Summary

Davos-Klosters, Switzerland 23 January

Africa Strategic Infrastructure Breakfast

Key Points– Africa remains a compelling investment prospect with

exciting progress and strong political will for collaboration with the private sector on infrastructure development in Africa

– Embedding the lessons learned from accelerating the pilot Central Corridor programme is a key for replicating and addressing the infrastructure deficit

– A paradigm shift of institutional money is occurring; the source of funds requires adaptive but predictable frameworks and trusted partnerships

– Coordinating structured scale across the region will mobilize funds towards project preparation, implementation and operation

– Optimizing existing African markets, capturing value and developing local skills are important for regional development

SynopsisAfrica remains a convincing investment prospect in 2015, with African GDP expected to grow well above the global average in 2015. However, to achieve this growth, infrastructure constraints in particular need to be addressed. Power and transport infrastructure remain key to development.

Following the World Economic Forum on Africa (Abuja, May 2014), the Forum convened an executive breakfast in Davos with heads of state and leaders from top multilateral organizations and business to discuss the progress of the second phase of the initiative and to deliberate on the next steps.

From talk to actionRecognized and supported by President Jacob Zuma, the substantial progress achieved in the Central Corridor pilot programme under the Programme for Infrastructure Development in Africa (PIDA) reflects the willingness and desire of African governments and private companies to share their expertise and collaborate on a common goal of accelerating infrastructure development in Africa.

The Business Working Group comprising more than 45 local and international companies – given the political support needed – has proven that multistakeholder collaboration can drive development. Strong partnership and dedication have provided the momentum to shift from “talking about it to doing it.” In just eight months, this $18 billion mega-transport programme across five countries has gone from an idea to a structured state, with support mobilized for a technical review of 18 cornerstone projects along the corridor.

The Central Corridor as a pilot for acceleration holds exceptional growth potential for the region, and will elevate interregional and intercontinental trade. Connecting regions via enhanced coastal and inland ports such as Lake Tanganyika and Kigoma; upgrading rail and roads to Lubumbashi with one-stop border posts – all contribute to reduced bottlenecks and the improved movement of goods, people and services. Over and above the physical infrastructure, focus remains on developing a true “value corridor” rather than an “extraction corridor” by opening cotton, fishery and manufacturing industries in the region to provide additional investor opportunities and more equitable distribution of opportunities to local communities.

The Development Bank of South Africa as co-chair of the initiative and The Boston Consulting Group as project advisers were recognized for their generous and tireless support to achieve the ambitious deliverables and timelines. To continue the close collaboration in the acceleration process and leverage private-sector expertise, an additional appetite review of the 18 shortlisted projects of the Corridor will be held in March in Johannesburg prior to the Central Corridor Investors and Industry Forum. Business Working Group members Standard Bank, Transnet, The Boston Consulting Group and Old Mutual as well as the Development Bank of South Africa will discuss the outcomes of the technical consultant’s review of the shortlisted projects and provide further recommendations to entice investors.

The Central Corridor Investors and Industry Forum will take place in March in Dar es Salaam.

Replicated successReplicating the process of acceleration from the Central Corridor and the continued engagement with private sector will be valuable for other infrastructure programmes in the region. Other important “pieces of the puzzle” include the North-South Corridor, the Beira Nacala Corridor and the Zimbabwe Railway, which ensure integrated connections from North to South and East to West. The scope of an additional pilot will be discussed, with a formal report to be completed and shared prior to the World Economic Forum on Africa in June 2015 in Cape Town. The report will focus on bottlenecks and suggest a way forward, given the lessons learned from the Central Corridor pilot.

Properly prepared and precisely implemented projectsQuality preparation, implementation and construction management are required along the project cycle to capture the value proposition for Africa. Vehicles such as the Africa50 project preparation facility of the African Development Bank contribute to a well-prepared pipeline of projects available to the market. Infrastructure project preparation facilities (IPPF) should leverage newly available, innovative credit facilities. For example, USAID announced the launch of a credit enhancement facility based on the success of Power Africa. The facility includes partners USAID, the Government of Sweden, SNBC and Citi group. Additional knowledge contributions and models for improved ways to work, such as the concept IPPF being developed by the World Economic Forum in collaboration with The Boston Consulting Group, are valued contributions in this space. The report is expected to be launched in March 2015.

Coordinated and connected scaleBetter coordination and connectivity between projects will provide the size and scale required by investors for enhanced value. The importance of developing industries with enabling frameworks and regulatory environments cannot be underestimated. Examples including agreements that allow gas from Mozambique and Tanzania to be used for the cement, fertilizer and other manufacturing sectors in the region should take priority for policy-makers, as they provide additional value capture and cost efficiencies.

01: Brian Molefe, Group Chief Executive, Transnet, South Africa; Claver Gatete, Minister of Finance and Economic Planning of Rwanda; Philipp Gerbert, Senior Partner and Managing Director, The Boston Consulting Group, Germany; Geoffrey Trevor White, Chief Executive Officer, Africa, Agility, United Arab Emirates; Luis Castilla, Chief Executive Officer, Acciona Infrastructure, Acciona, Spain; and Suresh Chaturvedi, Group Chairman, Overseas Infrastructure Alliance (OIAPL), India

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01: Njuguna S. Ndungu, Governor of the Central Bank of Kenya; Nhlanhla Musa Nene, Minister of Finance of South Africa; Jeff Radebe, Minister in the Presidency of South Africa; Patrick Khulekani Dlamini, Chief Executive Officer and Managing Director, Development Bank of Southern Africa; Jacob G. Zuma, President of South Africa; Brian Molefe, Group Chief Executive, Transnet, South Africa; Claver Gatete, Minister of Finance and Economic Planning of Rwanda; Philipp Gerbert, Senior Partner and Managing Director, The Boston Consulting Group, Germany; and Geoffrey Trevor White, Chief Executive Officer, Africa, Agility, United Arab Emirates

Internal value capture and continued enablementStrong coordination and enhanced internal value capture for the continent requires local currency and debt capital markets enhancement. The South Africa Pan African Development Fund has been very successful with its first issue in South African rand in London. However, leveraging and deepening of markets require pension fund, insurance, energy and other regulatory and sector amendments. Marginal changes could release significant sums of money for infrastructure.

Local skills and capacity-building can be enhanced with strategic and decisive supplier-development terms. Transnet is seen as a leader in this area, using partnerships with GE and other international companies to develop the local engineering and technical skills required to become a leading manufacturer of rail components.

The proposal of a knowledge platform was well received after potential “PPP hub” suggestions were raised. Participants discussed the idea of a collaborative platform for data and information-sharing between the OECD, IMF, World Bank and the World Economic Forum to close the gap between infrastructure projects that need to happen and how they can be funded. Progress on establishing this platform will be provided in a G20 report in Turkey later in the year, and the global search for a CEO is ongoing.

In the lead-up to World Economic Forum on Africa in Cape Town (3-5 June 2015), proposed activities include:

– DBSA-AfDB-AUC-NEPAD-Forum technical result review and preparation workshop for the Central Corridor (Johannesburg, March 2015)

– BWG Appetite Testing Roundtable – Identify strategic investors for promotion of shortlisted projects of the Central Corridor (Johannesburg, March 2015)

– Scoping of second potential programme for acceleration to commence in March 2015; progress report to presidency prior to June 2015 World Economic Forum on Africa

– Central Corridor Industry and Investor Forum (Dar es Salaam, March 2015)

– Early Stage Project Finance model IPPF concept Launch (March/April 2015)

– World Economic Forum Toolkit – Documenting best practices for accelerating and managing large infrastructure programmes in Africa as part of the pilot (World Economic Forum on Africa, 3-5 June 2015); the toolkit will include selection methodology, acceleration process, transnational infrastructure programme management and early-stage project finance

– Transition planning and enablement of NEPAD Agency for replication of acceleration of PIDA (ongoing, June 2015)

A complete overview of the initiative to date can be found online: http://www3.weforum.org/docs/WEF_African_Strategic_Infrastructure_Initiative_Summary_Synopsis_report_2015_1401.pdf

DisclosuresThis summary was written by Benji Coetzee. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.

Copyright 2015 World Economic ForumThis material may be copied, photocopied, duplicated and shared, provided that it is clearly attributed to the World Economic Forum. This material may not be used for commercial purposes.

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01: From left:Benji Coetzee, Project Manager, Africa Infrastructure, World Economic Forum; Hisham H. Mahmoud, President, Infrastructure, SNC-Lavalin Group, USA; John M. Beck, Executive Chairman, Aecon Group, Canada; Simpiwe K. Tshabalala, Joint Chief Executive Officer, Standard Bank Group, South Africa; Ralph Mupita, Chief Executive, South Africa and Emerging Markets, Old Mutual, South Africa ; Gordon Brown, Chair, World Economic Forum Global Strategic Infrastructure Initiative; Member of Parliament; Prime Minister of the United Kingdom (2007-2010); Modest Jonathan Mero, Ambassador and Permanent Representative of Tanzania to the United Nations, Geneva; Elsie S. Kanza, Senior Director, Head of Africa, World Economic

Co-Chaired byGordon Brown, Chair, World Economic Forum Global Strategic Infrastructure Initiative; Member of Parliament; Prime Minister of the United Kingdom (2007-2010)Patrick Khulekani Dlamini, Chief Executive Officer and Managing Director, Development Bank of Southern Africa, South Africa

Remarks byElsie S. Kanza, Senior Director, Head of Africa, World Economic Forum; Young Global LeaderBrian Molefe, Group Chief Executive, Transnet, South AfricaAlex Wong, Senior Director, Head, Center for Global Industries (Geneva) and Head, Basics & Infrastructure Industries

Special GuestJacob G. Zuma, President of South Africa

WithMohamed Diaré, Minister of Economy and Finance of GuineaClaver Gatete, Minister of Finance and Economic Planning of RwandaModest Jonathan Mero, Ambassador and Permanent Representative of Tanzania to the United Nations, GenevaBenno Ndulu, Governor of the Bank of TanzaniaNjuguna S. Ndungu, Governor of the Central Bank of KenyaNhlanhla Musa Nene, Minister of Finance of South AfricaEbrahim Patel, Minister of Economic Development of South AfricaJeff Radebe, Minister in the Presidency of South Africa

ParticipantsBertrand Badre, Managing Director and World Bank Group Chief Financial Officer, The World Bank, Washington DC

John M. Beck, Executive Chairman, Aecon Group, CanadaLuis Castilla, Chief Executive Officer, Acciona Infrastructure, Acciona, SpainSuresh Chaturvedi, Group Chairman, Overseas Infrastructure Alliance (OIAPL), IndiaMark Cutifani, Chief Executive Officer, Anglo American, United KingdomKarin Finkelston, Vice-President, Global Partnerships, International Finance Corporation (IFC), Washington DCMandla Gantsho, Non-Executive Director, Sasol, South AfricaPhilipp Gerbert, Senior Partner and Managing Director, The Boston Consulting Group, GermanyAhmed Heikal, Chairman and Chief Executive Officer, Qalaa Holdings, EgyptGregory Hodkinson, Chairman, Arup Group, United KingdomTalal Khalid Idriss, Chief Executive Officer, Bahra Advanced Cable Manufacture, Saudi ArabiaJabu A. Mabuza, Chairman, Telkom Group, South AfricaHisham H. Mahmoud, President, Infrastructure, SNC-Lavalin Group, USAThomas Maier, Managing Director, Infrastructure, European Bank for Reconstruction and Development (EBRD), LondonKgosi Leruo T. Molotlegi, Executive Chairman, Royal Bafokeng Administration, South AfricaRalph Mupita, Chief Executive, South Africa and Emerging Markets, Old Mutual, South AfricaNku Nyembezi-Heita, Chairman Designate, Johannesburg Stock Exchange, South AfricaGeoffrey Qhena, Chief Executive Officer, Industrial Development Corporation of South Africa (IDC), South AfricaRajiv Shah, Administrator, US Agency for International Development (USAID)V. Shankar, Group Executive Director and Chief Executive Officer, Europe, Middle East, Africa and the Americas, Standard Chartered, United Arab EmiratesLutfey Siddiqi, Global Head, Emerging Markets - FX, Rates and Credit, UBS, Singapore; Young Global LeaderJubril Adewale Tinubu, Group Chief Executive, Oando, NigeriaHendrik du Toit, Chief Executive Officer, Investec Asset Management, United KingdomGeoffrey Trevor White, Chief Executive Officer, Africa, Agility, United Arab EmiratesSimpiwe K. Tshabalala, Joint Chief Executive Officer, Standard Bank Group, South AfricaKapil Wadhawan, Chairman, Rajesh Wadhawan Group, India

Forum; Young Global Leader; Rajiv Shah, Administrator, US Agency for International Development (USAID), Nku Nyembezi-Heita, Chairman Designate, Johannesburg Stock Exchange, South Africa; Mark Cutifani,

Chief Executive Officer, Anglo American, United Kingdom; Bertrand Badre, Managing Director and World Bank Group Chief Financial Officer, World Bank, Washington DC

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