contribution Agreement SPV Special Purpose Vehicle SSATPP Sub-Sahara - African Transport Policy Programme STAP Short-Term Infrastructure Action Plan TOR Terms of Reference UACC Upper Airspace Control Centre UEMOA West African Economic and Monetary Union

(Union Economique et Monétaire Ouest Africaine) UK United Kingdom UMA L’Union du Maghreb Arabe U NCITRAL UN Commission on International Trade Laws UNCTAD United Nations Conference on Trade and Development USAID United States Development Agency US EX IM Export Import Bank of the United States of America US/USA United States of America USTDA United States Trade Development Agency WAAP Wide Area Augmentation Program WAGP West Africa Gas Pipeline WAPP West Africa Power Pool WATRA West Africa Telecommunications Regulators Association WB World Bank WHYCOS World Hydrological Cycle Observing System WMO World Metrological Organisation

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1. Executive Summary This continental synthesis report presents an overview of the findings of the second review of the progress being made on the implementation of the NEPAD Short Term Action Plan (STAP). The report draws on the findings detailed in the respective regional reports that were prepared following missions to each of the Regional Economic Communities (RECs) to ascertain the current status of implementation of projects under their regional NEPAD portfolio, and to examine other regional infrastructure projects that could be included in the STAP portfolio.

1.1 Key Achievements Since Last Review Overall a number of key achievements have been identified since the last review in 2003.

• The NEPAD brand is now fully established, well known and

recognised within and outside Africa. Indeed, most major

development initiatives for Africa are now contextualised within the

NEPAD framework.

• There is now a much greater understanding and appreciation of the

roles and responsibilities associated with the delivery of the NEPAD

infrastructure agenda throughout the continent amongst the key

stakeholders and development partners.

• In recognition of their roles, a few RECs have developed and are

implementing detailed capacity building plans. Foremost of these are

ECOWAS and EAC, who are enhancing internal structures, technical

and financial capacity and systems. There is still, however substantial

need for capacity building within RECs, if they are to carry out their

NEPAD mandate effectively and efficiently.

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Key Achievements Since Last Review (continued)

The role of the ADB as lead agency providing technical assistance

and support, is now better appreciated and understood. Further to this, the

NEPAD infrastructure STAP has received robust funding support from

ADB USD$(bn)

By end 2004, the ADB had

financed STAP projects and programs up to USD$520m and

had mobilised co-financing of

US$1.6 billion. For 2005, there is

an additional portfolio of

approximately US$500m for

funding of STAP projects.

1.5

1

.5

0

WB+others ADB co-financing

2 0 0 4

•

The bank is additionally currently working on converting the NEPAD IPPF into a

multi-country facility with a view to expanding this facility through the participation of

other development partners.

• Two significant investment projects have achieved financial closure - West African Gas

Pipeline (WAGP) and RASCOM Phase One. This demonstrates the fact that large and

complex cross-border projects can be successfully packaged and implemented within

Africa.

• The African Water Facility has been established. This is a specific water fund managed

by the ADB with a potential portfolio of USD$615 million to boost water supply and

sanitation on the continent.

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1.2 Implementation Status by Sector The progress of implementation of projects has been mixed across sectors and across regions. The implementation status for each sector is summarised below.

1.2.1 Energy A number of projects have made considerable progress. These include, in addition to the WAGP, the West African Power Pool (WAPP), the Southern Africa Power Pool (SAPP) and the development of generating and transmission capacity within UMA.

The continental investment programme in power generation and regional interconnection projects is perhaps the most significant funding requirement of all the NEPAD STAP programmes in terms of size, duration and potential long term benefit. A summary of the key challenges and recommendations for the sector are outlined below.

Key challenges: • Continued development of the power pools and

sustainable power trading mechanisms. • Substantial investment requirement. • Accelerating the restructuring of utilities.

• Establishing strong and independent regulation.

• Attracting partners for sustainable IPP development.

• The realisation of the Grand Inga Project.

Energy: Key achievements West Africa Gas Pipeline • Financial close achieved 4th Quarter 2004 and

construction commenced

West African Power Pool • Master Plan developed • Project pipeline prepared • Regulatory body established • Interconnections being constructed

Southern African Power Pool • 5-year Business Plan Prepared • WestCor formed to facilitate regional interconnectivity • Project pipeline prepared

In UMA region • Development of generating and transmission capacity

Kenya Uganda Pipeline • Intergovernmental agreement concluded • Engineering designs undertaken

Key recommendations:

• Continue programme development of power pools and hasten preparation of bankable investment projects within these programmes.

• Focus should be on modular, scaleable and replicable solutions.

• Institute appropriate reforms to facilitate an increase in private sector participation in the development of projects within the sector.

• Rationalise the approach to the development of the Inga hydropower site. Also consider establishing a single continental project vehicle for the whole Inga development.

• Develop, within AFREC (African Energy Commission), a continental planning capacity and database.

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Implementation Status by Sector (continued)

1.2.2 ICT New ICT infrastructure, both in the form of satellite and fibre optic networks, is being established in many regions. The majority of regions have moved forward on key issues such as harmonisation of policies and regulations and have made progress on liberalisation and the associated legislative framework. These reforms are encouraging private sector funding although the exclusivity granted to some operators is constraining competition, especially in fixed-line services. There is a general awareness in the RECs of the lack of a backbone infrastructure and related cross-border interconnectivity. The STAP Programme

ICT: Key achievements

• Regional adoption harmonisation model enabling liberalisation with good implementation in some regions

• COMTEL due diligence being conducted

• SAT 3 implemented with Landing Points in a number of countries

• RASCOM 1st Financial Close USD$180M Launch expected 2nd Quarter 2006

• EASSy MOU signed by 15 operators

• Principle of an EAC Regional Carrier Company

established. Studies are in progress

• Establishment of regional regulatory authorities

• Establishment of e-Africa Commission

has identified a number of possible measures to overcome these constraints. The key challenges are to provide sufficient technical skills and resources both at the country level and within the RECs to move these projects forward and manage the transition to fully liberalised markets. Other challenges, and recommendations, are summarised below.

Key challenges:

• Further liberalisation reform for countries required

to be compliant with Regional Harmonisation models.

• Additional regional backbone projects needed to

ensure inter-connectivity.

• Management of the transition to an open market.

• Completion of second round financing critical for

final RASCOM implementation.

• EASSy needs further development to ensure it

becomes a bankable project.

• Sustainability, completeness and integration of

continental ICT infrastructure.

Key recommendations: • The rollout of the ICT backbone across the continent

should be accelerated.

• National and regional regulators to be suitably resourced

and equipped for the task of spectrum management,

as well as the full monitoring and enforcement of

agreements.

• RASCOM to update its business plan to reflect current

market conditions.

• Continue implementation of peer review and alignment

initiatives regulatory agencies.

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1.2.3 Air transport The air transport sector shows wide variations in both implementation of reforms and willingness of Member/Partner States to liberalise markets and enforce agreed decisions at all levels. The main obstacles and difficulties in implementing the Yamoussoukro Decision (YD) stem from state parties not honouring their commitments to the Decision and instead insisting on restrictive policies and bilateral agreements which have either been superseded by, or are contrary to, the Decision. This severely limits the benefit that would otherwise have accrued to the citizens of Africa, Member/Partner States individually and the regions collectively. These, and other challenges and recommendations, are summarised below.

Key challenges: • The willingness and ability of Governments to fully

undertake the necessary reforms to ensure compliance

with YD.

• Inadequate capacity within RECs to provide technical

assistance to countries.

• Poor co-ordination between RECs in the dissemination of

best practices. • REC’S lack of engagement with the private sector.

Air Transport: Key achievements

• M ixed progress across regions in

implementation of reforms to ensure compliance of the Yamoussoukro Decision, including

application of monitoring mechanisms

• Good progress has been made towards implementing regional COSCAP programmes

• Studies and co-ordination activities between regions on GNSS are in progress


• AU and NEPAD should support the RECs and other

relevant institutions in their efforts to mobilise political

will for the full implementation of the YD.

• Reinvigorate the AU YD monitoring body.

• Include the implementation of the Decision in the African

Peer Review Mechanism.

• AU and NEPAD should encourage greater regional co

ordination in the implementation of YD.

• Technical capacity and funding should be provided to RECs

and AU to enable them to assist countries in implementing

reforms.

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1.2.4 Road, Rail and Maritime Road Transport & Transit Transport

The road, rail and maritime sectors display wide variation in the quality of infrastructure and in the implementation of projects.

1.2.4.1 Road Transport

In the case of the road sub-sector there is now a general recognition that the investment will primarily have to be made by the public sector with private sector participation targeted at performance based contracts for the design, build and maintenance of

Facilitation: Key achievements

• The corridor concept is generally accepted

throughout the regions

• A number of road corridor programmes are currently

being implemented - PR1, Mombassa - Nairobi -

Addis corridor / EAC road network programme

• One Stop Border Post pilot studies are in progress

• Some innovative approaches to cutting border transit

times are being tested

• Examples of good collaboration between overlapping

RECs

roads. With respect to transit facilitation, lack of institutional stakeholder buy-in, bureaucratic and institutional resistance to reforms, legal complexities and a lack of political willingness to implement genuine reform continue to hinder efforts to facilitate the movement of people and goods across borders within the continent.

Key challenges: • The willingness and ability of governments to undertake

the necessary reforms, to ensure compliance with regional

agreements for the free movements of goods and services.

• Institutional resistance to reforms.

• Legal complexities.

• Continued simplification of cross-border procedures and

harmonisation of documentation.

• Reducing transit and processing times at border posts.

• Elimination of unofficial checkpoints/bottlenecks.

• Infrastructure asset management; axle load controls and

ongoing maintenance.


• RECs and countries should continue to procure

sustainable funding for development of road networks

and ensure sustainability of road assets. PPMR and

Design, Build and Maintain contract, can provide

innovative approaches.

• Corridor focus for cross-border road projects should be maintained.

• Operationally, axle overload control should be improved to protect road assets.

• Devise practical measures which focus on improvements in border processing procedures and transit times, even within institutional frameworks and constraints.

• Accelerate customs reform and the implementation of associated enhanced ICT support systems.

• Effectively communicate success stories to overcome resistance to change.

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1.2.4.2 Rail Transport In the rail sub-sector, the STAP projects have focused on the encouragement of privately financed concession schemes and the improvement of rail network connectivity. A number of rail concessions are planned for 2005. The key challenges and recommendations for the rail sub-sector are summarised below

Key challenges:

• Poor condition of rail infrastructure and rolling stock,

coupled with relatively low traffic volumes.

• Significant investment outlay required for new rolling stock

and infrastructure.

• Substantial difficulties in integrating rail networks

particularly in North and West Africa.

• Establishment of rail-track standards.

Rail transport: Key achievements • Good progress towards the concessioning of railways

in SADC and EAC regions

• ECOWAS and UMA both sponsoring studies on

Improvements in Railway Interconnections

• Efforts to improve existing rail networks

• EAC preparing an East Africa Railways Development

Strategy (Master Plan)

• Project conceptualised to improve existing networks

in Morocco, Algeria, Libya and Tunisia

• Rehabilitation of the Ethio-Djibouti line as a

concession


• Concentrate efforts on devising implementation strategies

to attract further investment for the modernisation and

extension of the Continent’s railway networks and rolling

stock.

• Deepen and fast-track concessioning process. • Carry out a study on rail track standards



1.2.4.3 Maritime transport In the maritime sub-sector, the STAP projects have focused on the development of key ports, particularly those offering corridor links through to landlocked countries, improvements in the navigation on the Central African Lakes and increased safety and security standards for ships and ports.

Key challenges: • Ports are still seen as a key national asset, which deters

accelerated implementation of concessioning programmes.

• The need for modernisation and rehabilitation of many

state-owned ports throughout the continent to meet

trends in shipping. • Safe navigation on Central African lakes is still a vital issue.

• Security remains a key concern and priority, particularly at

several West and Central African ports.

Maritime transport: Key achievements Lake Victoria Basin • Establishment of Lake Victoria Basin Commission to cover

safe navigation, environmental issues, fisheries, pollution and

the development of the region’s economy

• Refocussing of the Lake Victoria Projects as a catalyst for

economic development in surrounding area

• Several international donors have made or pledged

funding for essential hydrological surveys and for measures

to improve navigation

Lake Malawi • Bilateral agreements signed and hydrological survey

updated

Port of Djibouti • The operations of the port have been concessioned to

Dubai Port Authority International

Maritime security • Refocussing by some RECs on maritime security to

ensure ports in their region satisfy the ISPS code

Key recommendations: • Port infrastructure and facilities should be modernised to facilitate improved trade flows.

• Integration with rail links should be improved, especially

where ports form part of regional corridors.

• Continued focus on port safety and security issues.

• REC capacity should be improved to adequately address

maritime issue.

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1.2.5 Water Following on from the previous review, and in recognition of the importance and unique challenges of the water sector, a parallel initiative was prepared, in the form of a NEPAD STAP specifically for Transboundary Water Resources. Preparation of this report was undertaken in parallel with this review and was published in March, 2005. The strategic goal adopted for this sector-specific STAP is to strengthen

Water: Key achievements • Implementation of a hydrological cycle

observation system (HYCOS) within SADC .

• Project management centre established and

operational

• Ground water management programme. SADC

part funding secured

• Funding has been mobilised for a HYCOS system

within IGAD

the enabling environment for the effective cooperative management and development of transboundary water resources and initiation of the implementation of prioritised programmes, thereby contributing to socio-economic development and poverty reduction.

An important development in this sector was the launch of the African Water Facility (AWF). This facility is a specific water fund managed by the ADB. It is intended that the AWF will seek to improve the enabling environment and strengthen water resources management so as to attract the substantial investments necessary for the development and management of water resources, meeting urgent continental water needs, strengthening the financial base for sustainable and effective water distribution and governance. The preparation of the NEPAD STAP for Transboundary Water Resources and the establishment of the AWF are significant steps, which it is hoped will facilitate the implementation of a number of critical projects already identified in this vital sector.

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1.3 Private Sector Participation in STAP The review revealed that there are some substantial opportunities, in a number of projects, for the private sector to participate in the implementation of STAP. These opportunities range from investment to performance based contracts. The review recognised, however that private sector participation in infrastructure investments in Africa has, so far, been somewhat limited.

1.3.1 Limited Private Sector Participation (PSP) in African infrastructure projects. WHY? Constraints on two levels

Macroeconomic level

• Perception of poor investment climate.

• Partially liberalised poorly regulated sectoral markets.

• Low availability of instruments and structures to mitigate risk.

• Limited development of local capital markets.

• Non-African externalities e.g. increased home market consolidation, capital following high growth opportunities.

Project level

• High cost and risk of project development.

• Shortage of risk capital for early stage development work.

• Capacity and institutional weaknesses of the public sector when acting as project sponsor.

• Poor perception by private sector of MFI's and other Africa infrastructure specific funds.

1.3.2 A Scale-up of PSP in the Implementation of STAP - How can it be attained?

There is a need for a coherent package of measures to be executed on the continental, regional and country level. Such measures to include inter alia:

■ The need for greater sensitisation of African governments on the cost of political risks.

■ Acceleration of policy initiatives, reform and actions to improve the investment climate within African countries.

■ Implementation of innovative approaches in the financial and legal structuring of projects. ■ Improve awareness of, and accessibility to, existing instruments for risk mitigation; and a need to design more flexible instruments and innovative structures that better respond to the unique challenges of African infrastructure projects. ■ Devise structures and instruments to leverage and channel financial resources from the African Diaspora, as well as domestic savings e.g. pension funds, within the

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continent for investment in infrastructure projects. ■ Formulate policy initiatives and implement measures to enhance the capacity of African private sector organizations and to promote the participation of African entrepreneurs in the implementation of the NEPAD Infrastructure

agenda. ■ Strengthening capacity within the countries and Regional Economic Communities (RECS) with respect to the development and implementation of bankable PPP projects.

1.4 Key Challenges and Constraints Overall, as has been indicated above, relatively good and steady progress has been made under the NEPAD STAP agenda since the last review. However, much still remains to be done. In particular, projects are still taking far too long to be implemented, be it harmonisation/facilitation or investment projects.

1.4.1 Lengthy Implementation Timescales

In the case of facilitation projects, many countries, after a decade since signing up to regional agreements such as road transit facilitation programmes, have still not fully implemented the requisite legal, regulatory and operational reforms. In this same vein, no country was found to be fully compliant with the Yamoussoukro Decision, even though the Decision had called for full compliance by 2002 by all countries.

Figure 1-2 An overview of a typical facilitation project process Setting Regional Objectives

Determining Programme Regional Planning Sector Policy/

Master Plan

Inter National Governmental Ratification

Agreements and Adoption

Enactment Full of National Implementation

Laws ‘on the ground’

6-9 6-9 12-18 6-12 2-3 years+ 2-3 years+ 3-5 years+ months months months months

Cumulative time elapsed: typically 6 to 15 years +

In the case of investment projects, the review revealed that a typical time frame from conception to financial closure is on average ten years or more.

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Key Challenges and Constraints (continued)

Figure 1-3 An overview of a typical investment project process

The typical time-frame from conception to financial closure is on average 10 years or more.

Initial IG

Total Project Preparation Process:

Construction:

Economic Life agreements: 8 years + (dependent on (or Operational

9 to 18 months technical Contract) complexity)

Project

Member/Partner Member/Partner States Inter- Governmental

M OU

Typically, a number of additional Inter Governmental MOUs and even new treaties may be required, before an investment project can achieve financial closure.

Project definition Project conception/ leading to construction/ Operations

feasibility financial execution closure

The total project preparation process (i.e .both of these phases combined) will include, inter alia: (i) Pre-feasibility study. (ii) Inter-governmental negotiations. (iii) Technical, economic and financial viability feasibility studies. (iv) Environmental impact assessments. (v) Detailed engineering design and costing studies. (vi) Finalisation of funding negotiations/documentation. (vii) Procurement process, including tendering and contractual

negotiations. (viii) The dedicated management of all of the above.

1.4.2 Factors Contributing to lengthy implementation

The review identified a number of overarching constraints that were handicapping timely and effective implementation of STAP projects and programmes. These included:

1.4.2.1 Bottlenecks in the delivery of facilitation and harmonisation programmes

A number of barriers and bottlenecks have been identified that have made it difficult to deliver the necessary reforms to national policies, practices and regulatory mechanisms in line with agreed regional and continental conventions, protocols and treaties (for example: Yamoussoukro Decision and the Road Transport and Transit Facilitation program). These barriers include: 1. Lengthy and complex decision-making processes of RECs

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2. Failure of governments to translate genuine political will into concrete actions by implementing agreed regional decisions in a timely manner.

3. Lack of robust monitoring and enforcement systems to ensure compliance by countries with regional agreements across all infrastructure sectors.

The most significant impact of these constraints is that they not only hinder the timely implementation of facilitation projects and programmes but could also stifle the development of bankable investment projects directly, because they hold back one or more critical stages in the project development process.

The poor track record in translating political will into concrete actions can be attributed to some or all of the following underlying causes:

• Strong vested interests within countries that block reform and/or

implementation processes, along with bureaucratic resistance to change. • The non-binding nature of the majority of agreed regional decisions. • A lack of technical, financial and human capacity at both national and regional

levels. • Implementation could be deemed detrimental to national interests, as countries frequently sign up to continental and regional treaties/conventions/protocols without having first carried out a full, in-depth impact assessment study. • Lack of effective institutional structures with clear responsibility to champion

and drive required reforms within countries. • Lack of an effective communications strategy designed to educate, apprise and seek support from the citizenry and various representative bodies and overcome the entrenched cultural propensity of certain interest groups to protect the status quo.

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1.4.2.2 Inadequate capacity for regional project preparation The review revealed an absence of institutional structures and capacity (technical and financial) in many RECs and their respective countries to consistently develop bankable cross-border infrastructure projects.

Whilst the Secretariats of many of the RECs have a relatively better skill-set in terms of establishing an enabling environment for major regional projects, they usually lack the capacity, skills and financial resources to successfully identify, prepare and implement major cross-border infrastructure projects, particularly those with a PPP component.

1.4.2.3 Limited financial resources within RECs Almost all RECs lack the financial resources necessary to successfully undertake the role they have been mandated as implementation organs of NEPAD.

Reasons for the often basic lack of funding can be attributed to the fact that in many RECs, regular funding streams were established some time ago, and do not reflect the “new reality” of their significantly increased commitments associated with their NEPAD role. The overlap in the membership of the RECs exacerbates the situation by creating multiple demands for contributions on already scarce financial resources.

1.4.2.4 Weak or ineffective institutional relationships between the key stakeholders

A prerequisite for efficient and timely implementation of cross-country projects is the establishment of adequate and appropriate institutional structures amongst all key stakeholders (at continental, regional and national level) to facilitate timely, relevant, efficient and effective liaisons and monitoring mechanisms both on general NEPAD related matters and on sector or project-specific issues.

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There are four principal aspects to the REC funding problem:

• The manner in which most RECs are funded has not adapted over time to remain appropriate to current needs.

• The level of contributions from Member/Partner States has not risen in real terms over the years.

• Non-payment of country contributions, and/or delays and deficits in such contributions.

• RECs cannot cover these shortfalls with borrowings as they are unable to raise loan capital in their own right.



In the main, very little evidence was found that institutional structures to support efficient and effective co-ordination of the NEPAD STAP have been robustly established on a consistent and widespread basis across the continent.

1.4.2.5 Development partner systems and practices do not always align with NEPAD priorities

Whilst it is acknowledged that donor support and funding has a crucial part to play in the development of infrastructure across the continent, it should be recognised that this “traditional” funding model does not always lend itself to the efficient preparation and implementation of regional infrastructure programmes and projects. In this respect, this review identified a number of constraints, set out below.

Constraints associated with donor funding

A Perceived complexity of donor funding

• Relatively long and inflexible approval processes.

• Conditionalities can often be placed upon the recipient country/countries to execute social reforms or other sectoral policies that have little relevance to the overall objectives of the specific project(s) being funded. • There may be one country involved in a regional project that is not eligible

to receive support at a given time, thus delaying full project implementation. B Fractured funding approach

• Dealing with a multiplicity of donors during the development of any particular project typically exposes the project to the donor’s varying internal systems and procedures. This can negatively impact on the critical path of projects and thereby delay their implementation, because time lags in one area of donor funding may cause key milestones to be missed and thus seriously hold up other, dependent, parts of the programme.

C Lack of focused programme and project definition

• Donor institutions have their own focus, priorities, programmes and culture, which do not always fit in with the priorities of the region, or indeed focus on the reality of the specific business or socio-economic case or needs of a particular project or programme. To qualify for funding, project or programme objectives may have to be realigned with donor priorities and objectives with at best, sub-optimal results, and at worst, a failure to achieve any of the original project goals.

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1.5 Key Recommendations Many of the weaknesses and impediments outlined above have for some time now been recognised by the key stakeholders of NEPAD, many of whom have individually and/or collectively taken some initiatives to address them. This report takes cognisance of these efforts, supports and reinforces them and makes some recommendations which include the following:

1.5.1 Streamline REC Decision-making processes

REC decision-making processes and mechanisms could be made more efficient and effective by streamlining to meet the requirements of their current NEPAD mandate without compromising transparency and accountability.

1.5.2 Consistently and Effectively Implement Regional Decisions

The translation of political will into concrete actions in countries could be facilitated by making certain regional decisions automatically binding on member countries and by improving the capacity of countries to undertake the necessary actions to ensure compliance with agreed regional decisions and protocols.

1.5.3 Strengthen the Capacity of RECs

There should be an augmentation of the capacity and resources of RECs to enable them to provide technical assistance to countries especially in their efforts to comply with sectoral harmonisation programmes and to monitor compliance therewith. In this respect an expansion of NEPAD IPPF to encompass facilitation projects should be considered.

1.5.4 Create PDIUs for Each Region

The preparation of bankable cross-border infrastructure projects could be accelerated through the creation of regional project development and implementation units (PDIUs), suitably equipped with the right skills-set and appropriate grant funding such as that being considered by ECOWAS.

1.5.5 Increase Financial Funding for RECs from Member/Partner States

Countries should be encouraged to provide the Secretariat of their respective RECs with regular funding that is sufficient to not only support, at the minimum, each REC’s basic functions/activities, but also, to make a meaningful contribution towards improvements in capacity, in order to advance the NEPAD programme.

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Key Recommendations (continued)

1.5.6 Scaling-Up PSP in the Implementation of STAP Under the auspices of the ADB, a coherent package of policies needs to be devised and implemented at continental, regional and country level, to support and encourage private sector investment in STAP. This should include policies designed to enhance the capacity of the African Private sector to effectively participate at all levels in the development of infrastructure projects throughout the continent.

1.5.7 Improve Communication and Co-ordination between the Key Stakeholders

Institutional relationships between the key stakeholders could be strengthened through the creation of a coordination framework, as recommended and agreed by the stakeholders at the NEPAD workshop in Abuja in March 20051. Further to this it is recommended that dedicated project specific secretariats be established as soon as countries agree to collaborate on particular cross border investment projects.

1.5.8 Review, Improve and Expand the Capacity of the ADB NEPAD Unit and the NEPAD Secretariat

The growing demand for their services with relation to the STAP agenda, will necessitate an expansion of the capacity (financial, human, technical) of both the ADB NEPAD Unit and the NEPAD Secretariat. In this regard an urgent review should be undertaken with a view to ensuring their continued effective contribution in the implementation of STAP. Further to this, it is recommended that the ADB act on the following:

1. Adopt a more proactive approach to bring to the market innovative financing and risk mitigation instruments that will catalyse a scale-up of private sector participation. Examples of such are: The Asian Infrastructure Development Company, The Private Sector Infrastructure Facility both of which were established by the Asian Development Bank.

2. Taking cognisance of the outcomes of the 2005 G8 Summit, ADB should develop policies, structures and facilities in order that it may be able to take a leadership role in mobilising funds from within and outside the continent and effectively channeling those funds for infrastructure development.

1.5.8 Improve Donor Co-ordination and Alignment with NEPAD priorities Development partners should be encouraged to collaborate more effectively and to adapt their internal systems and practices in line with the priorities of NEPAD, so as to be able to better contribute to the acceleration of the implementation of the STAP.

The creation of a pooled development fund in each region would address poorly focused or skewed programmes and obviate the need for separate funding applications for each project component.

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Key Achievements since last review (continued)

Conclusion

Undoubtedly STAP has galvanised and focused development effort to address the continent’s infrastructure deficiencies. For such a nascent initiative, progress made to date in the development and implementation of the programmed and projects is impressive. Indeed for a plan devised for Africa by Africans it is unique in that it has gained the widespread support and commitment of many within and outside the continent. The challenge now is to transform this laudable agenda into realisable projects that will deliver visible success on the ground and in particular widen the access of infrastructure services across the continent. To meet this challenge and ensure sustainability, business as usual with the traditional development models, will yield neither significant progress nor tangible results. A collective effort on many fronts, accompanied by bold actions and innovative measures, is essential from the African stakeholders and the continent’s development partners.

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2. Introduction

2.1 Background: The NEPAD Infrastructure Agenda

In May 2002, a NEPAD Short-term Action Plan for Infrastructure (STAP) was produced 2. The importance accorded to infrastructure in the NEPAD agenda reflects the fact that one of the priorities of NEPAD is the promotion of regional integration in the African continent as a means of overcoming the lack of economies of scale and the barriers to Africa’s long-term development. Bridging the infrastructure gap has been identified as an important element in promoting this regional integration. Infrastructure is also an important element in reducing Africa’s economic marginalisation, because the growth of an adequate and reliable infrastructure capacity is a precursor to increased trading activity and thus meaningful socio-economic development.

The 2002 STAP outlined NEPAD’s response to the challenges facing the sector under four areas:

• Facilitation - the establishment of the policy, regulatory and institutional frameworks to create a suitable environment for investment and efficient operations.

• Capacity building - initiatives to empower the implementing institutions to perform their mandates.

• Investment - in physical and capital projects.

• Studies - to prepare future projects.

The NEPAD STAP Programme thus comprises projects of these four types, conceived and formulated by Africans to fast track meaningful development and integration of the continent through renewed partnership with Africa’s development partners globally.

The STAP was formally adopted by the NEPAD Heads of State and Government Implementation Committee (HSGIC) and subsequently endorsed by the African Union (AU) in June 2002.

The STAP is to be complemented by a more comprehensive Medium and Long-term Action Programme in the near future.

In May 2003, the African Development Bank (ADB) undertook a review of the implementation of the STAP3.

The resulting report4 detailed progress made, identified constraints to efficient project implementation, and made appropriate recommendations to enhance implementation performance going forward.

This report details the findings and recommendations of this second review of the implementation of the NEPAD STAP projects across the African continent.

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2.2 Current NEPAD STAP Project Portfolio Projects are characterised by type (i.e. facilitation, capacity building, study or investment), by sector (Transport, ICT, Water, Energy) and by REC. The classification summary for NEPAD STAP projects across the continent is shown in figures 1 - 3 below.

Figure 2-1 NEPAD STAP Projects by Type - 2004 Source:ADB

Figure 2-2 NEPAD STAP Projects by Sector - 2004 Source:ADB

Figure 2-3 NEPAD STAP Projects by REC - 2004 Source:ADB

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Current NEPAD STAP Project Portfolio (continued)

2.2.1 Selection Criteria The selection criteria for a project to be included in the NEPAD STAP are:

1. Projects that are at an advanced stage of preparation and that can be fast-tracked.

2. Projects that support both a regional approach to infrastructure provision and regional integration.

3. Projects that have stalled for political reasons and where NEPAD’s intervention could be expected to make a difference.

4. Initiatives that offer solutions to regional policy, regulatory or institutional blockages to regional infrastructure activities.

5. Projects that respond to the involvement of the private sector in infrastructure provision.

2.2.2 The Top 20 Projects

In addition to the selection criteria in the STAP, projects were included in the ‘top twenty’ list because they:

1. Strengthen sector governance arrangements.

2. Enhance governments’ capacity for policy making, effective regulatory oversight and monitoring.

3. Establish regulatory frameworks that foster competition and support the emergence of regional markets for transport services.

4. Focus on issues whose solutions depend on regional cooperation and implementation of regional projects.

5. Support policy and institutional reform so as to create an enabling environment for competition and investment.

6. Build capacity related to regulatory oversight, monitoring and participation of business organisations and professional associations.

7. Represent selected physical projects for which studies are available.

8. Remove bottlenecks and fill gaps in regional infrastructure networks.

9. Prepare studies for additional projects of great regional importance. 21


Current NEPAD STAP Project Portfolio (continued)

2.2.3 NEPAD Flagship Projects

A small, select number of these projects have also been designated “NEPAD Flagship Projects”. The rationale for this is that they would become highly visible indicators of NEPAD’s activities and influence, and would benefit from a special NEPAD effort in terms of promotion, keeping them at the forefront of the donors’ attention, especially at heads of state meetings, focusing on flagship projects for raising finance.

The following ten projects were adopted as flagship projects: 1. Implementing the Yamoussoukro Decision

2. Facilitating Road Transportation

3. ICT Policy and Regulatory Frameworks at the Regional Level

4. Power Pools (West and Southern Africa, etc.)

5. Nile Basin Initiative

6. Greater Inga Integrator Study

7. Establish Regional Linkages for African Energy Commission

8. Capacity-building for RECs

9. West Africa Gas Pipeline

10. COMTEL

It is important to appreciate that the ten flagship projects are a subset of the ‘top twenty’ list rather than a separate unrelated list.

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2.3 Review Process 2.3.1 Purpose / Terms of Reference

The purpose of the assignment was to review and document progress in the implementation of the NEPAD Infrastructure STAP since the last review held in early 2003 and also to update project profiles. The review included not only reporting upon progress being made upon the existing STAP projects, but also those other projects, currently excluded from the STAP but which are of continental or regional significance. In carrying out the review the consultants worked closely with the RECs, the NEPAD Secretariat, the ADB and where appropriate the Member/Partner States and other project sponsors and stakeholders. The main activities of the review were to include, without limitation, the following:

1. Analysis of the issues raised by the 2003 STAP Review and whether these had been addressed or mitigated.

2. Analysis of the current status of the STAP to highlight new issues and challenges that had arisen since the 2003 Review.

3. Analysis of other projects or programmes not included in the 2003 STAP Review, which deserve recognition and integration within the NEPAD umbrella due to the significance of their regional or continental impacts.

4. Developing a framework for, and updating the STAP project profiles, in a format which can be developed as a database; particularly for the use of potential sponsors and financiers, to provide them with an idea of the level of readiness for financing and implementation of a project and as a basis of subsequent progress reporting.

5. A detailed review of the Flagship Projects (or those projects which the RECs have given or agreed with their Member/Partner States have ‘high priority status’) with the further remit to propose a way forward for enhancing and accelerating their implementation.

6. Examining the manner in which the Private Sector has embraced the NEPAD Infrastructure STAP and highlighting how the level of both private sector awareness and participation can be enhanced.

Throughout the review, due cognisance has been taken of the principle of subsidiarity advocated in the 2003 STAP Review, which stipulates that NEPAD activities would be carried out by the agencies at the lowest level that is both effective and efficient. In relation to this, the remit of the review included consultations with other regional/sub-regional bodies involved in projects that are currently in STAP or are potential STAP projects. These consultations were to be co-ordinated by RECs, given their central role in the implementation of NEPAD programmes.

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Review Process (continued)

2.3.1 Methodology The review methodology executed was as follows:

1. Preparation of STAP Project template data sheets for each REC.

2. Send data sheets to REC staff via ADB for completion.

3. Undertake mission to each REC. The review team visited the various REC offices in the first quarter of 2005.

4. Complete data sheets for each REC and translate into project information sheets for reporting purposes.

5. Set up framework for analysis and reporting.

6. Collate and analyse information to produce initial diagnostic findings. This analysis included comparisons with other sectors and regions.

7. Produce draft regional reports for discussion with ADB and the other stakeholders.

8. Produce a draft continental synthesis report for discussion with NEPAD, ADB, RECs and other key stakeholders.

9. Produce final report and conclusions/recommendations.

Please note that it did not prove possible to visit UEMOA and CENSAD in the course of carrying out this second STAP review. However, it should be noted that reference is made to UEMOA in the ECOWAS regional report wherever this is of significant relevance.

2.4 A “Road Map” to the Report Section 3 of this report takes the form of an overview of the current status of issues arising from the first NEPAD STAP review.

Section 4 presents a summary of the analysis of the ongoing implementation of STAP, sector by sector, and includes an overview of REC Capacity Building Projects.

Section 5 examines issues related to the catalysing of Private Sector Participation in the implementation of STAP.

Section 6 examines some overarching constraints handicapping the accelerated implementation of the NEPAD STAP. Finally,

Section 7 outlines some suggestions to overcome the constraints discussed in Section 6. It incorporates conclusions and recommendations from the STAP Validation workshop held in Tunis in July 2005.

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3. Overview of Issues Arising from the First NEPAD STAP review

In this section we examine in general the status and progress made on issues that were identified as key constraints in the last review.

3.1 ‘Lack of clarity as to what NEPAD really is and the roles of the key stakeholders’ 3.1.1 NEPAD

The immense work undertaken by all the key stakeholders of NEPAD led by the Secretariat has ensured that the NEPAD brand is now fully established, well known and recognised within and outside Africa. This is evidenced by the fact that all major development initiatives for Africa are now contextualised within the NEPAD framework. NEPAD’s role has now been distinguished from that of being an implementing agency to that of a facilitator and brand manager. With support from the ADB, it has been able to mobilise widespread political good will and support for the STAP agenda. In recent months it has also stimulated action in the facilitation of knowledge sharing, networking and dissemination of best practice among RECs and certain continental implementing agencies.

However NEPAD’s role in mobilising within countries the political will and actions necessary to ensure compliance with continental and regional agreements, has been limited. This is primarily due to the limited human resources within the Secretariat. In this regard, the Secretariat may wish to consider undertaking an in-depth assessment of its current and future STAP Infrastructure related workload and devise a strategy to suitably equip and enhance the capacity of the Secretariat to widen and deepen the success it has so far achieved.

3.1.2 RECs

It was clearly established during this review that the role of the key stakeholders was now better appreciated in many regions as well as by the development partners. The majority of RECs, despite capacity shortcomings, fully accept the leading role they have to play in the implementation of the STAP and have in this regard championed

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Overview of Issues Arising from the First NEPAD STAP review (continued)

the NEPAD initiatives in their respective regions. However, there remains a very small number of RECs that have not fully appreciated and distinguished the various roles designated for the key stakeholders i.e. Countries, RECs, NEPAD and ADB. It is worth noting that it is also within these same RECs that capacity was at its most limited.

3.1.3 ADB

The role of the ADB as lead agency providing technical assistance and support is now better appreciated by the RECs. Indeed the NEPAD infrastructure programme has received robust funding support from ADB. By end of 2004, ADB had financed STAP projects and programmes to the value of USD$520m and had mobilised co-financing of USD$1.6 billion. For 2005, there is an additional portfolio of approximately USD$500m for funding of STAP projects. Further to this the Bank has established, with Canadian Government support, the NEPAD IPPF and provided funding for project preparatory work for a number of projects under this facility. This notwithstanding, there are some RECs that believe the Bank should interact more with and participate more effectively in the development of their programmes. Indeed, some RECs have made some specific suggestions. These include: • A Regional Integration Department should be established within the ADB, which will be responsible for overseeing and co-ordinating all regional integration programmes. This will ensure that the regional integration agenda is not just an add-on to the work of the Bank. Although the Bank established the Economic Cooperation and Regional Integration Unit in September 2004, which complements the existence of the NEPAD Unit, this falls short of the wish expressed by some RECs for the creation of a fully-fledged Regional Integration Department at the Bank, to give this work greater prominence.

• The ADB could consider adopting and adapting the institutional arrangements that have been put in place by the European Union under the European Development Fund for funding regional programmes. This is accomplished through the establishment of regional funds and regional Authorisation Authorities. It has been reported by some RECs that although the ADB “nominally” has funds earmarked for regional projects, there appears to be no regional mechanism for making requests for the use of the funds, as the Bank still apparently relies on individual country requests. • A proactive approach to bring to the market innovative financing methods and

risk mitigation instruments that will catalyse a scale-up of private sector participation.

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• Taking cognisance of the outcomes of the 2005 G8 Summit, ADB should develop policies, structures and facilities in order that it may be able to play the leading role in mobilising funds from within and outside the continent and effectively channeling those funds for infrastructure development. Further to this, consideration should be given to augmenting the capacity of the NEPAD unit within the ADB to ensure that the ADB is able to deliver effectively on its ever-growing responsibilities under its designated HSGIC mandate. Indeed, as with the Secretariat, the Bank should consider undertaking an assessment of its current and growing workload, viz, the STAP programme; devise a strategy for putting in place adequate resources and internal structures to meet the increasing demand for its services and funding under the STAP programme. Such a strategy may also require more effective prioritisation and focusing of the Bank’s support and interventions in order to deliver a number of positive and highly visible outcomes, even if these are relatively few in number, rather than spreading its efforts too thinly and thus risking lesser tangible results.

3.2 ‘Lack of Definition Regarding Linkages Between Countries and RECs’

The review did reveal continuing institutional weakness in the relationship between RECs and the countries in their region. Many RECs and their Member/Partner States have still not established structures and procedures for the efficient and effective coordination of NEPAD programmes within their regions. This was evident in some RECs not having any up to date information on the status of key projects in their region nor being able to liaise with a single contact point in country that could provide such information.

A number of RECs have undertaken initiatives to enhance the institutional relationships with their member countries. Such proposals include the establishment of a NEPAD focal point within the REC, NEPAD co-ordination units within each country, region wide sector specific expert and ministerial committees to promote for instance - sector harmonisation. Few RECs however, have approached this issue in a strategic manner and continue to create such structures in a piecemeal way, which does not always ensure the strengthening of institutional relationships, or indeed better co-ordination of programmes and projects.

RECs that have not yet done so should be encouraged to undertake a strategic review that will focus on measures to strengthen the institutional arrangements within countries, and between countries and RECs, to ensure better co-ordination and

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acceleration of implementation of NEPAD programmes and projects. Further to this, RECs could consider establishing regional sector units to provide both technical assistance and devise sector-specific peer alignment mechanisms. Some RECs have already begun to establish such units.

3.3 ‘Overlapping REC Responsibilities’ As indicated in the last review, the issue of overlapping responsibilities of different RECs, combined with the fact that some countries may belong to more than one REC with different sets of rules, standards and in some cases legal regimes, continues to present challenges both for facilitation/harmonisation projects and for physical investment projects. (See Appendix 2 for a table showing African countries’ memberships of RECs). The challenges posed include the following:

• RECs adopting different sectoral harmonisation models and policies, thus

creating dilemmas for countries which often can lead to delays in the

implementation of region wide programme objectives.

• Competition for resources and the dilemma it poses for development partners.

Limited capacity that should be harnessed for the delivery of regional projects is

too often dissipated by institutions’ efforts to compete for the same donor funds.

• Complexities in terms of the legal and financial structuring of cross border

regional projects where participating countries belong to different RECs with

different legal systems.

The review did however identify evidence of increasing collaboration between RECs in the implementation of STAP. Such collaboration included:

• Establishment of frameworks for regular inter REC liaison meetings.

• Creation of Joint Secretariats for implementation of regional programmes, such

as the Inter-Regional Co-ordinating Committee (IRCC) established by

COMESA, EAC, IGAD and IOC to co-ordinate the implementation of the 9th

EDF Regional Programme.

• Agreement on the development of joint sectoral programmes and designation of

which REC will take leadership for a particular sectoral programmes thus

reducing the potential for duplication of effort and ensuring a single regional

harmonisation model is adopted for any particular sector.

• A joint proposal by COMESA, EAC, IGAD and SADC to establish one office

for a Project Preparation Facility (PPF).

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This notwithstanding, it is recommended that NEPAD continue to intensify its efforts to encourage overlapping RECs to work more closely together, in particular to jointly examine their programmes with a view to:

• Collaboration or joint development of programmes thus avoiding duplication

of effort.

• Sharing best practices, knowledge base and technical competencies.

3.4 ‘Lack of Financial and Technical Capacity in the RECs’

A chronic shortage of financial and technical resources in all RECs was identified as a key constraint in the last review. This situation has not improved. Indeed, as will be shown later in this report, the lack of financial and technical capacity continues to handicap the REC in their efforts to fulfill their designated mandate as implementing organs of NEPAD within their respective regions. This lack of capacity emanates from the manner in which RECs were structured, staffed and funded to pursue their original constitutional mandates.

NEPAD and ADB have recognised this, and have encouraged RECs to undertake a comprehensive assessment of their capacity needs and to design capacity building programmes and initiatives with properly evaluated budgets, so that these can be presented to development partners for funding.

A small number of RECs have initiated measures to improve their financial and technical capacity - these include:

• Measures to improve the manner and level of funding from their respective

member countries.

• Institutional reforms to boost technical capacity to undertake harmonisation

and programme development work as well as the preparation of bankable

projects.

Further to this, the ADB is actively considering the conversion of the NEPAD IPPF into a multi-country donor facility and seeking to expand the fund with contributions from other development partners.

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3.5 ‘Aligning Programme and Project Priorities of RECs with those of NEPAD’

At the NEPAD workshop held in Abuja in March 20055, the RECs agreed to the following actions to address this issue:

1. “Each REC shall prepare an action plan in respect of the prioritised projects

showing how it will accelerate implementation of these NEPAD projects.

2. NEPAD Secretariat shall convene meetings with RECs, and development

partners to consider action plans for individual major projects in each region

within three months.

3. That each REC must ensure that the outcomes of this workshop are reported in

terms of each REC’s decision making structures.”

At the same workshop, the RECs confirmed the priority STAP projects in their respective regions. These are detailed at Appendix 1.

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3.6 ‘Inadequate Knowledge and Co-operation on Shared Water Resources Issues’

Though NEPAD’s Infrastructure initiative recognition has been given to these issues, the current programme is mainly focused on selected shared basins namely: Niger and Senegal in West Africa, Nile in Eastern Africa, Congo and Lake Chad in Central Africa and, Zambezi and Okavango in Southern Africa. As identified in the last review, many RECS still have not developed programmes for this important sector. Indeed only SADC, IGAD and ECCAS provided data for this review. However, a NEPAD STAP for Transboundary Water Resources has been prepared and the African Water Facility launched.

It is important to note that none of the river basin authorities or UEMOA which oversees the management of the STAP water projects within the Region, were visited during the course of this review.

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NEPAD STAP Review 2004 - Continental Synthesis Report (Revised)

4 Overview of the Status of Implementation of STAP by sector In this chapter of the report, the results of the review of the implementation status of STAP projects are summarised and presented on a sector-by-sector basis.

4.1 Energy In the Energy sector, the NEPAD STAP encompasses the following types of project: (i) The development of regional/intra regional power pools, including investment projects for additional generating capacity, inter-connection infrastructure and capacity building. (ii) The development of oil and gas pipelines for the transmission of energy resources. (iii) The development of capacity through the African Energy Commission (AFREC) programme.

Additionally, the sector includes The Grand Inga project, probably the most significant continental project in terms of investment, potential benefit and environmental impact.

4.1.1 Power Pools and Regional Interconnectors

A summary of the progress being made within the regional power pool programmes and their associated projects is given below Within the context of the development of the Regional Power Pools, the SAPP and WAPP have made the most significant progress with both organisations establishing their priority “least cost” infrastructure programmes with budget forecasts.

4.1.1.1 SAPP

SAPP has taken steps to restructure its overall policies through a series of new Inter Governmental and Inter Utility MOU's introducing supply industry reforms and reducing the role of SADC to allow for future private sector participation. In the field of tariff reform SAPP has also created a short term energy market and is also making good progress towards the development of a spot market for electricity.

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Energy (continued)

Feasibility studies for specific interconnectors have been completed. Specific projects are being managed by the SAPP Coordination Centre, in cooperation with the SADC Secretariat and International Co-operating Partners (ICPs).

Priority short and long-term generation expansion plans for each member country were identified at a Special SAPP Executive Committee meeting held in Namibia in July 2004. The generation and transmission expansion plans were presented to the SADC Energy Ministers and the SADC Summit of the Heads of State held in Mauritius in August 2004. The Summit endorsed the proposal and mandated SAPP to meet and agree on a concrete action plan. The SADC Energy Ministers met in October 2004 to sign the various enabling agreements and to discuss the decreasing excess generation capacity in the region. In this regard, it was agreed to hold a Regional Electricity Investment Conference in mid-2005 in Windhoek, Namibia.

A. Transmission Projects

A.1 Zambia -Tanzania-Kenya Interconnector

A Ministerial Committee and a high level technical committee have been established to accelerate the project. The total cost of the Zambia-Tanzania element of the interconnector project is estimated to be approximately USD$160 million. The World Bank is expected to be the main funding agency. Zambia has received a USD$1million PPF grant from the World Bank and USD500,000 to support the three Governments in engaging a transaction advisor to facilitate the attraction of private sector participants and the attainment of Financial and Legal Closure for the Project. A.2 Mozambique-Malawi Interconnector

The project involves the construction of a 400kV line but initially energised at 220kV from Mozambique to Malawi. The project will also include the rehabilitation of the Tedzani hydropower plant in Malawi and construction of a new substation at Phombeya in Malawi. Feasibility studies are in progress. The estimated cost of the project is USD$84 million. The main funding agency is the World Bank. It is anticipated that the World Bank will fund up to USD$62 million. A donor’s meeting to close the funding gap has been proposed by the IDA and accepted in principle by both Governments. This is expected to take place in September 2005.

A.3 DRC-Zambia Interconnector

This project is ongoing and includes the rehabilitation of the DC transmission line from Inga to Kolwezi and the AC transmission line to the border with Zambia. It also includes construction of a second AC transmission line to the border to Zambia as well as reinforcements of substations. The objective is to increase power transfer capacity from DRC to SAPP from the current 250MW to 500MW by 2008. The project is scheduled for commissioning in July 2007.

33


Energy (continued)

The estimated cost of strengthening of the transmission corridor from Inga in the DRC to SAPP is USD$182 million out of which World Bank IDA would provide USD$173 million and the Government of the DRC the remainder. The portion in Zambia would amount to approximately USD$20 million and will be financed by CEC.

A.4 WESTCOR

Under the auspices of SAPP a group of utilities have formed the WESTCOR Project. WESTCOR aims to interconnect Inga in the Democratic Republic of Congo (DRC) to Southern Africa via Angola, Namibia, Botswana and South Africa. WESTCOR has announced the launch of a feasibility study for the project It is envisaged that the project will include the aforementioned transmission lines as well as new generating capacity at Inga III. The total cost of the project has been estimated at USD$2.5 billion. The WESTCOR inter-governmental and inter-utility accords signify the achievement of a major milestone in establishing the necessary institutional framework for the implementation of the WESTCOR project (both transmission & generation at Inga III). However, as neither a pre-feasibility nor a feasibility study has been carried out on Inga III, the technical, financial, economic, social and environmental aspects of the project are yet to be assessed.

In this respect the ADB has recommended that consideration be given to carrying out a single holistic study on the development of the Inga Hydropower site, including both rehabilitation and construction of new capacity, rather than carrying out two separate studies on Inga III and Grand Inga hydropower project (See Section 4.3.1).

34


Energy (continued)

Figure 4-1: Current and Proposed SAPP Interconnectors

Source: SAPP

35


Energy (continued)

B. SAPP Generating Projects

Listed in the tables below are the SAPP short and long term generation projects with the expected commissioning year.

Table 4-1 SAPP Short Term Generation Projects

No. Country Project Name

1 Angola Capanda

2 Botswana Morupule Expansion

3 DRC Refurbish Inga-1 & 2

4 Lesotho Muela Phase-2

5 Malawi Kaphichira Phase-2

6 Namibia Kudu

7 South Africa Mothballed Plants

Open Cycle Gas Turbine

8 Swaziland Maguga

9 Zambia Refurbishment

Itezhi-Tezhi

Kafue Lower

Kariba North

10 Zimbabwe Kariba South

Hwange 7 & 8

Lupani

11 Tanzania Ubungo

Ubungo

Kinyerezi

Kinyerezi

TOTAL

Source: SAPP

Capacity [MW]

260

240

500

110

64

800

3,500

500

20

210

120

600

360

300

660

300

40

40

60

60

8,744

Expected Type Commissioning

Year

Hydro 2007

Coal 2009

Hydro 2007

Hydro 2010

Hydro 2009

Gas 2009

Coal 2005 to 2010

Gas 2008

Hydro 2007

Hydro 2006

Hydro 2007

Hydro 2009

Hydro 2009

Hydro 2007

Thermal 2008

Gas 2009

Gas 2004

Gas 2005

Gas 2007

Gas 2009

36

Energy ( cont inued)

Table 4-2 SAPP Long Term Generation Projects

Expected

Commissoning Year

Capacity [MW] Type

No. Country Project Name

Source :S

A

B

N

Cambambe II

Mmamabula

Hydro

Thermal

2011 1

2

NEPAD STAP Review 2004 – Continental Synthesis Report

ngola

otswana

A

Lesotho

Malawi

e

a

Inga-3

Musanga

Kholombizo

1 0

Hydro

Hydro

Hydro

Hydro

Hydro

Hydro

2010

2018

2012

2020

2012

Mozambiqu

PP

mibia

South Africa

M

M

E

P

G

G

2

L

R

M

M

REN

K

B G

oatize

assingir

pupa

opa

reenfield

reenfield

x CGT

1

1

0

Hydro

Coal

Hydro

Hydro

Hydro

Coal Coal

Gas

2015 2015

2012-2013

2014

2010

2013

ubombo

uhudji 1,000

H

C

C

2016

2022

2024

2027

chuchuma

chuchuma

H
umakali
xpansion Kariba

H2020

orth

alungwishi

atoka

okwe North 1

49

260

3,600

3,500

6,000

240

260

0

,300

,000

4

360

23

4,000

2,500

1,500

2,330

358

200

200

222

200

220
H2014
800
H 2020
,300

Hydro

ydro

oal

oal

ydro

ydro

ydro

ydro

2015

2012

2020


Energy (continued)

4. 1.2 WAPP

Figure 4-2 WAPP Planned and Existing Interconnections

The WAPP has adopted a similar strategic focus to SAPP in planning future increases in generation capacity and interconnections. In parallel, they have developed a technical framework for power trading, and established a co-ordination and monitoring centre. Further, with funding of USD$ 5m from Agence Française de Developpment (AFD), WAPP is putting in place a Regional Regulatory Mechanism for the sector. Some regional interconnections are currently being built while others are receiving funding from donor institutions. The first regional interconnection project under WAPP, connecting Nigeria and Benin, is under construction with funding from ADB, EBID and BOAD. The World Bank Group, ADB, EIB and Kuwait Fund have promised to provide funding to the level of USD$350m, USD$5m, USD$10m and USD$16.5m respectively to support other WAPP projects. The primary focus of this support to WAPP will be the co-financing of additional priority interconnection lines and key regional hydropower generating facilities.

38


Energy (continued)

In addition to the above, other notable achievements were: (i) ECOWAS Heads of States and Government adopted the revised West African Power Master Plan and stability study.

(ii) Preparatory work on the establishment of a Regional Regulator Agency for the Electricity sector is continuing with the approval of grant support over five years from Agence Francaise de Development (AFD) in July 2004.

(iii) The ECOWAS Energy Observatory has now been launched and is operational.

(iv) With the support of USAID, the ECOWAS Secretariat has commenced a

regional study on rural electrification

A. Transmission Projects

Listed below are the WAPP transmission projects with a summary of progress on projects for which information was available.

Table 4-3 WAPP ( Zone A) Priority Interconnection Projects (330kv)

Project KM Est. Status Cost

Interconnection 70 $40M • Construction commenced October, 2004. 1. Sakete (Benin) Ikeja West (Nigeria)

2. Aboadze - Volta 216 $38M • EIB and World Bank completed financial appraisal Ghana of project.

• UDS$16.5 million obtained from Kuwaiti Fund.

3. Aboadze-Prestea 375 $21M • Consultant for feasibility, detailed design and EIA study selected by ECOWAS and respective utilities.

4. Tema- Mome 327 $58M • Contracts for feasibility update/detailed design, Hagou-Sakete environmental and social impact assessment, and Ghana,Togo, Benin Tender document studies signed by ECOWAS.

• The studies will be financed by NEPAD IPPF. • Scheduled start date for studies - July 2005.

Source: ECOWAS, March 2005

39


Energy (continued) Table 4-4 WAPP ( Zone B) Priority Interconnection Projects (225kv)

Project KM Est. Status Cost

1. Bobodioulasso 338 $61M • Financial appraisal of projects completed by banks. Ouagadougou • Funding released. Burkina Faso • Pre-qualification of consultants for works

supervision - on-going • Tender for pre-qualification of consultants for works

launched June 2005 for decision August. 2005.

2. Ferkessedougou 520 $69M • Bidding process for feasibility studies and Sikasso engineering designs completed. Cote d’Ivoire - Mali • Bidding process for ESIA studies unsuccessful.

Malian Government relaunched process.

3. *Sikasso 290 $32M • EDM network investment SegouMali * 150 kv

4. Sikasso Bamako • Required for N-1 criteria

5. Boltanga Ouaga • Identification phase currently. Financing of Ghana - Bukina Faso preparatory studies included in World Bank APL.

B. Generation Projects

Listed below are the WAPP generating projects with a summary of progress being made on projects for which information was available.

Table 4-5 Priority Hydro Power Projects

Project Est. Status Cost

1. OMVG $ 143M • Feasibility and environmental studies completed. Sa mbagalou/Kaleta • Including Kaleta HEP and Southern Transmission segment from Gambia, Guinea, Lisa to Kaolack. USD$5.033 million grant agreement with ADB Guinea Bissau, signed for pre-investment of financing of detailed Senegal • Implementation of Kaleta Phase 1 - target operational date 2009.

• Institutional capacity building support initiated. Recruitment of experts for Project co-ordination unit.

2. OMVS - Felou $98M • Preparation of environmental assessment, resettlement action Hydro Power plan and pre-investment studies for development through PPP. Station.

Source: ECOWAS, March 2005

40


Energy (continued)

Table 4-6 Priority Hydropower Projects (DAMS) (2004-2011)

Site Sponsor Capacity Average Est. cost Cost of (MW) Energy ($m) Supply (GWh/y) ($/MWh)

Bumbuna S. Leone 50 290 40 1.7

Kaléta-1 Guinea 105 900 143 2.0

Sanban-galou Guinea 120 400 225 7.9

Felou Mali 62 335 98 3.1 Source: ECOWAS

Table 4-7 Priority Thermal Power Projects (2004-2008) Site Sponsor Capacity Average Est. cost (MW) Energy ($m) (GWh/y)

Takoradi Steam Ghana 110 820 90

Tema Ghana 330 2,460 250

Agip Nigeria 450 3,350 330

Akitipupa Nigeria 670 4,990 490

Papalanto Nigeria 670 4,990 490 Source: ECOWAS,

41


Energy (continued)

4.1.3 EAPP The EAPP is still at the preparatory stage of a study on the East African Power Master Plan (EAPMP). This study involves the development of a least-cost expansion programme for the development of generation capacity and a comprehensive plan for the development of an interconnected power system between the three Partner States to facilitate the creation of an integrated power pool. The study is in Phase II, and a detailed report of this Phase has been produced.

4.1.4 CAPP

A regional body has been established to develop the CAPP and donor funding is now being sought. With regard to studies on Interconnectivity of Electricity Networks, ADB has approved a USD$5.0 million grant to finance the studies. ADB is awaiting a resubmission of the bid evaluation report from ECCAS.

4.1.5 UMA

Regional Interconnectivity and Independent Power Producer (IPP) Projects

Financing for the ‘Strengthening of the Morocco-Spain Interconnection project’ has been secured, with ADB contributing Euro 80 million out of a total loan of Euro 250 million. The commissioning of the second sub-sea line is scheduled for the end of 2005.

The first phase of the ‘Algeria Gas-Fired Power Station and Algerian-Spain Interconnection project’ is due to become operational in the third quarter of 2005. Phase two of the power station is scheduled for completion by April 2006. However, progress in the Algeria-Spain interconnection has stalled due to problems in finalising the tariff level issues.

Two feasibility studies were completed respectively in mid-2003 for the 2000 MW interconnection sub-sea cable between Algeria and Spain and in mid-2004 for a 1000 MW interconnection sub-sea cable between Algeria and Italy. However, investment decisions by private investors are dependent on the level of prices for natural gas.

A recent development of significance has been the declaration of intent - signed between Algeria, Morocco, Tunisia and the European Commission - to create an integrated electricity market across the three Maghreb countries, with the intention that the market ultimately would be integrated into the EU internal electricity market.

Further to this, another memorandum of understanding was signed amongst the Maghreb countries in December 2003, affirming the intention to create this market in the Maghreb by 2006 (to be progressively integrated into the EU market thereafter), and to define a work programme to achieve this. Libya is expected to join the process soon.

42


Energy (continued) 4.1.6 Challenges for Power Pools and Associated Projects

• The continental investment programme in power generation and regional

interconnection projects is perhaps the most significant funding requirement of all of the

NEPAD STAP programmes in terms of size, duration and potential long term benefit.

• The financing of power projects and especially power generation, is dependent

upon the ability to prove that market pricing and payment mechanisms are

robust and convenient, especially for projects in which private sector

operating and investment partners are being sought.

• The key challenge specific to power pools and regional interconnections is the

development of a sustainable industry and power pooling structure which is

critical to the success of any regional power pool programmed.

• For Power Pooling Initiatives to be effective on a regional/ continental basis it

implies that:

The off-taker is able to pay for the least cost power produced and consumed.

The production of electricity is cost effective.

The generating companies are allowed to charge economic prices for their

product.

The utilities are sufficiently well managed to ensure that revenue streams are

maximized and losses through non payment are minimized.

To date in Africa this has not necessarily been the case.

43


Energy (continued)

4.1.7 Recommendations for Power Pools and Associated Projects

• Countries should be encouraged to continue to restructure and reposition their

energy utilities to allow them to participate freely in commercial regional

energy markets. Further to this, the development of appropriate regional

transnational utilities should be encouraged.

• All RECs and countries should openly share knowledge and best practices in

bringing forward the enabling regulations and investment required to establish

regional and intra-regional power pools.

• Funding and resources should be made available to those RECs such as ECCAS,

whose progress on power pools and other energy orientated projects has been

constrained, whether this is at a policy/harmonisation or investment project level.

• New generating capacity and inter-connection programmes should continue to

be developed on a “least cost” basis. The content and phasing of these

programmes should be coordinated between countries and regions to ensure

the maximum timing and impact of benefits.

• The repositioning and restructuring of the national energy utilities together

with the development of appropriate enabling environments will be essential in

bringing forward appropriate private sector participation.

• Restructure of national power sectors should include provision for the

establishment of strong and independent regulators.

44


Energy (continued)

4.1.8 Grand Inga Integrator Study (Flagship)

The study aims at exploring the feasibility of power development at the Grand Inga site in the Democratic Republic of Congo (DRC), and ensuring transmission of hydropower-based electricity to other regions in Africa.

The responsibility for development of this project rests with the government of DRC. There is minimal involvement of the SADC or ECCAS Secretariats.

Current status

A pre-feasibility study of Grand Inga was carried out with ADF funding between 1993 and 1997. Following this study, progress to date has been limited.

In October 2004, ADB conducted a fact finding mission to the DRC to establish what progress has been made in the preparations for the feasibility study. The mission identified a number of issues, which together with the review findings include the following:

• Inga 1 and 2 are operating below capacity, with urgent need for rehabilitation.

• WESTCOR has been officially established and is considering carrying out a study for the

development of Inga III hydropower project.

• There are two differing opinions as to the development approach for the Inga site:

either carry out two separate studies, one for the development of Inga III and the

other for the development of Grand Inga, or carry out one holistic study that encompasses

both rehabilitation and new capacity development at the Inga hydropower site.

• There is a need for a dialogue between all key national stakeholders and between the

DRC and existing and potential international stakeholders, including inter alia, potential

consumers, investors and financiers.

The Government of the DRC has made a funding request to the ADB for financing of a holistic feasibility study the development of the Inga Site. In additions the GoDRC has requested the ADB to provide financial support for holding two roundtables for the national and international dialogue mentioned above.

Recommendations

1. ADB should continue to assist the Government of DRC in its efforts to organize the planned roundtables for major Inga project stakeholders, to discuss the initiative.

2. The Government of the DRC should consider the adoption of one holistic feasibility study for the Inga site.

45


Energy (continued) 3. Consideration to be given to the establishment of appropriate institutional structures to drive the implementation of this significant project. In this regard,

• Separate project development activities from facilitation and public oversight activities.

• Create a Special Purpose Vehicle (SPV) to manage or outsource the project preparation activities.

• Establish institutional structures for public oversight, harmonisation of policies and regulatory environments and facilitation of inter governmental agreements.

4.1.9 Gas and Oil Pipelines

The progress being made in these projects is summarised below:

• West African Gas Pipeline

The West African Gas Pipeline (WAGP) has achieved financial close and construction has commenced.

• Kenya - Uganda Oil Pipeline

The Governments of Kenya and Uganda have agreed the basis of their co-operation on the Kenya Uganda Oil Pipeline and private sector partners are being sought. Preliminary engineering designs and an Environmental Impact Assessment have also been carried out.

• Tunisia/Libya Gas pipelines

• A techno-economic study was initiated under a contract signed on 10 December 2003 with Sofregaz (France). A pipeline Route Survey was initiated in 2004 under a contract signed with National Consulting Bureau, NCB (Libya).

• A gas purchase agreement was initialed by STEG and NOC in 2004 and a gas transportation agreement is being discussed by STEG and Joint Gas.

• The investment cost will be defined by the feasibility study, expected by February 2005, and funding is being sought from various financial institutions including the ADB.

• Nigeria-Algeria Gas Pipeline

The procurement process for the selection of a consulting team has begun. It is anticipated that the pre-feasibility study will be completed by the end of 2005.

46


Energy (continued)

Figure 4-3 West Africa Gas Pipeline A case study

B GHANA d

ra

k a

T

WAGP case study

Brief description

T O G O

é

a m o

m L

T

E NIGERIA N I N

u o s

n g a s

to L o o v

C ra Source: ECOWAS 2004 s

E

Constraints and hurdles overcome

This is a 678km pipeline project that will deliver natural gas from Nigeria to Ghana, through Benin and Togo.

The implementation of this project will further the integration of West African countries and is a strategic complement through the WAPP to increase power generation capacity in the region thus economic development through the regional electricity market.

Reduction in the high costs of electricity generation in Ghana, Togo and Benin.

Increased access to cheap and clean energy source by the sub regional consumers.

Reduction in local industries relatively high production costs thus promoting growth.

Lessons learnt

Complex, large scale project defined and designed.

Multiple member states involved.

Regulatory hurdles overcome.

Establishment of new institutional and project structure achieved.

Financing of the relatively high project development costs.

Long timescale from inception to delivery.

Ambitious projects in terms of complexity, scale and involvement of multiple member states can be completed successfully.

Clear benefits to stakeholders.

Institutional structure that separated inter-Governmental facilitation from project development activities.

Efficient institutional structure established on public sector side.

Strong project/programme management skills deployed in the project development vehicle. Relatively

early involvement of a strong private sector sponsor.

Commitment and participation of off takers.

Innovative project financing.

47


Energy (continued)

Figure 4-4 WAGP Project Governance Framework A Best Practice

■ This structure clearly separates, on the one hand, harmonisation of policies, facilitation of inter-governmental agreements, the adaptation of the requisite legal and regulatory environments and the building of co-operative regional frameworks amongst the relevant countries, from, on the other hand, project implementation itself, which is private sector driven. ■ On the harmonisation side, the WAGP framework has provided for a focused and streamlined representation of Member States and relevant executing authorities, ministries and state utilities. This has allowed short and sharp decision-making by the right people, equipped with the relevant skills and authority.

■ The formation of a dedicated project company, and agreement amongst the public and private shareholders on roles and responsibilities, has ensured that a dedicated team has developed the project and ensured that key project milestones were controlled. The private sector partners in the WAGP project felt that this framework facilitated the development of the project and engagement of stakeholders and that ECOWAS played a valuable central role in this facilitation process.

48


Energy (continued)

4.1.10 Establishing Regional Linkages for Africa Energy Commission (Flagship)

Figure 4-5 AFREC - Capacity Building for Energy Sector A Flagship Project

Project Background

The objectives are to: Build operational capacity with AFREC.

Strengthen the capacities of the RECs to develop energy programmes and projects.

Project status

• Interim Structure of AFREC: only one position (the Executive Director) was filled out of six due to lack of financial resources.

• Ratification of AFREC’s convention: Only 8 counries ratified out of required 15 and total 30 despite intensive efforts by AFREC.

• AFREC’s internal office organisation: various administrative actions completed and the following a re under preparation:(i) Host Country Agreement ( ii) staff rules and regulations (iii) financial rules and regulations.

• Energy Information System: (i) IEA Training on EIS completed (ii) establishing EIS initiated (iii) Building focal points started.

• Human Resources Development Review of Egyptian AEIS Training Programme commenced.

• Inter-African Energy Projects: MOU with ECA finalised. Creation of East African Power Pool (EAPP) under discussion.

• Renewable Energy Resources: Database and Directory initiated.

• Publication: 1st newsletter - December, 2004. Plan for quarterly journal and preparation of All Africa Energy Directory.

Constraints and hurdles

There is an apparent lack of commitment from the individual countries to sign up to the AFREC Constitution.

Lack of funding to provide trained personnel at REC level for the preparation of compatible databases throughout the RECs.

Recommendations

NEPAD to urge countries to ratify AFREC convention.

AFREC to be supported by the AU and ADB to become

fully operational and develop a continental planning

capacity.

AFREC to continue to build linkages with RECs.

49


Energy (continued)

4.1.11 Energy Sector - Way Forward

To accelerate the implementation of energy projects within the STAP portfolio, consideration should be given to the following.

1. Complexity of large scale cross border transactions

The Power Pool Generation and Interconnection, Gas Pipeline and other projects are significant cross border transactions. The structures and modus operandi used to deliver the WAGP illustrate how the governments, utilities and the strong private sector partners can work together to deliver multi-country projects. Similar international best practices will need to be used in order to realise intended development programmes.

2. Competition for scarce financial resources

In drawing together the various regional programmes, there will be a point whereby not all projects in all regions could be funded simultaneously. NEPAD, the RECs, Member/Partner States, the ADB, other development partners, and potential private sector partners should liaise closely to ensure that the regional programmes are wherever possible fully integrated to ensure maximum benefit in the timing and use of ultimately limited financial resources.

Furthermore, with respect to financing of power generation projects in many regions in the continent, the ADB could work with other MFIs to develop innovative financing instruments such as the Private Sector Energy Development Fund (PSEDF) and Expanded Co-financing Operation (ECO) guarantee facility utilised in the ‘Hub Project’6.

3. Capacity building

There is a need for a robust capacity building programme for the sector, particularly with respect to continental level planning and regulation as well as capacity at regional and country level. In this respect, countries must fulfill their AFREC commitments, so as to enable the organisation to accomplish its capacity-building mandate throughout the continent.

4. Opportunities for PSP are available in the energy sector

The WAPP and SAPP potentially have an already proven requirement for provision of some 28,000 MW in generating capacity plus associated transmission and distribution infrastructure by the year 2011. Taken together with the future

50


Energy (continued)

requirements for EAPP, CAPP and specific projects such as Inga and the Kenya Uganda Oil pipeline, the energy sector offers a large number of investment opportunities for substantial participation by the private sector.

Given these opportunities, there is a need to define innovative practical frameworks and modalities for achieving partnership between public and private investment institutions.

51


4.2 ICT The ICT Projects within STAP consist of two flagship projects, namely ‘ICT Policy and Regulatory Framework’ and COMTEL, RASCOM, a continental project, together with several other projects under the catagories of Facilitation, Capacity Building and Investment. Additionally this review reports on new projects that have been identified for which the relevant RECs have proposed inclusion in STAP.

4.2.1 ICT Policy and Regulatory Frameworks at Regional Level

A key objective of NEPAD in the area of ICT infrastructure is to develop harmonised regional telecommunications legislative and regulatory frameworks within regions.

A number of RECs are making significant progress, particularly COMESA, to develop and adopt harmonised regional ICT policy and regulatory frameworks as well as devising regional action plans for the development and full liberalisation of the sector within their respective regions. Such progress across the regions is evidenced by the following:

• The establishment of the West African Telecommunications Regulatory Association (WATRA), the Association of Regulators for Information and Communications for Eastern and Southern Africa (ARICEA) - covering the ICT, broadcasting and postal sub-sectors, to foster the standardisation of best regulatory practices.

• ECOWAS incorporating as part of its harmonisation programme, a study to identify missing inter-state links through the Intelcom II project.

• ECOWAS, ECA, COMESA, adopting regional action plans, which encompass issues such as:

• Deepening liberalisation to promote further competition in the fixed networks and value added services.

• Creation of structures to allow regional GSM and eventually continental GSM roaming.

• Strengthening of regional regulatory bodies.

• The development of peer alignment mechanisms, for knowledge and skills transfer between regulators.

• Assessments within Member/Partner States of the status of ICT policy development and implementation in accordance with the agreed regional model, the results of which in COMESA were encouraging as highlighted below.

52


ICT (continued) Summary of COMESA Assessment A Case Study and Peer Review A review was carried out in late 2003 to evaluate progress since 2000, and this assessment found that Member States had made significant steps forward in modifying their regulatory framework to offer an enabling environment for investment and were forging ahead with further actions to reinforce and build upon these reforms. In particular, the following has been achieved:

■ Sixteen Member States have enacted recent legislation on the institutional

restructuring and liberalisation of the ICT sector.

■ Fifteen countries have in place regulatory bodies established separately from the

supervising ministries and operators.

■ Fifteen Member States have liberalised cellular mobile telephone and value-added

telecommunications and Internet Protocol-based services.

■ Four Member States have partially privatised their stated-owned national

telecommunication operators. Several countries, including Ethiopia, Kenya, and

Malawi, are working currently on privatising their national telecommunication

operators.

■ Seychelles, Uganda and Zimbabwe have introduced competition into their fixed

line telephone markets by licensing two operators.

■ Burundi has completely opened up the international telephone service segment

while in Sudan competition is allowed in the national fixed-line market.

■ Mauritius has completely opened up its telecommunications market under the

WTO liberalisation regime.

As COMESA stated in its own recent progress report on ICT policy7, at the current rate, most COMESA countries will complete the fundamental changes envisaged in the COMESA ICT Policy and Model Bill earlier than the 2008 target.

However, a note of caution has been raised in that there is evidence of only limited awareness of the COMESA ICT Policy and Model Bill in the Member States. On the other hand, various stakeholders have expressed the view that the Policy and Model Bill will be helpful in speeding up the adoption of national policies and legislation.

53


ICT (continued)

4.2.2 Recommendations • NEPAD and RECs should continue to encourage countries to adopt their respective

regional harmonisation Bill’s and Models into their national legal and regulatory frameworks.

• Annual or bi-annual reviews of progress in harmonising ICT policy and

regulation should be carried out by each REC to meet the challenge to create regional common markets in ICT by 2008.

• Periodic regional conferences should be organised for all stakeholders to review progress and share ideas, know-how and experience.

• Creation of an Africa Peer Review Mechanism for Regulators to ensure the dissemination of best practices. This could be complemented by a pool of regional advisors on regulatory matters and/or regional regulators, shared amongst countries.

• Potential private sector partners should be encouraged to participate in all stages of policy development, harmonisation and review processes.

4.2.3 COMTEL Transmission ATM Network

The COMTEL project entails the establishment of a regional terrestrial telecommunications network linking telecommunication operators in the Eastern and Southern Africa region. The aim of the project is to improve telecommunications inter-connectivity within the region both with the National Telecommunications Operators (NTOs) and other ICT telecommunications projects.

4.2.3.1 Project Status

Following a bidding process, the Interim Project Board selected a preferred Strategic Equity Partner (SEP) in March 2004. The preferred SEP is currently undertaking due diligence of the project. Should the outcome of the due diligence prove positive, it is estimated that the full network would be rolled out in two years. The ADB and DBSA will be assisting with funding some of the project preparatory work through NEPAD IPPF and DBSA-AFD PPF.

54


ICT (continued) Diagram 4-6 The COMTEL Transmission ATM Network

Source: COMESA website at http://www.comesa.int/ict/projects/COMTEL/view

4.2.3.2 Challenges

The principal challenge is the potential reluctance of some National Telecommunications Operators (NTOs) to adapt to the new market structure. As both shareholders and customers, they will have to manage the transition to an open market. In this regard it is anticipated that the initial shareholders will not adopt a ‘club approach’ that would set prohibitive high fees or tariffs for newcomers wishing to join or indeed use the network. It should be noted that whilst such an approach has the attractiveness of high margins, it may preclude competition and hence impede wide access to the facility.

4.2.3.3 Recommendations

COMESA must support and encourage the NTOs to rise to the challenges and opportunities presented by the new liberalised market structure. In particular the original shareholders should desist from establishing a ‘club type’ approach that would preclude open and fair competition and indeed impede wide access to the network.

55

http://www.comesa.int/ict/projects/COMTEL/view

NEPAD STAP Review 2004-Continental Synthesis Report

ICT (continued)

4.2.4 RASCOM

Created in 1992, and sponsored by 44 African countries the mission of RASCOM (Regional African Satellite Communication Organization), is to provide an efficient and economical means of telecommunications in all areas of the African continent using a Regional African Satellite System. The objectives of the RASCOM project are to:

• Provide a wide range of telecommunications services to all areas in Africa at affordable costs as a result of the economies of scale generated in the project.

• Establish direct links between all African countries without exception in order to save the hundreds of millions of US dollars that Africa pays every year on transit traffic settlements that exit Africa to Europe.

• Improve inter-urban communications within each African country.

• Provide facilities for radio and television broadcasting in each African country as well as exchange of Radio and TV programmes between African countries.

4.2.4.2 Summary of Progress The major achievements since 2003 are as follows:

■ In February 2003, the Execution Agreement (Concession) was signed between RASCOM and RascomStar-QAF for the construction of the satellite and management of the business. ■ First Financial Close was achieved and construction of the first satellite commenced in June 2003. The construction is expected to be completed in 2 005.

■ Work is now underway to achieve the second financial closing in 2005.

■ The expected launch date of the satellite is mid 2006.

■ Technical operation and commercial services are expected to start in late 2006.

56


ICT (continued)

4.2.4.2 Challenges

There is a lack of awareness about the deliverables of the RASCOM project, its coverage areas and the licence requirements that extend to regulators, operators and consumers. This is reflected by the lack of activity on this project in several of the RECs. A second successful financial closing is essential to fund the launch and related insurance.


RASCOM should:

• Monitor developments in new technologies that may soon allow even cheaper international call charges than RASCOM’s planned minimum call charge.

• Update its business plan and financial model to reflect changes in new products and services, technologies and new market entrants.

• Encourage competitive production of the ground and subscriber terminals to ensure fair market price, good quality and a high level of customer service.

• Develop a robust marketing strategy and embark upon a media campaign to inform consumers about the opportunities and range of services that RASCOM will offer.

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ICT (continued)

4.2.5 Other Projects within the ICT Sector

A summary of the progress being made in other projects within the ICT sector is given below:

PROJECTS CURRENT STATUS FACILITATION

Continental Umbrella to facilitate the Utilisation and Exploitation of ICTs in African Countries

The Development of a Comprehensive Communications Strategy for the Lake Victoria Basin CAPACITY BUILDING

ICT Human Resources Capacity Development Initiative for Africa

Programme to Broaden and Enhance Africa’s Participation in the Global ICT Policy and Decision Making Fora

Strengthening of African Telecommunications and ICT Institutions

ECOWAS has identified initiatives under this programme: • An agriculture information system. • A trade information system.

In EAC, the Partner States are currently compiling country reports on their ‘Info Communication’ gaps with the aim of seeking Japanese donor lead funding for a further project to fill in the gaps that impede effective interconnectivity between the Partner States. As part of the initiative the Partner States are developing their own respective ICT projects to bridge the ‘Digital Divide’.

EAC has prepared a project proposal for a maritime communications strategy for the Lake Victoria Basin. It is anticipated that funding for the implementation would be obtained from SIDA’s (Swedish International Development Cooperation Agency) Lake Victoria programme partnership fund.

ECOWAS is developing a computerised Management Information System (known as SIGTEL).Technical problems still need to be addressed.

ECOWAS currently assessing a series of options to facilitate the participation of RECs, Member States, Regulatory agencies and Civil Society, in global ICT fora.

ECOWAS seeking funding for studies to assess its current ICT training centres and additionally for the restructuring and development of the centres.

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ICT (continued) PROJECTS CURRENT STATUS

INVESTMENT

Development of Telecommunications No initiative was identified in any REC.

Equipment manufacturing in Africa Possible reasons for this include - lack of oversight by RECs of private sector activities, RECs’ inability to clearly

define a deliverable project with measurable outcomes. SAT-3/WASC/SAFE - Utilisation to Improve The SAT-3 project has been completed on schedule and Interconnectivity was commissioned in April 2002.The network has 17 landing nodes, 11 of which are in Africa, of which five are

in the ECOWAS region.

SADC Region Information Infrastructure SRII has made rapid progress, completing most of its Project (SRII) short and medium-term projects. The first two phases

have already been completed. Programme of works for the proposed projects for phase 3, have been already finalised - for example the links between South Africa and Botswana and a fibre link from South Africa to Zimbabwe. However, specific countries are facing problems for financing the remaining projects - particularly Zimbabwe, Malawi and Zambia. Resources to complete the gaps need to be mobilised through regional organs (SATA, SADC, NEPAD, ATU, ADB, DBSA, the private sector (foreign as well as local) and development partners. SATA has recently launched a proposal through the World Bank to obtain funds to assist in the financing problems for these countries.

Maghreb Fibre Optic Telecommunications The majority of the link has been completed, only the link

Interconnection between Tunisia and Libya is outstanding. The work is being financed by the UMA Member States and the ADB.

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ICT (continued)

4.2.6

Proposed New Projects

The table below details the proposed new ICT projects for inclusion in STAP.

NEW REGION P ROJECTS INVESTMENT

Development ECA of an East African Submarine Cable System (EASSy) Africa

Establishment ECA of a Regional Telecommun ications Carrier Company

Frequency COMESA Spectrum

An agriculture ECOWAS information system A trade information system

OBJECTIVES

The EASSy project is to provide high quality broadband international connectivity to serve the whole length of the Eastern seaboard of Africa. The proposed cable will link with the Middle Eastern cable networks in the Red Sea area which are already linked to other cable networks in Europe including SAT3/WASC cable.

To provide cost effective broadband trunking network connecting the Partner States.

The concept for the establishment of a Regional Carrier Company emanated from the findings of the study for the

‘Development of a Comprehensive Communications Strategy for the Lake Victoria Basin’ undertaken in 2003. The project is endorsed by the Sector Regulators in each Partner State and eight regional operators.

A pre-feasibility study was carried out in late 2003/early 2004 which confirmed project viability. Additionally, this study

also defined the network and the additional microwave links that would be required.

Subsequent to the completion of the pre-feasibility, the task force has studied and integrated the regulatory and licensing issues into the region’s policy and harmonisation programme.

Monitoring of bandwidth usage in support of regulating a fair market

Construction of physical telecommunications infrastructure, development and installation of comprehensive regional sector information databases.

STATUS

An MOU for the implementation of the project has been signed by 15 of the Regional Operators within the COMESA region. A detailed feasibility study is being undertaken. The successful realisation of this project will effectively mean that a fibre optic ring around the African continent would be achieved. (See map below).

TOR being prepared.

Concept paper prepared.

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ICT (continued)

Diagram 4-7 Existing and Potential Fibre Optic Cable around Africa

SEA ME WE 16

3 & 4 17

EASSy SAT-3/WASC

SAFE

4.2.7 ICT Sector - Challenges

• There is a need for additional regional backbone projects to ensure interstate connectivity and widen the access to the continental fibre optic ring. However, there are a number of technical, institutional and financial constraints to this being achieved.

For example, with respect to the SAT-3 network, the capability to provide high bandwidth connectivity is restricted to 11 countries across the continent. Other states are currently unable to use the network due to the investment cost of each landing node.

• The EASSy project needs further development to ensure it becomes a bankable project and thus able to secure adequate funding for the full implementation of the project.

• Implementing cost-based or cost-orientated interconnection charges between operators is a complex issue and may be difficult and too soon for the regulators to develop technically and enforce, due to their current lack of capacity. Hence

the management of the transition to an open market poses a significant challenge.

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ICT (continued)

4.2.8 Recommendations - ICT There is a need to accelerate backbone rollout in all regions, especially West and Central Africa given the lack of infrastructure. The business model adopted for regional interconnectivity projects whilst ensuring adequate returns for its initial shareholders should not create high barriers to entry or usage for other service providers. NEPAD and ADB should actively support RECs’ and countries’ funding mobilisation efforts for backbone projects.

The EASSy project should be designated a flagship project as it is supported at all

levels by both the public and private sectors. Further funding is required to address

the essential legal, regulatory and financial issues.

The capacity and skills shortfalls faced by RECs, governments and regulators present

a considerable problem and needs to be addressed. Some RECs, notably ECCAS,

need to consider recruitment of ICT specialists to progress projects in the sector.

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4.3 Air Transport The NEPAD objectives for air transport and civil aviation are to foster the full liberalisation and development of competitive, safe and efficient air transport services and the strengthening of Africa’s linkages with the global air transport industry. These objectives are being pursued through the implementation of the Yamoussoukro Decision. In this context, the STAP Main Report published in May 2002 identified four specific initiatives based on projects already identified by RECs. These are (i) Institutional Support for the Yamoussoukro Decision; (ii) Cooperative Development of Operational Safety and Continuing Airworthiness Programme (COSCAP); (iii) the Development of a Global Navigation Satellite system; and (iv) the creation of Upper Airspace Control Centres.

4.3.1 Institutional Support for the Yamoussoukro Decision

The objective of the Decision is the gradual liberalisation of air transport services in the whole continent and involves inter alia:

■ The granting of traffic rights (1st - 5th freedom) on scheduled and non scheduled flights.

■ The elimination of restrictions on frequencies and capacities.

■ Liberalisation of tariffs.

■ Conformity to conventions on air safety in line with ICAO provisions.

Institutional Support for the YD is thus a NEPAD Flagship Project. 63


Air Transport (continued)

4.3.1.1 Summary of Findings A summary of progress being made in each region is given below.

COMESA

COMESA has adopted an Air Transport liberalisation instrument - Legal Notice No. 2 of 1999. Phase I of Legal Notice No. 2 has been implemented and Phase II delayed pending the adoption and implementation of the Competition Regulations for liberalisation of air transport.

COMESA, in collaboration with SADC and the EAC, has developed the Competition Regulations. They were approved by the policy organs of the three participating RECs in 2004.

The next step is for Implementing Provisions and Guidelines for the Competition Regulations to be developed. COMESA is proceeding with this stage of the programme and will appoint a consultant to carry out this task. Following the draft of these provisions and guidelines, further discussions will be held with SADC and EAC. The establishment of a Joint Competition Authority has been identified as a critical next step.

Currently, where countries have already implemented Legal Notice No. 2, an increase in weekly frequencies of flights as well as in passenger traffic, have been detected. The fares along these routes have also decreased in real terms, as compared to those where implementation has not taken place.

COMESA has submitted a proposal to the World Bank and ADB for their support for the establishment of a coordinating secretariat.

EAC

In November 2004, the EAC Council approved the competition rules prepared in collaboration with COMESA and SADC, as well as the regulatory framework agreed to by the three RECs. The RECs have agreed to continue collaborating as per the reported status regarding COMESA above.

Kenya and Uganda have abolished their bi-lateral agreements and are showing greater flexibility in granting traffic rights. Tanzania has made good progress towards liberalization of air transport following the privatisation of Air Tanzania.

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Air Transport (continued) EAC (continued)

The Civil Aviation Authority (CAA) in each of the three Partner States is autonomous but none of the airports are privatised, although Kilimanjaro Airport is operated by the Kilimanjaro Airports Development Company.

The CAAs of the Partner States have been mandated by the REC Sectoral Council to develop a framework for the implementation of the YD.

A Tripartite Air Services Agreement to liberalise regional air services has been established between Kenya, Uganda and Tanzania. This replaced the existing bilaterals between these three countries. However, the recently privatised national airlines of Kenya and Uganda signing with their respective governments exclusivity agreements for the operation of certain routes is considered to be contrary to the YD provisions.

ECCAS Due to its geographic overlap with ECCAS, CEMAC has taken most of the responsibility for the implementation of the YD in the region. Furthermore, CEMAC and ECOWAS are collaborating on the implementation and monitoring of YD in their regions.

Less positively, the six CEMAC Member States have granted a five year traffic rights exclusivity agreement to the new company Air CEMAC, created in strategic partnership with Royal Air Maroc (RAM). Such traffic exclusivity is against the air transport liberalisation provisions of YD.

ECOWAS, UEMOA and CEMAC The Banjul Accord Group has signed a multi-lateral agreement that is compliant with Y D.

In line with the Economic Regulation framework adopted in Lomé in February 2003, a country assessment of the implementation of YD was undertaken between September 2003 and April 2004 by the ECOWAS and CEMAC Secretariats. A summary of the results is outlined in a case study following from this summary of findings.

The Council of Aviation Ministers of CEMAC and ECOWAS adopted in December 2004 the Common Air Transport Economic Regulation. The regulation covered slot allocation, ground handling and denied-boarding compensation. The same Council has mandated the regional harmonisation committee to conclude the regulation for harmonised market access rules, common carrier licensing rules, competition rules and dispute settlement mechanisms.

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ECOWAS, UEMOA and CEMAC (continued) The ECOWAS Secretariat obtained Council endorsement (in January 2005) for a detailed framework for the implementation of the YD and the strengthening of the Aviation sector capacity within the secretariat. This two-year action plan, which includes budgeted costs, has been sent to the ADB and World Bank with a request for funding.

IGAD Institutional Support for the Yamoussoukro Decision has not been defined as a NEPAD STAP project by the IGAD secretariat. As most countries in the region are also members of COMESA they participate within the COMESA programme.

SADC The Competition Regulations for Air Transport developed in collaboration with COMESA and the EAC were approved by the SADC Council of Ministers in August 2004. The RECs have agreed to continue collaborating as per the reported status regarding COMESA above.

The SADC air transport ministers, in recognition of the fact that political constraints could hamper implementation in some Member States, have agreed that the principle of ‘variable geometry’ should be adopted so that those countries that are ready to liberalise their air transport markets should not be held back by others in the region. Less positively, Mauritius withdrew from the Decision in 2004 because it was considered inappropriate, for the time being, to liberalise on the basis of the YD.

UMA

Whilst no specific actions have been taken by the REC, the CAAs of UMA Member States have agreed a new regulatory framework for liberalising air services in the region. The proposed framework is due to be discussed at a meeting of air transport ministers to be held in 2005.

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ECOWAS and CEMAC Assessment of the Implementation of YD A Case Study

In line with the Economic Regulation framework adopted in Lomé in February 2003, an assessment of the implementation of YD was undertaken between September 2003 and April 2004 by the ECOWAS and CEMAC secretariats. The ECOWAS countries assessed were Benin, Ghana, Guinea, Mali, Nigeria, Senegal and Togo, while Cameroon, Central African Republic, Congo and Gabon were assessed in the CEMAC region. The assessment aimed to determine states’ compliance with the provision of the Decision; assess the effect of air transport liberalisation; identify challenges facing member states in implementing the Decision and offer policy recommendations to the Council. A summary of the findings for both the ECOWAS and CEMAC regions is given below:

A. ECOWAS

■ Fully functional autonomous Civil Aviation Administrations exist only in three of the seven states.

■ Although all seven countries have made some improvements to their aviation safety standards, significant effort is still required in all but two states.

■ Most bilateral air service agreements are not consistent with the Decision. However, some states have commenced a revision of these agreements. ■ Traffic rights are granted more frequently. The process however is still fraught

with difficulties, for example:

• Non-responsiveness to, or long delays in processing applications and requests for airline designation.

• Restrictions on or denial of 5th Freedom Traffic Rights.

• Imposition of limits on capacity and frequency of air services.

• Restrictions on entry points.

• Imposition of state restrictions on the number of local airlines designated for international regional operations or acceptance of multiple designations from other states.

■ Air passenger traffic in the period 1999 to 2003 increased in all but one country, while cargo increased in three of the states. The most significant growth in both types of traffic has been in Nigeria. Average growth across the seven states for the

period was 15% in passenger traffic and 14% in cargo. In addition, the number of airlines increased and several new routes were established.

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■ In six states, the majority of aircraft were not registered in the state in which the operator resides. This complicates the states’ oversight function.

■ Two states have liberalised ground handling and have two service providers. Another two are in the process of opening up for a second service provider. The remaining three have sole companies with no plans to liberalise.

Figure 4-6 Consistency of Bilateral Agreements with YD - ECOWAS 2004

Consistency of Bilateral Agreements with YD

Togo

Senegal

Nigeria

Mali

Guinea

Ghana

Benin

0 10 20 30 40 50 60 70 Degree of Consistency (%)

Source: Presentation - ‘Workshop on Mechanisms for Capacity Building of RECs and Speeding up of Implementation of Key NEPAD Infrastructure Projects’ by ECOWAS / CEMAC Air Transport Liberalisation Project Secretariat (March 2005)

B. CEMAC

■ Only Cameroon and Congo have functionally autonomous Civil Aviation Administrations.

■ Two states have incorporated YD into their national laws.

■ The region has adopted a Civil Aviation Code, which, whilst abolishing all tariffs, is not fully compliant with the Decision.

■ Although all four countries are flexible in granting traffic rights and have relaxed the 5th freedom rights to all countries, they still experience difficulties in accessing the markets of some countries of West and Southern Africa.

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■ All the four countries assessed have improved their aviation safety standards. However, further effort to improve is still required.

■ While growth in passenger traffic was reported in Cameroon and Gabon, the Central African Republic witnessed a substantial decrease. All the countries reported significant decline in their cargo traffic. However, the region witnessed a rise in the number of new airlines and routes.

■ The region has also adopted Common Competition Rules that address unfair trade practices, going beyond the YD in this respect. There is a dispute settlement mechanism in place, a committee for monitoring and follow-up has been established and there are sanctions for contraventions. However, the Common Competition Rules do not tackle consumer protection issues.

No REC has reported that any country in their respective region has achieved full compliance with YD.

This position is particularly disappointing given that the provision of the Decision called for full compliance by all countries by August 2002.

4.3.1.2 Challenges

Lack of full compliance is attributed to a number of factors. These include the following:

• The failure of national governments to carry out the necessary reforms in their countries that are envisaged under the Decision. Amongst the reasons for this failure are:

• Lack of creation of structures and framework to undertake the necessary reforms. • Lack of financial, human and technical capacity.

• Desire to protect their small national airlines. • Failure to appreciate and communicate the benefits that the YD liberalisation agenda could bring to air travelers, the tourism industry and the regional integration process.

• A lack of comprehensive compliance audits by RECs, with the exception of ECOWAS, UEMOA and CEMAC. • The failure to establish, under the African Union, a continental executing agency, equipped with the legal powers, tools and resources to undertake its designated mandate.

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• Although there is a designated body that is responsible for monitoring compliance with the Decision, this does not appear to be functioning effectively due to poor participation by RECs.

This review revealed that, similar with other facilitation projects, political and institutional constraints were the main barriers to the progress of this project. This is shown in Figure 4-9 below.

Figure 4-9: Constraints: Support for Yamoussoukro

Constraints Score 0 5 10 15 20 25

COMESA

EAC

EOCAS/CEMAC

ECOWAS

IGAD

SADC

UMA

Key: ■ Political ■ Institutional ■Technical/Project Delivery ■ Financial


The proposals adopted at the Sun City meeting of air transport ministers in May 2005 seem to suggest that new vigour has been injected into the future implementation of the Yamoussoukro Decision. Whilst this meeting did not establish a formal timetable for implementation, it did reach agreement on certain additional measures. These included the preparation of guidelines for evaluating countries’ compliance, clarification and strengthening of the role of the existing body created for monitoring the agreement and for the implementation of the Decision to be included in the African peer review mechanism of NEPAD.

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It is crucial that NEPAD urge all stakeholders to implement in full the comprehensive resolution adopted at Sun City.

Further to the decision of some RECs to establish a regional Joint Competition Authority in their respective regions, consideration should be given to the formation of a single continental Competition Authority.

In addition to the creation of regulatory authority(s), resources will need to be committed to the drafting and preparation of accompanying implementation regulations establishing common rules and procedures. The complexity of this task should not be understated given the different legislative codes between regions.

Consideration should also be given to the establishment of properly resourced air transport teams within RECs, as is being established by ECOWAS. Such teams can have the dual role of providing technical assistance to their respective Member/Partner States to aid them in implementing their reforms, as well as undertaking regular peer review audits.

4.3.2 Co-operative Development of Operational Safety and Continuing Airworthiness Programme (COSCAP)

COSCAP is an integral part of implementation of the Yamoussoukro Decision. It seeks to enhance the safety and efficiency of air transport by establishing a sub-regional body that would provide technical services in safety oversight with the support of ICAO, which is the implementing agency. The programme will identify deficiencies in Member/Partner States primary aviation legislation and regulation relating to licensing, flight operation, airworthiness certification and supervision, and will assist Member/Partner States efforts to surmount them. It will also review and harmonise regulation with respect to the above to ensure that they are compliant with ICAO standards.

The introduction of the COSCAP programmes is also expected to lead to the sharing of infrastructure and personnel (e.g. safety audit inspectors), resulting in economies of scale.

4.3.2.1 Summary of Findings

Summarised below are the findings of this review with respect to this project, by REC. In common with progress towards regulatory reform under the Yamoussoukro Decision, the position is mixed across the RECs as a whole.

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COMESA

Countries falling under COMESA, that are also SADC or EAC member countries, currently participate in either the EAC or SADC-COSCAP programme. For the COMESA countries that are not part of the SADC or EAC programme, COMESA, in conjunction with ICAO, has prepared a COMESACOSCAP project proposal.

The ICAO/COMESA proposal has been presented and discussed at both Ministerial and COMESA Council level. However, at this stage, only seven COMESA member countries have agreed to join this programme.

The proposal will be considered at the next Ministerial meeting scheduled for April 2005. The implementation of the COMESA programme will depend on the outcome of that meeting.

EAC

COSCAP, the Global Navigation Satellite System (GNSS), and the Upper Airspace Control Centres (UACC) are consolidated under a single ‘Safe Skies Programme’ funded by the US Trade and Development Agency (USTDA). The Safe Skies Programme aims to enhance aviation safety, security, air navigation and to build capacity to meet the safety requirements of ICAO and also to attain the US International Aviation Safety Assessment Criteria for Category 1. A review of aviation regulations has commenced with the aim of harmonising civil aviation regulation in the region.

A Memorandum of Understanding (MOU) on cooperation in the enhancement of aviation safety, security, air navigation and capacity building was signed by representatives of the Partner States at the REC Sectoral Council Meeting in November 2004. This MOU entails the sharing of aviation safety personnel and would facilitate the harmonisation of aviation regulations. The Heads of Civil Aviation and Airport Authorities are developing the detailed framework for implementation of the MOU.

The Tripartite Search and Rescue Agreement were ratified in November 2004 and an implementation framework is being developed. The Agreement aims to facilitate cross border search and rescue activities through (i) sharing resources; and (ii) establishing an enabling legal and operational framework.

An Agreement has also been reached for a Regional Safety Agency to be established by December 2005.

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ECCAS

No specific air safety project being undertaken by the ECCAS Secretariat was identified. The institutional support for the implementation of YD and COSCAP projects have been integrated into a Project for Air Transport Liberalisation for West and Central Africa. For this, CEMAC represents the ECCAS region (please see below).

ECOWAS, UEMOA and CEMAC The civil aviation ministers meeting in Lomé of February 2003 approved the implementation of COSCAP in three member state groupings - the Banjul Accord Group, CEMAC and UEMOA. It was envisaged that each grouping would have its own regional safety organisation with funding from donors and participant states. ■ Banjul Accord Group

In the ECOWAS region, the key initiatives have been taken by the Banjul Accord Group (BAG).

• ICAO, which is assisting with the implementation of the project, has prepared a feasibility study for the Banjul Group on the institutionalisation of COSCAP but the project awaits full implementation.

• The project would be carried out through a special project group vehicle - BAGSO (Banjul Accord Group Air Safety Organisation).

• Recruitment of personnel for the project has commenced.

• The total project cost is USD$4.9 million. At the time of the review, funding of around USD$3.3 million had been received or pledged from some Member States and donors, including the AFD, the EU and IFFAS.

• In March 2005 an ADF grant of UAC 4.6 Million was approved to finance COSCAP projects in CEDEAO/CEMAC-SAO TOME/UEMOA.

• Four of the member states have significantly improved their safety standards and a number have updated their Regulations and Manuals.

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ECOWAS, UEMOA and CEMAC (continued) ■ CEMAC

The project document has been prepared but the states are yet to sign. No agreement has yet been reached with the ICAO for its assistance to implement the project. Contributions from member states are not yet agreed. ADB has earmarked funding for the project, as outlined above.

■ UEMOA

THE UEMOA COSCAP project was signed in September 2003. The secretariat is in the process of recruiting a project coordinator and has also obtained funding commitments from the ADB (see above), EU and the AFD. (Further details are not available as the review team was unable to visit UEMOA)

IGAD

No specific air safety project being undertaken by the IGAD Secretariat was identified.

SADC

SADC has a proposal for a feasibility study for its own Air Safety Organisation to implement COSCAP and it is currently liaising with ICAO on funding. Possible financiers, who have indicated their support to the SADC COSCAP project, are EC, Netherlands CAA and Airbus. It is also expected that certain sponsors may provide contribution in kind in the form of instructors, training manuals, as well as financial aid.

UMA

A Ministerial Commission on Infrastructure was held in January 2005, which adopted recommendations on safety and quality programmes as well as training in air traffic management and search and rescue. Recommendations were also adopted for cooperation on airport management, operations, safety, security and service quality.

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4.3.2.2 Challenges

• Timely enactment of national legislation where required to incorporate new safety laws.

• A general lack of funding and human resources within the RECs to pursue this project vigorously.

• The creation of Regional Safety Organisations in line with ICAO standards

4.3.2.3 Recommendations • NEPAD should encourage all countries to enact the new safety regulations.

• NEPAD, with the support of the ADB and development partners, should encourage and assist RECs to build capacity within this sector in their respective organizations.

• NEPAD should encourage RECs and their member countries to accelerate the implementation of the Regional Safety Organizations.

• NEPAD and RECs should continue to encourage countries that have hitherto not done so to establish autonomous Civil Aviation Authorities, as they are critical to the sustainability of the COSCAP programmed.

4.3.3 Global Navigation Satellite System (GNSS)

The introduction of a Global Navigation Satellite System to enhance or replace existing terrestrial navigational systems is essential to ensure safe and cost-effective air traffic management across Africa’s skies. This satellite system requires fewer ground installations and will provide full coverage of navigational services over deserts, forests and sparsely populated areas, thereby creating new routes and allowing greater flexibility to air traffic management. The project is sponsored by ASECNA (Agence pour la Sécurité de la Navigation Aérienne en Afrique et à Madagascar) and by national ATM (air traffic management) service providers.

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Test stations have been established at some 10 locations across the continent and trials have been underway from 2003 to assess the benefits, which include improved navigational performance, landing capability and cost-savings from more direct routings. South Africa, Namibia, Zambia, Kenya, Senegal, Nigeria, Cameroon, Gabon and Equatorial Guinea are amongst those countries participating in the trials. The funding of the GNSS project is expected from the EU, within the Regional Indicative Programs, and intra-ACP funds. The participating countries will also make some contributions.

Summarised below are the findings of this review with respect to progress on the GNSS project in each REC.

COMESA

The COMESA Secretariat does not make a distinction between the GNSS and Air Space Control projects, but rather regards them as one integrated programme - the Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) Systems. Together with SADC, COMESA has embarked on a programme to implement GNSS. For the COMESA member countries that also fall within the SADC region, GNSS procedures have been developed for all of the major international airports. Building on this foundation, tests are currently taking place in South Africa, Namibia and Zambia.

EAC

GNSS, COSCAP and the Upper Airspace Control Centres (UACC) are consolidated under a single ‘Safe Skies Programme’ funded by the US Trade and Development Agency (USTDA). The GNSS pilot study for the regional implementation strategy and plan was undertaken with funding of US$200,000 from USTDA. A draft report has been prepared and will be reviewed by the Partner States in March 2005.

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ECCAS

No specific GNSS project being undertaken by the ECCAS Secretariat was identified. Along with the institutional support for the implementation of YD and COSCAP projects, this project has been integrated into a Project for Air Transport Liberalisation for West and Central Africa. For this, CEMAC represents the ECCAS region (please see below).

ECOWAS, UEMOA and CEMAC

A project profile has been prepared and the project costed. However, the implementation of the project has stalled due to lack of funding. It was anticipated the EU would lead the funding of the project. To date no funds have been received. The ECOWAS secretariat intends to continue consultations with member states and donors to provide the necessary funds.

IGAD No specific GNSS project being undertaken by the IGAD Secretariat was identified.

SADC

Within SADC, GNSS procedures have been developed for several major international airports. Building on this foundation, tests are currently taking place in South Africa, Namibia and Zambia. However, the total capital requirement for implementation of satellite-based systems will only become clear once the tests have been completed.

UMA

UMA report that this project has been completed as part of the European network.

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4.3.3.2 Challenges

Whilst the introduction of GNSS will undoubtedly bring long-term benefits, the investment requirements are significant, both for airlines and for African air traffic service providers. A key constraint to date has been the lack of adequate funding. In the short-to-medium term, it is likely that predominantly non-African airlines will be in a better position to invest in the necessary onboard avionics, particularly for the more profitable routes between Europe and Southern Africa. In the longer term, it is likely that investment costs will reduce as more equipment is fitted to aircraft fleets, thus opening up GNSS to African airlines. Many aspects of the GNSS/EGNOS system, however, are still to be fully tested in Europe and there are still some technical difficulties to ensure that the European EGNOS is interoperable with the US-based WAAP (Wide Area Augmentation Program). As a result, the implementation of GNSS in Africa is unlikely to be realised within the short-to-medium term. Indeed, in SADC the key constraint to date has been the length of time it is taking to carry out the testing of the system, due to the new technology that is involved.


ASECNA and other national ATM service providers with the support of RECs, African Civil Aviation Authorities and airlines, need to continue to test and develop GNSS. Progress will require substantial funding, and in some regions it may be possible to engage development partners, as well as the private sector, to fund this project. Due to the comparative size of the European-African (rather than the North American-African) route network, it is likely that funding will continue to come from Europe (e.g. the European Commission and EIB) rather than the US. Although it will be several years before GNSS is implemented across Africa as a whole, it is important to note that there are likely to be benefits to other transport sectors in Africa as well as aviation, e.g. maritime and rail.

It would be valuable to collate information on how this project was completed in UMA, including costings and a review of implementation and operation. There may be useful lessons for other projects and regions.

4.3.4 Upper Airspace Control Centres (UACC)

In Africa, as in many other parts of the world, each country has its own upper and lower airspace control centres. The Upper Airspace Control Centre project is designed to consolidate these into individual sub-regional centres, thereby reducing the number of ‘hand-overs’ between control centres and achieving economies of scale in terms of staff and equipment requirements. It will thus contribute to safer and more reliable air transportation in the continent.

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Summarised below are the findings of this review with respect to this project, by REC.

COMESA The COMESA Secretariat does not make a distinction between the GNSS and Air Space Control projects, but rather regards them as one integrated programme - the Communication, Navigation, Surveillance/Air Traffic Management (CNS/ATM) Systems.

Due to lack of funding, member countries could not develop an acceptable plan on how to implement the UACC, and consequently, the programme has not progressed as well as expected. In addition, a major long-term constraint is that legislative changes may need to be made by each member country, before this programme can be implemented. A COMESA Secretariat decision means that this programme will now be co-ordinated and harmonised with other sub-regional RECs such as SADC and EAC. The COMESA Working Group has accepted an offer of assistance from ICAO to help prepare a CNS/ATM Systems Project Proposal on how to take this programme forward. The capital investment required, will only become clear once this proposal has been prepared. Member countries’ Civil Aviation Authorities will then discuss the project and decide on the way forward.

EAC

GNSS, COSCAP and the UACC are consolidated under a single ‘Safe Skies Programme’ funded by the US Trade and Development Agency (USTDA). The programme includes plans for the establishment and administration of a Unified Upper Flight Information Region, which will be controlled by one UACC.

The EAC Secretariat is currently preparing Terms of Reference for a study on the implementation of such a UACC in the region.

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ECCAS The study on the UACC is yet to commence. ECCAS deliberately suspended this pending the result of the upcoming SADC study (see below).

ECOWAS, UEMOA and CEMAC

The ECOWAS secretariat has suspended work on this study pending the conclusion of the detailed feasibility study that will be undertaken shortly in SADC (see below). This decision was taken to build on best practices elsewhere in the continent and hence prevent a duplication of effort and waste of resources.

IGAD No specific UACC project being undertaken by the IGAD Secretariat was identified.

SADC

SADC has already undertaken a feasibility study of the implementation of a sub-regional UACC. This indicated that the project would be economically viable. A further study to investigate the institutional and financial arrangements for the Centre will be commissioned shortly and, subject to a favourable outcome, it is intended that an open tender would be launched for a privately-financed development (e.g. under a PPP arrangement).

UMA

No specific UACC project being undertaken by the UMA Secretariat was identified.

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4.3.4.2 Challenges

Air traffic services have been privatised in some countries of the world (e.g. in the UK and Canada) although there are no specific instances of the privatisation of a single Area Control Centre. In practice, there may be political difficulties as to where the centre should be located, the financial returns to individual Member/Partner States, etc. This has proved to be the case at the Central European Upper Airspace Control Centre, which will consolidate eight national UACCs at a single location in Vienna.

A further major challenge is that legislative changes may be required by each Member/Partner State. A key constraint is lack of adequate resources. This project seems to have progressed furthest in the SADC region - although it may prove to be difficult to attract private funding. The economic case for a UACC is likely to be strongest in Southern Africa due to the greater density of traffic and is likely to depend on whether GNSS is implemented or not. In the longer-term, however, there is no doubt that consolidation of UACCs at a regional level is essential to ensure the future safety of air traffic management across the continent.


The proposed SADC UACC will act as a pilot for the continent as a whole - subject to obtaining suitable funding. The precise institutional and financial arrangements need further assessment before this can be replicated to other regions.

4.3.5 Conclusions for the Sector

The NEPAD 2005 STAP review has indicated that progress in the implementation of the Yamoussoukro Decision has been variable across the continent. Those countries that have made substantial reforms to comply with the Decision have benefited from increased traffic levels and reduced air-fares as a result of enhanced market competition. In others, the lack of progress is due to the reluctance of governments to move away from restrictive practices, often to support comparatively small and unprofitable national airlines. An ‘open-skies’ approach is essential and reforms are needed to improve air safety and air traffic control management in compliance with international standards. At the sub-regional level, several RECs lack the technical capacity and funding to pursue these initiatives and there is a lack of coordination between the RECs to disseminate best practice.

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NEPAD STAP Review 2004 -Continental Synthesis Report The recent AU Ministerial conference (in May 2005) reaffirmed the need for the full implementation of the YD by all parties. Furthermore, it was resolved to establish a pan-African Executing Agency under the auspices of the AU, to reinvigorate the existing continental monitoring body by strengthening its functions and clarifying the role of its members, mandating it to harmonise the competition rules developed at the level of the RECs and to prepare and distribute to States Parties guidelines on the criteria for evaluating compliance with the Yamoussoukro Decision. These decisions, taken together, form a potentially useful step towards the full implementation of the YD with all the benefits this will bring for the development of a commercially viable and self-sustaining aviation sector.

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4.4 Road Transport The NEPAD road sector projects focus on facilitating measures to identify road network upgrade requirements based on a corridor approach and trade/transit facilitation through the development of one-stop border posts, harmonised transit documentation and other measures such as vehicle overload control.

4.4.1 Summary of Findings

A summary of progress being made on projects in each region is given below.

COMESA - Road Transport Facilitation

Establishment of One-Stop Border Posts

Two pilot projects are being undertaken.

■ The Chirundu border post between Zambia and Zimbabwe - a joint COMESA/SADC initiative. The single customs document developed by COMESA, to simplify customs procedures, is being utilised at this post.

■ The Malaba border post between Uganda and Kenya. USAID financed a needs assessment study and a draft business plan. The sub-Saharan African Transport Policy Programme has now provided funding for the appointment of a

consultant to work with both countries on legal reforms and an implementation programme.

A measurable output of each pilot project would be the anticipated decrease in transit times.

Implementation of Overload Control Along Road Corridors

Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) survey to review current vehicle overload practices in sub-Saharan Africa, was completed in August 2004 with the active participation of countries in COMESA and SADC regions.

Following the recommendations of the GTZ survey, the sub-Saharan African Transport Policy (SSATP) Programme, is financing a study of issues affecting the implementation of region-wide overload control.

Issues to be addressed will include: the harmonisation of weighbridge equipment and weighing procedures, the acceptance of tolerance limits, the use of the Overload Control Certificates and the actual management of weighbridges.

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Road Transport (continued) Facilitation continued

The key deliverable of the SSATP study will be the preparation of model guidelines and procedures, for use by member countries. The results of the study will be considered by a regional workshop and absorbed into an implementation plan. COMESA to appoint consultant to work with COMESA, SADC, EAC and other corridor management institutions on the SSATP.

COMESA/SADC Uniform Custom Document and Bond Guarantee Scheme Implementation framework and legal and technical instruments developed. Wide consensus achieved established ownership and commitment amongst stakeholders.

Identified banks and insurance companies in the region interested in participating in the scheme, and will be forming a National Sureties scheme and a Council of Surety.

Capacity Building

Strengthening Stakeholders Associations for Trade Facilitation

Ongoing dialogue and working relationship established with the COMESA Business Council.

4.4.2 EAC - Road Transport

Facilitation


Partner States have established the High Level Standing Committee (HLSC) for the EARNP to tackle the constraints and bottlenecks arising from the Corridor Network Programme and the Trade/Transport Facilitation Programme.

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Road Transport (continued)

Facilitation continued

The tripartite Road Transport Agreement has been signed (but Uganda is still to ratify it). The principal objective of this Agreement is to facilitate road transport through reduced documentation for crews and vehicles at the border crossing, harmonised requirements for operations licensing, customs and immigration.

A study on a Framework for joint utilisation of infrastructure facilities at border posts was undertaken in 2004.

A pilot study of a One Stop Border Post is ongoing at Malaba. A draft business plan has been prepared and USAID has agreed to fund Phase 1. The second and third phase of the project will include the installation of ICT and traffic management systems and the building of appropriate infrastructure.

Border agencies have utilised innovative approaches with the existing infrastructure to improve efficiency. This is evidenced by the practice of allocating desk space to officers of the adjoining country in each other’s border control facilities, the aim being to ensure that only a single physical checking procedure is undertaken in the transit from one country to the other thus reducing transit time.


■ Member States continue to share information on axle weight manipulation

■ Collaboration between SADC/EAC/COMESA/IGAD to harmonise regulations

■ Long term objectives and framework dependent upon COMESA/SADC led Study

Capacity Building


The East Africa Business Association (EABC) has received funding for a period of three years starting in early 2003, from GTZ, for a consultant to expand its activities and lobbying capacity in respect of facilitating trade in the region. In this regard the EABC is also advocating, amongst other things:

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Capacity Building continued

• a 24-hour 7 day a week operation of border posts;

• simplification of all border crossing procedures for both commodities and persons; and

• the encouragement of a more co-operative attitude by all border control

agencies.

The EABC has also carried out a survey of 600 companies to ascertain the barriers to

successful trade within the region.

Strengthening Stakeholders Associations for Trade Facilitation Case Study: EAC and EABC - REC and BUSINESS - in Partnership

Description • The East African Business Council (EABC) is an umbrella organisation whose membership comprises National Chambers of Commerce and Industry, Manufacturers’ Associations, Employers’

Associations, Investment Promotion Authorities, Export Promotion Boards and private corporations operating in East Africa.

• The organisation constantly monitors the business climate and works to speed political decision-making by lobbying at the highest level and works very closely with all relevant organs of the EAC.

Key achievements • Specifically, on transportation facilitation, EABC carried out a survey of 600 companies on the barriers to trade within the region and the report will be available shortly.

• Secured funding for a period of three years (2003 to 2006) for one consultant to assist with propagating its trade facilitation vision.

Key Constraint • Ongoing Technical Financial and Human Resources capacity.

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Vision and Priorities • The vision of the EABC is to promote the interests of East African companies of all sizes and in all sectors through policy advocacy and a forum for private sector discussion on policy issues. The EABC priorities include: • Development of SME and Micro-Enterprises

• Free movement of people

• Development of Infrastructure

• Governance and Security

• Non-Tariff Barriers • EABC demands include: border posts open 24 hours, 7 days per week. Harmonisation of Standards within EA without delay, simplification of border crossing procedures for both commodities and persons and enforcement of a more cooperative attitude of the police.

• The EABC argues that the cost of doing business in East Africa is one of the highest in the World and urges improvements in transport infrastructure which would go some way to ameliorating the situation.

Lessons to be learnt for implementation elsewhere

The close co-operation between the EAC and the EABC



Investment

The East African Road Network Project (EARNP) encompasses the separate road investment projects listed in the 2003 STAP review and has replaced them with five corridors. EAC aims to have implementation of the EARNP substantially completed projects by 2008. The road networks are illustrated in the diagram below.

Figure 4-10 East African Road Network - Revised Corridor Designation Corridor 1: Mombasa-Malaba-Katuna Corridor

Corridor 2: Dar-es-Salaam-Dodoma-Isaka-Mutukula-Masaka Corridor 3:

Biharamulo-Mwanza-Musoma-Sirari-Lodwar-Lokichogio Corridor 4:

Nyakamazi-Kasulu-Sumbawanga-Tunduma Corridor 5: Tunduma-Iringa-

Dodoma-Arusha-Namanga-Moyale

Sections/Links connecting with East Africa neighbours; those of interregional connectivity

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Table 4-8 East African Road Network - Summary statistics for ‘Original Plan’

Links Links Length Cost Funded Percent Corridor (no.) (funded) (km) ($m) ($m) funded

1 16 11 1,627 490 371 75.7%

2 16 15 2,097 734 684 93.2%

3 8 3 919 250 39 15.5%

4 4 1 1,121 394 105 26.6%

5 12 6 1,894 799 439 54.9%

Totals 56 36 7,658 2,666 1,637 53.18

Under the EAC Road Network Donor Conference (ERDC) programme a procedure has been established for the identification of weak transport links and the assessment of the capital commitment required for implementation of projects. The WB, EU and ADB have participated in the funding of the EARNP ‘Original Plan’. EAC carried out a second round of project identification, known as ‘additional links’. These refer to branches to provincial centres, by-passes, ring road and alternative routes. The table below shows the funding status for these additional links.

Table 4-9 East African Road Network - Summary statistics for additional links

Links Links Length Cost Funded Percent Corridor (no.) (funded) (km) ($m) ($m) funded

1 16 2 1,877 519 63 12.1%

2 9 0 451 141 0.0%

3 7 1 1.147 322 40 12.4%

4 1 0 93 33 0.0%

5 6 0 869 295 0.0%

Totals 39 3 4.437 1.3096 103 24.5%

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4.4.3 ECCAS - Road Transport

Facilitation Road Transport Facilitation Action Plan

Feasibility studies funded by PROINVST are ongoing. This will evaluate the existing road facilitation programmes in which the Central African Countries are involved and develop a comprehensive facilitation program and associated action plan for the region. No further information was available.

Capacity Building

Strengthening Stakeholders Associations for Trade Facilitation No information was available.

Investment

Fougamou - Mouila - Ndende - Doussala Road Project

This road is a part of the regional integration network and part of the TransAfrican road Tripoli - Windhoek. In 1998 a pre-feasibility engineering study was undertaken. This needs to be updated and transformed into a full feasibility study. ECCAS is preparing a request to IPPF (NEPAD Infrastructure Project Preparation Facility) to fund the updating of the 1998 studies. This will be submitted to the ADB by mid 2005.

ECCAS lacks the human and financial resources to progress the development of this project.

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Study Feasibility Study of the Doussala/Gabon Border - Dolisie Kinkala - Brazzaville Road

This road is a part of regional integration network and part of Trans-African Road Tripoli - Windhoek. When completed it will strengthen regional integration and reduce transport costs.

The project definition has been agreed to by CRNEPAD/CA (Central Africa NEPAD Unit). Terms of reference are being prepared to be agreed by Congo and the ECCAS Secretariat.

Feasibility Studies of Rail/Road Bridge Brazzaville - Kinshasa

This is a sub-regional link to promote regional integration and spur economic development in DRC and Congo.

Terms of reference are being prepared. It is envisaged that a project steering team will be put in place following the next regional summit.

Transport Recovery Studies in Angola and DRC

The projects are managed by the individual countries, without the involvement of the Secretariat.

4.4.4 ECOWAS - Road Transport

Facilitation

Road Transport Facilitation Action Plan/Establishment of One-Stop Border Posts

ECOWAS/UEOMA have jointly devised and validated a regional road transport and transit programme.

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Road Transport Facilitation Action Plan / Establishment of One-Stop Border Posts

ECOWAS has obtained a Policy and Human Resources Development (PHRD) grant of approximately USD$1m from the Japanese Government, for the preparation of the transit facilitation programme. TOR have been prepared to undertake studies on:

■ Axle load control and harmonisation in West Africa.

■ Harmonisation of vehicle technical inspections.

■ Road Tracking System.

■ Computerised interconnection of customs systems.

■ Port security audit.

■ Institutional arrangements on joint-border posts.

A feasibility study has commenced on the suitability of the Road Tracker module of the Advance Cargo Information System (ACIS) funded by ADF in September 2004. Phase two of the study will be funded under the Japanese PHRD grant.

A study has been undertaken to establish the legal status of joint border posts and management of corridors. ECOWAS is considering the report.

An evaluation of conditions pertaining to the transit of goods at the Seme/Krake Plage post on the Benin-Nigeria border has been undertaken. The study concluded that the current organisation of road checks of goods in transit at the border posts does not conform to the provision of the ECOWAS Conventions. ECOWAS is awaiting the outcome of further studies by UEMOA, who are working on a pilot joint-border post. Tenders have been advertised for the construction of the joint control post at the border between Burkina Faso and Togo.

With respect to the establishment of observatories to monitor and audit bad practices

along the corridors UEMOA has commenced preliminary studies on road checkpoints.

ADB has agreed to fund a study on Inter-State Transit Operations and Guarantee System

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Investment

ECOWAS has identified a 20,000 km priority road network comprising the Trans West African Highway, the Trans-Sahelian Highway and other roads linking landlocked countries to seaports and other important trade links. A survey is about to be conducted to prepare a road infrastructure improvement programme (USD$432,000 of the PHRD grant will be used for the preliminary feasibility study). The Programme Routier One road project Accra/Ouagadougou/Bamako (PR1) is currently being implemented with funding from ADB. The World Bank is currently considering financing a USD$100m road rehabilitation programme including a transit facilitation component for Benin, Burkina Faso and Ghana.

There are seven road infrastructure improvement projects for which information on progress was not available, as they are overseen by UEMOA.

4.4.5 IGAD - Road Transport Facilitation


IGAD is seeking financial support to develop a framework for overload control along road corridors. The immediate funding requirement for the study is USD$45,000 and the ADB, Economic Commission for Africa (ECA), EU and other donors have been approached for funding.

Capacity Building


The TOR of the study component of the project has been completed. IGAD had made funding requests to NEPAD/ADB, EU, ECA and other donors for possible financing. IGAD has not been able to secure the USD$70,000 required for the study.

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Investment

Djibouti Addis North Highway

The EU financed a pre feasibility study in 1997. Completion of a feasibility study and detailed engineering design is planned for 2005. The EU has earmarked Euro 32 million for the feasibility study, detail engineering design and the upgrading of the road. The financing agreement between EU and the Government of Djibouti has yet to be concluded.

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4.4.6 SADC - Road Transport

SADC has designated a Regional Trunk Road Network (RTRN) consisting of nearly 18,000 km of the region’s main road network. The RTRN comprises the roads that link countries or the major cities and economic activity centres of the region. The RTRN also constitutes the sub-regional road transit or trade and travel routes (see Figure 4-11).

Figure 4-11 SADC Regional Trunk Road Network (RTRN) Source: ‘SADC - NEPAD Short-Term Action Plan - Infrastructure (STAP): Review of Implementation Progress And The Way Forward’ by ADB (Tunis, July 2003)

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Facilitation


The SADC region has concentrated on the establishment of unified procedures and systems within the existing legal framework, rather than wait for comprehensive legal reforms in Member States or indeed the construction of new facilities. The current focus aims to improve the productivity at existing border posts, which in turn will speed-up the processing of people and goods passing through the border posts (thereby also making the border posts far more user-friendly). The projects SADC has supported include pilot one-stop border post schemes at Mutare and Chirundu, which include training and harmonised documentation. SADC recognises however, that due to delays in obtaining the necessary legal reforms in Member States and difficulties in funding, that full implementation of such facilities should be considered as a long-term objective.

A separate Pilot Project has been implemented by USAID along the Trans Kalahari Corridor, involving Namibia, Botswana and South Africa.


A key initiative was the 2004 survey conducted to review current vehicle overload practices in sub-Saharan Africa. Nearly all of the countries that provided information for the survey came from COMESA and SADC regions. The survey established various issues that impact on overload control management and in part recommended the adoption of SADC Model Legislative Provisions (MLP) on the Management of Vehicle Loading, as a foundation to build on. Following on from the recommendations of the 2004 survey, the Sub-Saharan African Transport Policy (SSATP) Programme has provided funding for a study to review examples of best practice in vehicle overload control and to prepare model guidelines and procedures for the implementation of region-wide overload control. Across the SADC region, there are several on-going initiatives based on linking weighbridge certificates to the border clearing process.

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COMESA/SADC Uniform Custom Document and Bond Guarantee Scheme

■ This project is managed by the COMESA Secretariat.

■ Implementation framework and legal and technical instruments developed.

■ Wide consensus achieved, established ownership and commitment amongst stakeholders.

■ Identified banks and insurance companies in the region interested in participating in the scheme, by forming National Sureties and a Council of Surety.

Capacity Building Strengthening Stakeholders Associations for Trade Facilitation

This project holds a low priority status at SADC and is currently under review by the SADC Secretariat.

4.4.7 UMA - Road Transport

Investment

Maghrebian Highway Project

The UMA REC has focused on the completion of the 7,300 km Maghreb Highway linking Nouakchott - Casablanca - Algiers - Tunis - Tripoli - Messad. Progress on the project is monitored by the authorities in each country, with little involvement by UMA. Financing is from ADB and the individual states. Many sections of the network have been completed, according to national priorities these total about 1,000km

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4.4.8 Sector Overview

Despite increasing traffic volumes, many of Africa’s road networks are in a poor state of repair. Rehabilitation and, in certain cases, the construction of new roads is essential to provide a safe and efficient transport system both for private users and for freight traffic. This will require new innovative financing and management approaches, which will combine public sector financing and performance-based contracts for the Design, Build & Maintenance of road infrastructure assets.

However, even with new infrastructure, the effectiveness of the road network at a pan-African level is often limited by time-consuming, bureaucratic and ultimately cost-inefficient delays at border crossings. The NEPAD initiative to implement one-stop border crossings is however hampered by a lack of legal and institutional reform. In this respect, governments will need to be continually urged to translate their commitments to regional agreements into effective actions within their respective countries.

4.4.9 Challenges and Recommendations

Key challenges: Key recommendations: • Simplification of cross-border procedures and

harmonisation of documentation.

• Reducing transit and processing times at border

posts.

• Elimination of unofficial checkpoints/bottlenecks.

• Infrastructure asset management: Axle Load controls

and ongoing maintenance.

• Legal complexities, lack of political will.

• Institutional resistance to reforms.

• NEPAD and REC’s should continue encourage countries to implement agreed regional treaties and

convention with respect to the free movement of

persons and goods.

• NEPAD should further consider establishing a peer

review and alignment mechanism for minimal

disruption to border traffic and the removal of road

blocks.

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4.5 Rail Transport There are three types of NEPAD STAP project in the railways sub-sector, namely capacity building projects, investment projects and studies. Progress on each of these is summarised below.

Capacity Building Projects

Institutional Support for Kenya, Uganda, Tanzania and TAZARA Railways - EAC

Kenya and Uganda Railways (Joint concession): The tender process was launched in September 2004. Pre-qualification of bidders completed in October. It is expected that the concession will be awarded in July 2005 and commissioned in December 2005. Tanzania Railway: Concession bids were submitted in December and the preferred bidder should emerge by March 2005. The concessionaire is expected to be operational in June 2005.

It is expected that a planned World Bank project on Trade and Transport Facilitation for Eastern Africa will offer explicit support to railways concessioning including resettlement and retrenchment issues.

Other institutional support includes the proposed formation of a high level standing committee, along the lines of the High Level Standing Committee (HLSC) of the East African Road Network Project.

Institutional Support for the Concessioning of Railways - SADC

Many of the countries in the region have concessioned their railways. Swaziland has also embarked upon the concessioning process and in this regard is planning to launch a feasibility study.

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Rail Transport (continued)

Investment Projects Rehabilitation of selected EAC and SADC Railways

In March 2004 the EAC the Heads of State Summit directed that an EAC Railways Development Master Plan be put in place urgently to guide the development towards a vibrant railways system for East Africa.

In line with this directive, in November 2004 the Sectoral Council of Ministers approved the Terms of Reference for the Study on the Master Plan. GTZ and the Finnish Government are funding the study, which is expected to be completed in 2005.

The Master Plan will address physical infrastructure requirements as well as policy, regulatory and institutional issues at the national and regional level.

Study Projects Rail Inter-Connection Feasibility Study for Central African Countries

ECCAS is drafting terms of reference for this study. ECCAS is also preparing additional information to support its application for funding from the ADB.

Rail Inter-Connection Feasibility Study for ECOWAS

A Study Implementation Unit (SIU) has been established to oversee the programme

and a consultant recruited in October 2004 with ADB assistance.

ADB has approved funding of USD$3.31m for the study.

The Procurement process to recruit consultants for the study has commenced with a Request for Proposals launched in November 2004. The final report is expected mid 2006.

Feasibility Study for the Trans Maghreb Railway

The project envisaged consists of improvements to 8,500km of existing track in Morocco, Algeria and Tunisia plus a new line to be built connecting Tunis and Tripoli.

A feasibility study has been completed for a line between Rasjedir (on the Tunisian border), Tripoli and Mesrata. This line will connect Libya to the Tunisian network.

Information was not available as to the status of the other associated feasibility studies.

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Rail Transport (continued)

Study Projects continued

Feasibility Study for the Trans Maghreb (High Speed) Railway System

Terms of reference for this study have been drafted by the Commission Ministérielle Spécialisée chargée de l’Infrastructure de l’UMA. No funding has yet been secured for the study.

Key challenges:

• Poor condition of rail infrastructure and rolling

stock, coupled with low traffic volumes.

• Huge investment outlay required for rolling

stock and infrastructure.

• Substantial difficulties in integrating rail

networks in the continent, particularly in North

and West Africa.

• A range of institutional and commercial factors

needs to be addressed with respect to cross

border rail concessions.

• Rail system often viewed as key national asset

which should not be concessioned to the

private sector.


• Further studies need to be undertaken in many

regions to ascertain what parts of each network are

commercially viable or that can justify Government

or other financial support on social grounds or in

terms of its value to the economy.

• Encourage RECs to establish databases of the types

of individual projects needed - e.g. improvements to

track, signaling and communications, other fixed

installations and rolling stock.

• Focus efforts on devising and implementing

strategies to attract further investment in the

modernisation and extension of the continent’s

railway networks and rolling stock.

• Deepen and fast track concessioning process.

• In regions such as ECOWAS, where there are

already five existing railway concessions in

operation, NEPAD should promote effective policies

that balance competition between railways and

roads (as far as possible) and, most importantly,

redefine the long-term role of government in railway

infrastructure investment.

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4.6 Maritime In the maritime sub-sector, the STAP projects have focused on the development of key ports, particularly those offering corridor links through to landlocked countries, improvements in the navigation on the Central African Lakes and increased safety and security standards for ships and ports. A summary of the progress being made in the implementation of these projects is given below.

Facilitation

Safe Navigation on Lakes Tanganyika and Malawi/Niassa/Nyasa - COMESA & SADC

Malawi and Mozambique, and Malawi and Tanzania have signed bi-lateral lake services agreements on shared lake transport. A Task Team made up of staff from Maritime Authorities of the countries involved, will shortly commence the drafting of a Model Agreement to provide a legal framework for co-operation between countries.

The Malawi Government has updated hydro-graphic charts for Lake Malawi, on the Malawi side of the lake. Plans are being made to extend this update to the other areas of Lake Malawi, as well as to Lakes Tanganyika, Niassa and Nyasa.

Safe Navigation on Lake Victoria - ECA

This project is now subsumed within the Lake Victoria Basin(LVB) initiative which is under the purview of the Lake Victoria Basin Commission (LVBC) an organ of the EAC. See Figure 4-12 Organisation Structure below.

Since the signing of the Protocol for the Sustainable Development of the LVB and the establishment of the LVBC the following has been undertaken: • Consultants have been appointed to undertake a transboundary diagnostic analysis and prepare a strategic action plan as part of the Three River Basin Integrated Water Resources Project funded by the World Bank and Global Environmental Fund. • Procedures and Regulations of Partnership on Victoria Lake Basin projects have been agreed between EAC, ADB, France, Norway and Sweden and a pool of funds is available for feasibility studies and investment.

With specific reference to the Safe Navigation component of the LVB initiative the

main achievements since 2003 were as follows:

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Maritime (continued)

Facilitation continued A draft Lake Victoria Transport Bill has been prepared and is expected to be approved in 2005.

The Maritime Task Force has recommended that a study be undertaken to explore possibilities for the establishment of the Safety of Navigation Levy Fund primarily to finance safety of navigation activities in the Lake Victoria Basin.

Instruments of Ratification on the Tripartite Agreement on Inland Waterways and Agreement between Government of Kenya, Tanzania and Uganda concerning Search and Rescue were lodged in November 2004.

The EAC Secretariat has prepared a project proposal on Maritime Communications Infrastructure for Lake Victoria for consideration under SIDA’s three-year support programme (2005-7).

The Government of France has disbursed funds of about USD$70,000 for the first phase of preparations for the seminar and workshops on the Lake Victoria Safety of Navigation Project

The Icelandic International Development Agency (ICIEDA), has indicated its readiness to support the hydrographic survey of the Lake Victoria. Further to this, DFID has donated a vessel to be used for the hydrographic survey and, later, for installing aids to navigation. EAC expects to take over the vessel in March 2005.

EAC has secured Canadian funding to organise a workshop on search and rescue in the lake.

Maritime Security and Facilitation - ECOWAS

ECOWAS holds regular consultation meetings with IMO and the Port Management Association of West and Central Africa (PMAWCA) to facilitate progress on this project. A Regional Action Plan has been developed for the implementation of the code. Many countries in the region have ratified this code and are in the process of implementing its requirements (e.g. establishing security committees and formally identifying threats).

A Regional Action Plan on maritime transport has also been developed and Cabotage Regulations on coastal shipping drafted with a view to encouraging regional shipping operators.

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Maritime Pollution - ECOWAS

ECOWAS has made a decision to minimise its efforts on this project until more progress has been made on the regional maritime security and facilitation project. Advisory Services for Maritime Affairs; Maritime Safety and Facilitation of Marine Traffic; Regional Strategy for Ship Waste Reception Facilities - SADC

These are currently low priority projects, which are under review by the SADC Secretariat.

Investment Nacala Port (Mozambique) Rehabilitation

The Feasibility Study has been completed and the concessioning of the port is currently being implemented. In January 2005 the Corredor de Desenvolvimento do Norte (CDN) agreed a 15-year concession to operate the Nacala port and railway. Upgrading of container handling facilities at the port of Mombassa - ECA Information on this project was not available

Port of Djibouti and Dry Port at Addis - IGAD According to the information obtained during the mission to the IGAD Secretariat, the

Port of Djibouti project has been successfully completed. Indeed the port has now

been privatised and is currently operated by Dubai International Port Authority.

The Secretariat did not have further details of the rehabilitation and privatisation of the

port. With respect to the Dry Port at Addis, the pre-feasibility study of the project has already been completed, financed by the EU. In 2004, the ADB incorporated the project in the Appraisal Report of Mombassa-Nairobi-Addis Ababa Road Corridor

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Investment continued

Development Project, which is being financed by the Bank. USD$ 2.2 million has been earmarked to finance the feasibility study and detailed engineering design for the Dry Port component. The project is scheduled for completion in 2008.

ECOMARINE (Proposed New Project) ECOWAS

The objective of this project is to expand coastal shipping services in the region and thereby stimulate intra regional trade.

Study Feasibility Study of the Port of Mayumba

ECCAS and Gabon are preparing terms of reference for the feasibility study. It is anticipated that the port will be developed on a Build-Operate-Transfer (BOT) basis.

Figure 4-12 LVBC Organisational Structure

EAC ICT Carrier Ecosystem

Project - Refer Conservation to ICT Projects Management

Lake Victoria Basin

Commission

Safe Environ Navigation on mental Lake Victoria Management

Lake Victoria Fisheries Organisation

Fisheries 3 River Basin Management Water

Plan Resources Hydrography Aids to Search & Maritime

Navigation Rescue Legislation

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Key challenges:

• Ports are still seen as a key national asset,

which deters accelerated implementation of

concessioning programmes.

• The need for modernisation and rehabilitation

of many state-owned ports throughout the

continent to meet trends in shipping.

• Safe navigation on Central African lakes is still

a key issue.

• Security remains a key concern and priority,

particularly at several West and Central

African ports.


• Port infrastructure and facilities should be

modernised to facilitate improved commodity flows.

• Integration with rail links should be improved,

especially where ports form part of regional

corridors.

• Continued focus on and vigourous efforts to improve

port safety and security.

• The capacity at REC level to address issues in the

maritime sector should be improved.

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4.7 Water This review reports on progress being made on projects assessed within SADC, IGAD and ECCAS, which were the only RECs to provide data on water projects. The River Basin organisations were not visited during the course of this review. UEMOA, which oversees the management of the STAP water projects within the ECOWAS region, was also not visited due to some logistical difficulties. Hence, no updated information was obtained on the projects under the auspices of these organisations.

4.7.1 Summary of Progress

Progress being made on projects for which information was available is summarised below.

Capacity Building Projects

Support for the Management of Water Resources in Central Africa - ECCAS

Terms of reference for the institutional study to establish the executing agency, are being finalized.

Strengthening of the Niger River Basin Authority Inter-State Forecast Centre (CIP) & Support of other New and Existing River Basin Organisations - ECOWAS/UEMOA No information available.

Facilittion Projects Hydrological Cycle -IGAD

Project documentation prepared by the World Metrological Organisation (WMO) and IGAD has been submitted to the EU and the Inter-Regional Coordination Committee (IRCC) for consideration and funding. The IRCC (COMESA, EAC, Indian Ocean Commission and IGAD) had previously earmarked Euros 5 million under the 9th European Development Fund (EDF) for funding of this project.

Expansion of SADC Hydrological Cycle Observation System (HYCOS) projects - SADC

Phase 1 (pilot project) was successfully implemented and is now operational. The regional project management centre in Pretoria has been established is operational.

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Water (continued)

Facilitation Projects continued)

Assessment of Surface Water Resources - SADC The SADC Council has approved project plans.

Ground Water Management programme for the SADC Region

Global Environmental Facility of the World Bank has approved project funding of USD$8m subject to an additional USD$4m being secured from other sources. Guidelines and Support for National Water Sector Policy and Strategy Formulation or Review in Member States - SADC

Appropriate supporting protocols, policies and guidelines have been drafted and a Euro 2.5m facility established to assist member countries. Nile Basin Initiative - COMESA Work has started on the Water Policy Component of the project. Some draft national reports have been circulated to the main stakeholders. Recruitment and some administrative frameworks for the implementation of the other projects are underway..

Study Projects

Action Plan for integrated Water Resources Management in West Africa - ECOWAS/UEMOA No information available.

4.7.1 New Initiatives in the Water Sector

Following from the previous review, and in recognition of the importance and unique challenges of the water sector, a parallel initiative was prepared, in the form of a NEPAD STAP specifically for Tran boundary Water Resources. Preparation of this report was undertaken in parallel with this review and was published in March 2005.

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Water (continued)

The strategic goal adopted for this sector-specific STAP is to strengthen the enabling environment for the effective cooperative management and development of Tran boundary water resources and initiation of the implementation of prioritised programmes, thereby contributing to socio-economic development and poverty reduction.

An important development in this sector was the launch of the African Water Facility (AWF). This facility has been established as a specific water fund managed by the ADB. It is intended that the AWF will seek to improve the enabling environment and strengthen water resources management so as to attract the substantial investments necessary for the development and management of water resources, meeting urgent continental water needs, strengthening the financial base for sustainable and effective water distribution and governance.

The preparation of the NEPAD STAP for Transboundary Water Resources and the establishment of the African Water Facility are significant steps, which it is hoped will facilitate the implementation of already identified critical projects in this vital sector.

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4.8 REC Capacity Building Projects REC Capacity Building Projects

The raison d’ëtre for the inclusion of the REC Capacity Building Project within the STAP was the recognition that a pre-requisite for the accelerated implementation of the NEPAD projects is for RECs to dramatically increase their capacity both on a short and long-term basis. This review found that only two RECs (ECOWAS and EAC) had approached this project in a strategic manner by devising a detailed plan to augment capacity, taking into account their new role as implementation organs of NEPAD in their regions. These RECs have also put forward their plans to development partners and encouraged them to support where possible in a collaborative manner. This strategic approach has resulted in significant progress of their initiatives - see the box below.

Notable REC Capacity Building initiatives - EAC and ECOWAS EAC

A recruitment drive to increase staffing levels.

Establishment of a NEPAD co-ordination desk.

The establishment of a transport sector co-ordination unit.

Establishment of an EAC Development Fund.

ECOWAS

Recruitment drive and ongoing training of staff.

Enhancement of budgetary planning financial management, and ICT systems.

Measures to improve the monitoring of the implementation of the community levy scheme.

Proposals for the establishment of a Roads transport Unit and an Aviation Unit

Approval for the creation of a dedicated NEPAD project development and

implementation unit.

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REC Capacity Building Projects (Continued)

In COMESA and SADC, whilst there was no evidence of a strategic plan for improving capacity, there was evidence of various independent initiatives to augment capacity. This approach however does not seem to have yielded the same results as are currently being achieved in EAC and ECOWAS.

UMA has appointed a key manager as the NEPAD focal point person, but staffing capacity is still low. ECCAS and IGAD, however, had not yet embraced the capacity building programme concept.

The Way Forward

At the NEPAD Abuja meeting in March 2005, the following actions were agreed at the workshop on mechanisms for capacity building of RECs and speeding up implementation of NEPAD infrastructure STAP projects:

■ The NEPAD Secretariat and African Capacity Building Foundation (ACBF) should expedite finalisation of the Terms of Reference for the Capacity Building Needs Assessment Study that the ACBF is to undertake on behalf of the Secretariat.

■ The NEPAD Secretariat and ACBF should launch, no later than April 2005, the capacity needs assessment study. The assessment should differentiate short term needs to accelerate and implement priority NEPAD projects, from medium to

long term needs to implement the NEPAD Infrastructure Programmes. The assessment should also differentiate between overall capacity needs and specific project-by-project needs for the priority projects. The assessment should be completed within three months of launching the exercise.

■ Within the framework of the capacity needs assessment study, the RECs, in collaboration with ACBF should, amongst other things, assess their capacity needs in terms of:

• Policy harmonisation and facilitation to ensure implementation of regional agreements/treaties.

• Project preparation, development, and implementation for both facilitation and capital investment projects.

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REC Capacity Building Projects (Continued)

■ Within the framework of the capacity needs assessment study, the RECs, in collaboration with ACBF should design capacity building programmes and initiatives, cost them, and package them into project/programme proposals to be submitted to development partners for funding. The proposed programmes should also draw on the use of African capacity in the Diaspora. ■ The NEPAD Secretariat and the ADB should assist the RECs in mobilising funds for the capacity building programmes. Many RECs are awaiting the report of the findings of the ACBF, which are due by the end of August 2005, following which they will embark on the capacity-building process agreed in Abuja.

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5. Catalysing Private Sector Participation in the Implementation of STAP

5.1 The Private Sector Opportunity The private sector is envisaged to play a leading role in the implementation of the STAP. Indeed, it is expected that half of the total cost for the implementation of STAP will be financed by the private sector. The concentration thus far has been on facilitation and capacity-building projects and studies. This reflects recognition by NEPAD and the RECs that facilitation and capacity-building projects help create the environment into which Private Sector Participation (PSP) can be attracted. This emphasis is reflected in the fact that only 36%8 of STAP projects are investment projects.

However, whilst success in these facilitation and capacity-building projects is a prerequisite for achievement of the accelerated implementation of infrastructure in Africa, it is by itself insufficient. There must be real, concrete, physical or capital investment that delivers infrastructure “on the ground”. The review identified a number of specific project opportunities for private sector participation across the infrastructure sectors. These opportunities are outlined by sector in the table below:

Table 5-1 Projects Offering Potential Opportunities to The Private Sector

Energy

■ WAPP - 19,000 MW Capacity + Transmission Lines + Power Pooling by 2011

■ SAPP - 8,800 MW Capacity + Transmission Lines + Power Pooling by 2010

■ Development of Inga

■ East African Power Pool

■ 2nd Phase 1200 MW IPP - Algeria

■ Algeria-Spain Interconnection

■ Kenya Uganda Oil Pipeline

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Catalysing Private Sector Participation (continued)

ICT

■ RASCOM - including earth stations

■ COMTEL

■ EASSy

■ Regional ICT Backbones / Carrier Companies

Air Transport ■ Open Skies, GNSS and UACC should simplify air travel and reduce costs, thus offering opportunities for:

• Mergers, alliances and code-sharing partnerships to create regional airlines with significantly lower operational costs.

• Corresponding demand for airline industry support services.

■ UACC - service provider

Road Transport

■ Kati-Saraya Road Project

■ Mamfe-Enugu Road Project

■ Isiolo-Moyale Road

■ Ethiopia Djibouti Road Corridor

■ East Africa Road Network Project

■ Kanzungula Bridge

■ Road Axis Libya - Niger – Chad

■ Road Axis Libya - Sudan - Eritrea

■ Doussala-Fougamou Highway

■ Implementation Philosophy - Design Build Operate Maintain

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Rail Transport

■ Railway Concessions - EAC region

■ Trans-Maghreb Railways

Maritime Transport ■ Port Mayumba

■ Mombassa Port Container Handling

■ Addis Ababa Inland Freight Terminal

Notwithstanding the existence of these opportunities, a recent World Bank survey noted that private sector participation in infrastructure investments in Africa has been limited as shown below. Figure 5-1 Private Sector Investment

Private investment in infrastructure has declined sharply from its

peak and is not recovering quickly Source: PPI database World Bank, Price WaterhouseCoopers

Indeed Africa’s share of PPI investments worldwide is only 4% of which 51% is invested in the telecommunications sector. Given the existing and potential opportunities for PSP within the STAP, the review attempted to identify the perceived constraints of the private sector in actively participating in STAP, and to identify actions and strategies that could catalyse a scale-up of the participation of the private sector in the implementation of STAP.

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5.2 Constraints 5.2.1 Private sector perception of STAP

In terms of the private sector’s perception of the NEPAD STAP a number of constraints were identified during the review. These include: • Lack of private sector awareness of STAP.

• Limited number of physical investment projects.

• Limited information on the projects and sponsors.

• Project preparation and structuring not well advanced in a number of projects.

5.2.2 Obstacles to PPI in Africa

Whereas the above relates specifically to STAP, there is the wider issue of the low level of Private Participation in Infrastructure (PPI) investment in Africa in recent years, and the reasons underlying this trend. The reasons for the limited level of PPI investments is attributable to several factors, which can be grouped under two broad headings: (i) macro level, and (ii) project level.

Figure 5-2 Limited Private Participation in Infrastructure

Perception of poor investment climate and high cost of project development top the

list of obstacles

Macroeconomic level

• Perception of poor investment climate. •

Partially liberalised poorly regulated

sectoral markets.

• Low availability of instruments and

structures to mitigate risk.

• Limited development of local capital

markets.

• Non-African externalities e.g. increased

home market consolidation, capital

following high growth opportunities.

Project level

• High cost and risk of project

development.

• Shortage of risk capital for early stage development work.

• Capacity and institutional weaknesses of

the public sector when acting as project

sponsor.

• Poor perception by private sector of MFI's and other Africa infrastructure specific funds.

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In addition to the above, there is a perception among the African private sector that there is a lack of policies and structures to encourage them to diversify into the infrastructure markets. This, in their view, is a missed opportunity because they believe it is only through their active involvement that sustainable capacity for infrastructure development can be built throughout the continent.

Figure 5-3 Approaches to address key investment obstacles

The ADB’s Private Sector Department is developing approaches to address key

investment obstacles

Perception of investment climate

Development of policy reforms:

• PS Country profiles

• Corporate Governance

• Cases: Algeria PS Country Profile

Seminar in Abuja, March 2005

Poorly regulated Legal and sectoral markets regulatory aspects

• NEPAD action in • Privatisation studies regional sectoral

planning • OHADA

• Ability to work with non sovereigns

• PPP work

• Case: NEPAD e-commission

High cost and risk of project development

• Dissemination of best practices

• Use of trust funds to develop

infrastructure projects

• Case: Feasibility study of RASCOM

Availability of instruments to mitigate risk

Development of guarantee use

• Enhance private loans

• Enable transactions in local currencies

• Help covering political risk

• Case: MTN

5.3 Agreed actions for scaling-up Private Sector Participation in STAP

The May 2005 Seminar9 on Fostering Private Investments in NEPAD Infrastructure Projects agreed that in scaling up private sector participation in the NEPAD infrastructure programme, there is the need for a new paradigm, containing a coherent package of innovative approaches and solutions to be undertaken simultaneously. The recommendations from the seminar include the following:

• The need for greater sensitisation of African governments on the cost of political risks.

• Acceleration of policy initiatives, reform and actions to improve the investment climate within African countries.

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• Implementation of innovative approaches in the financial and legal structuring of projects.

• Improve awareness of, and accessibility to, existing instruments for risk mitigation; and a need to design more flexible instruments and innovative structures that better respond to the unique challenges of African infrastructure projects.

• Devise structures and instruments to leverage and channel financial resources from the African Diaspora, as well as domestic savings e.g. pension funds, within the continent for investment in infrastructure projects.

• Formulate policy initiatives and implement measures to enhance the capacity of African private sector organizations and to promote the participation of African entrepreneurs in the implementation of the NEPAD Infrastructure agenda.

• Strengthening capacity within the countries and Regional Economic Communities (RECS) with respect to the development and implementation of bankable PPP projects.

NEPAD, ADB and the RECs should develop action plans for the implementation of the above recommendations.

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6. Overarching Constraints Overall, progress has been made under the NEPAD STAP agenda. In particular, the brand name and its aims have become firmly established and accepted both within and outside the continent. Further to this, there is now clearer definition and better understanding of the roles and responsibilities of the various stakeholders with respect to the implementation of the STAP. Additionally, two significant cross-border infrastructure investment projects have achieved financial closure - WAGP and RASCOM Phase 1. However, much still remains to be achieved if the full benefits of STAP are to be realised. Specifically, projects are still taking far too long to be implemented.

This section of the report outlines typical implementation time-frames for facilitation and investment projects. This is followed by an examination of the issues and obstacles identified as overarching constraints that were handicapped timely and effective implementation of STAP programmes and projects.

6.1 An Overview of Project Implementation Time-frames 6.1.1 Facilitation Projects and Programmes

This second STAP review revealed that a typical facilitation programme/project process contains the following critical stages and time-line.

Figure 6-1 An overview of a typical facilitation project process

Setting Regional Objectives

Determining Programme Regional Planning Sector Policy/

Master Plan

Inter National Governmental Ratification

Agreements and Adoption

Enactment Full of National implementation

Laws ‘on the ground’

6-9 6-9 12-18 6-12 2-3 years+ 2-3 years+ 3-5 years+ months months months months

Cumulative time elapsed: typically 6 to 15 years +

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Overarching Constraints (continued)

An illustration of the timeframe taken is evidenced by the fact that many countries, after a decade since signing up to regional agreements such as road transit facilitation programmes, have still not fully implemented the requisite legal, regulatory and operational reforms. In this same vein, no country was found to be fully compliant with the Yamoussoukro Decision, even though the Decision had called for full compliance by 2002 by all countries.

6.1.2 Investment Projects

The review also highlighted that a typical regional investment project process follows the following critical path and time-line.

Figure 6-2 An overview of a typical investment project process

Initial IG

Total Project Preparation Process:

Construction:

Economic Life agreements: 8 years + (dependant on (or Operational

9 to 18 months technical Contract) complexity)

Project

Member/Partner States Inter Governmental

M OU

Typically, a number of additional Inter Governmental MOUs and even new treaties may be required, before an investment project can achieve financial closure.

Project definition Project c o n c e p t i on/ leading to c o n s t r u c t i on/ Operations

feasibility financial execution c l o s u re

The total project preparation process (i.e. both of these phases combined) will include, inter alia: (i) Pre-feasibility study. (ii) Inter-governmental negotiations. (iii) Technical, economic and financial viability feasibility studies. (iv) Environmental impact assessments. (v) Detailed engineering design and costing studies. (vi) Finalisation of funding negotiations/documentation. (vii) Procurement process, including tendering and contractual

negotiations. (viii) The dedicated management of all of the above.

The review revealed typical time-frame from conception to financial closure is on average 10 years or more.

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Some examples of investment project timeframes revealed by the review are:

• WAGP: 12 years from conception to financial close.

• Grand Inga: Pre-feasibility study undertaken between 1993 and 1997. There has been no significant progress on the project.

• Kenya-Uganda Oil Pipeline: Intergovernmental MOU signed May 1995. Feasibility study was undertaken in 1999 and updated in 2001. Currently private partners are being sought with a view to implementation in 2006/07.

6.2 Factors Contributing to Lengthy Implementation The review has revealed a number of constraints which hinder the implementation of infrastructure programmes and projects; these are discussed below.

6.2.1 Bottlenecks in the Delivery of Facilitation and Harmonisation Programmes

A number of barriers and bottlenecks have been identified that have made it difficult to deliver reforms at a national level in line with agreed regional and continental conventions, protocols and treaties. These include:

6.2.1.1 Lengthy and complex decision-making processes of RECs

The decision-making processes at most, but not all, RECs are cumbersome and broadly follows the process outlined below:

• The relevant Technical Department prepares and circulates a paper on a given subject to the identified experts within all Member/Partner States.

• A meeting, or series of meetings, of experts, usually after donor funds have been obtained for the specific workshop(s), then considers the subject and makes recommendations for the internal management and Council of Ministers.

• The Council of Ministers in their (typically bi-annual) meetings then consider and agree on recommendations to the conference of the Heads of State for adoption in their next meeting, which typically takes place just once a year.

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These processes form a critical path, and therefore, if one critical stage in this process is delayed, then the next stage cannot occur and the whole process stalls. Such processes, many of which were designed prior to the RECs being designated as the implementing organs of NEPAD, are lengthy and complex. The result of these inefficient decision-making processes is that, too often, critical protocols and conventions can take years before they are finally agreed. This hampers policy harmonisation efforts.

6.2.1.2 Failure of governments to translate genuine political will into concrete actions by implementing agreed regional decisions in a timely manner

A key problem identified is the widespread inability of countries to translate their genuine political will and commitment for the NEPAD agenda into tangible actions. This is particularly evident in that, when regional and continental agreements have been reached, these are often not converted into effective action in a consistent manner across the Member/Partner States. In this respect, the review identified four key problem areas:

• There are often lengthy delays before agreed protocols and conventions are ratified by counties.

It is recognised, however, that in some RECs, decisions taken by the Statutory Council of Ministers and/or by Heads of State are binding and therefore do not require ratification by national governments/legislatures10.

• National laws to reform the appropriate legal, regulatory and administrative frameworks, to comply with the relevant binding regional conventions and protocols, are not always enacted in a timely manner, if at all.

• Countries often fail to put into place regulations, structures and mechanisms to implement the relevant laws in practice.

• Very few RECs, in association with their respective Member/Partner States, have consistently devised and implemented robust monitoring and enforcement systems to ensure compliance with regional agreements across all infrastructure sectors. The poor track record in translating political will into concrete actions can be attributed to some or all of the following underlying causes:

• The non-binding nature of the majority of agreed regional decisions in many RECs.

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• A lack of technical, financial and human capacity at both national and regional levels.

• Strong vested interests within countries that block reform and/or implementation processes, along with bureaucratic resistance to change.

• Implementation could be deemed detrimental to national interests, as countries frequently sign up to continental and regional treaties/conventions/protocols without having first carried out a full, in-depth impact assessment/study which

could in many cases highlight the social and economic benefits to the country.

• Lack of effective institutional structures with clear responsibility to champion and drive required reforms within countries.

• Lack of an effective communications strategy designed to educate, apprise and seek support from the citizenry and various representative bodies and overcome the entrenched cultural propensity of certain interest groups to protect the

status quo.

The most significant impact of these constraints is that they not only hinder the timely implementation of facilitation projects and programmes but also stifle the development of bankable investment projects directly, because they hold back one or more critical stages in the project development process.

6.2.2 Inadequate Capacity for Regional Project Preparation

The review revealed an absence of institutional structures and capacity (technical and financial) within RECs and countries to consistently develop bankable cross-border infrastructure projects. In this respect, it should be noted that many REC Secretariats, although typically under-resourced, have a demonstrated ability to handle the crucial areas of policy, legal and regulatory reform and harmonisation. In the best cases, their technical skills, excellent knowledge and understanding of the practical workings of government and, perhaps most importantly, their familiarity with and respect for the political processes and cultural mores in their region, gives them a strong understanding of how to present projects to governments in a consensus-building process.

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However, whilst the Secretariats of many of the RECs have a relatively strong skill-set in terms of establishing an enabling environment for major regional projects, they usually lack the capacity, skills and financial resources to successfully identify, prepare and implement major cross-border infrastructure projects, particularly those with a PPP component. This is not surprising because the constitutional mandates, and hence cultures and practices, of the RECs were not designed for such a role.

Similarly, many countries also do not have the requisite skill-sets and financial resources for the consistent development, packaging and promotion of complex PPP projects.

6.2.3 Limited Financial Resources within RECs

Almost all RECs lack the financial resources necessary to successfully undertake the role they have been mandated as implementation organs of NEPAD. Too often the review identified progress on projects being stalled because of basic problems such as lack of funding for meetings of groups of experts, no budget to recruit critical staff or purchase essential IT facilities. There is an expectation that RECs should be equipped to meet basic administrative overheads and expenses without recourse to development partners. Indeed development partners are more likely to respond in cases where the RECs themselves have been seen taking ownership and making an “in kind” contribution and/or financial contribution.

Why is there too often a basic lack of funding? In many RECs their regular funding streams were established some time ago, and do not reflect the “new reality” of their significantly increased commitments associated with their new NEPAD role. The overlap in the membership of the RECs exacerbates the situation by creating multiple demands for contributions on already scarce financial resources. There are four principal aspects to the REC funding problem:

• The manner in which most RECs are funded has not adapted over time to remain appropriate to current needs.

• The level of contributions from Member/Partner States has not risen in real terms over the years.

• Non-payment of country contributions and/or delays and deficits in such contributions.

• RECs cannot cover these shortfalls with borrowings, as they are unable to raise loan capital in their own right.

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6.2.4 Weak or Ineffective Institutional Relationships between the Key Stakeholders

A prerequisite for efficient and timely implementation of cross-country projects is the establishment of adequate and appropriate institutional structures and coordination and communication mechanisms amongst all key stakeholders (at continental, regional and national level) to facilitate timely, relevant, efficient and effective liaisons and monitoring mechanisms both on general NEPAD related matters and on sector or project-specific issues. There was limited evidence to demonstrate that institutional structures to support efficient and effective co-ordination of the NEPAD STAP have been robustly established, on a consistent basis across the continent. For example, some RECs have neither up-to-date information on the status of key projects in their region, nor a single point of contact in each country that could provide such information.

6.2.5 Development Partner Systems and Practices do not Always Align with NEPAD Priorities

Whilst it is acknowledged that donor support and funding has a crucial and important part to play in the development of infrastructure across the continent, it should be recognised that this “traditional” funding model does not always lend itself to the efficient preparation and implementation of regional infrastructure programmes and projects. In this respect, this review identified a number of constraints:

6.2.5.1 Perceived complexity of donor funding Obtaining Donor funding entails a relatively long and inflexible approval processes.

Conditionalities can often be placed upon the recipient country/countries to execute social reforms or other sectoral policies that have little relevance to the overall policy objectives of the specific project(s) being funded.

There may be one country involved in a regional project but because the country is for one reason or other not eligible to receive support at that given time, project implementation ends up being delayed.

6.2.5.2 Fractured funding approach

• Dealing with a multiplicity of donors during the development of any particular project typically exposes the project to the Donor’s varying internal systems, criteria and approval processes. This can negatively impact on the critical path of projects and thereby delay their implementation, because time lags in one area of donor funding may cause key milestones to be missed and thus seriously hold up other, dependent, parts of the programme.

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Such delays also pose the danger that the rationale for particular programmes and the assumptions on which the funding bids were made may no longer hold true by the time the funds are obtained.

This fragmentation of project funding hinders the RECs from planning their development efforts strategically, and from setting out a rationally prioritised annual development programme.

• Development of a given project may itself become fragmented, where for example, a pre-feasibility study under the auspices of one REC is funded by Donor A and executed by Consultant 1, an overlapping REC undertakes a project with similar

objectives with funding from Donor B and advised by Consultant 2, individual country discussions take place with Donor C, all this resulting in “competing” programmes targeted at the same aims. This also poses serious dilemmas for the various implementing agencies as to which programme to pursue.

6.2.5.3 Lack of focused programme and project definition

Donor institutions have their own focus, priorities, programmes and culture, which may not necessarily fit in with the priorities of the region or indeed focus on the reality of the business and socio-economic case. Nonetheless, RECs have to address and satisfy these donor policy objectives and criteria in order to qualify for funding support for their facilitation programmes. As such, when seeking funds from certain donors, programme and projects objectives can become skewed, and in some cases result again in competing projects or programmes in overlapping RECs.

The two principal dangers with such an approach are that of duplication of effort and the possibility that projects and programmes may become unmanageable, because there is no longer a cohesive focus and a set of deliverables wholly complementary to that focus.

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7. Recommendations A significant number of the weaknesses and impediments outlined above have been recognised by the key stakeholders of NEPAD, many of whom have individually and/or collectively taken initiatives to address them. This section of the report takes cognisance of these efforts, supports and reinforces them and makes some additional recommendations.

7.1 Streamline REC Decision-making Processes

RECs at a minimum, should examine and where appropriate, reform their decision making processes and mechanisms to ensure they are efficient and streamlined to meet the requirements of their current NEPAD mandate, without compromising transparency and democratic accountability.

7.2 Consistently and Effectively Implement Regional Decisions

RECs should not only ensure that their decision-making processes and structures are efficient, but also that the resulting decisions are binding once agreed. To this end, at a minimum, a legal framework should be established that clearly identifies the respective responsibilities and obligations of RECs and of individual countries, with respect to the implementation of community decisions relating to NEPAD infrastructure projects. This legal framework should contain effective powers to impose and levy sanctions on Member/Partner States in the event of failure to implement ratified decisions within specified timeframes.

RECs could also develop their respective legal regimes so that an appropriate regional institution (the Council of Ministers or Council of Heads of State and Government or similar body) is transformed into a supra-national body invested with powers to enact regulations and directives applicable to and binding on the Member/Partner States, such as exists in the European Union, UEMOA, EAC and as is planned in ECOWAS. Additionally, NEPAD and the RECs, with support from the ADB and other development partners, should consider providing technical assistance and funding to countries to enable them to reform their administrative and legal frameworks, so as to achieve compliance with agreed regional decisions.

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Recommendations (continued)

Simultaneously, actions should be taken to address the ‘Communications Gap’ and tackle the deadening hand of vested interests. The RECs, in collaboration with countries, should develop and put in place an effective communications strategy with all existing and potential stakeholders, including the Civil Society of the Member/Partner States, to maintain an ongoing dialogue with respect to the regional NEPAD agenda.

7.3 Boosting the Capacity and Resources of RECs Additional resources need to be committed and be readily available to the RECs to enable them to provide technical assistance to countries with respect to sectoral harmonisation programmes and monitoring compliance therewith; as has been effectively undertaken by COMESA and ECOWAS in the ICT and aviation sectors respectively. In this respect, an expansion of NEPAD IPPF to encompass facilitation projects should be considered.

7.4 Accelerating the Preparation of Bankable Cross-border Projects

As discussed in Section 5 of this report, there is a critical need to strengthen the capacity of the RECs to engage at all levels with the private sector and, especially, to bring bankable PPP projects to the table in an accelerated timeframe. This could be achieved through the creation of dedicated regional project development and implementation units (PDIUs), equipped with the right skills-set and appropriate grant funding, as is currently being planned for implementation in the ECOWAS region.

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Figure 7-1 Proposed ECOWAS PDIU Approach

7.5 Increasing the Financial Resources of RECs

Where it has not hitherto been the case, Member/Partner States should be encouraged to provide the Secretariat of their respective REC with sufficient regular funding to support at the minimum its basic functions/activities and, in order to advance the NEPAD programme, make meaningful contribution towards the funding required for improvements in capacity.

7.6 Strengthening Institutional Relationships between Stakeholders

Institutional relationships between the key stakeholders could be strengthened through the creation of a coordination framework, as recommended and agreed by the stakeholders at the NEPAD workshop in Abuja in March 200511. Further to this, it is recommended that dedicated project specific secretariats be established as soon as countries agree to collaborate on specific cross border investment projects.

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7.7 Review, Improve, and Expand the Capacity of the ADB NEPAD Unit and the NEPAD Secretariat

The growing demand for their services in relation to the STAP agenda will necessitate an expansion of the capacity (financial, human, technical) of both the ADB NEPAD Unit and the NEPAD Secretariat. In this regard an urgent review should be undertaken with a view to ensuring their continued effective contribution in the implementation of STAP. Further to this, it is recommended that the ADB act on the following:

1. Adopt a more proactive approach to bring to the market innovative financing and risk mitigation instruments that will catalyse a scale-up of private sector part i c i p a t i o n . Examples of such are: The Asian Infrastructure Development Company, The Private Sector Infrastructure Facility both of which we re established by the Asian Development Bank.

2. Taking cognisance of the outcomes of the 2005 G8 Summit, ADB should develop policies, structures and facilities in order that it may be able to take a leadership role in mobilising funds from within and outside the continent and effectively channeling those funds for infrastructure development.

7.8 Improve Donor Co-ordination and Alignment with NEPAD Priorities

The NEPAD concept fundamentally challenges the donor-recipient relationship, and the net “drag” effect this has had on African capacity to deliver infrastructure and infrastructure services affordably, by placing responsibility for Africa’s development on Africa’s own shoulders. Development partners should be encouraged to collaborate more effectively and to adapt their internal systems and practices in line with the priorities of NEPAD, so as to be able to better contribute to the acceleration of the implementation of the STAP. An example of such collaboration could be the creation of a pooled fund in each region, through which development partners can contribute collectively to support regional development efforts. Such a fund, like the proposed EAC Development Fund, would provide a shared ‘pot’ of funds that RECs can use for their projects, provided those projects meet pre-agreed conditions.

A pooled fund would offer many potential benefits, including enhanced co-ordination between donors, and administrative simplification and resultant cost savings, both at the REC secretariats and in the development partners as well - the RECs will no longer have to make separate funding applications for each project component. In turn, this should enable more coherent and holistic development planning at the

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RECs, the production of associated annual budgets that take all sectors and areas into account and hence more rational prioritisation and planning of programmes and projects. This approach should help to ensure that mobilised resources are directed to priority projects, especially those under the NEPAD STAP. A secure supply of funds should also lead to more studies being transformed into workable implementation action plans.

Conclusion

Undoubtedly STAP has galvanised and focused development effort to address the continent’s infrastructure deficiencies. For such a nascent initiative, progress made to date in the development and implementation of the programme and projects is impressive. Indeed for a plan devised for Africa by Africans it is unique in that it has gained the widespread support and commitment of many within and outside the continent. The challenge now is to transform this laudable agenda into realisable projects that will deliver visible success on the ground and in particular widen the access of infrastructure services across the continent. To meet this challenge and ensure sustainability, business as usual with the traditional development models, will yield neither significant progress nor tangible results. A collective effort on many fronts, accompanied by bold actions and innovative measures, is essential from the African stakeholders and the continent’s development partners.

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