China, India, and a few Middle Eastern Gulf nations are financing a record number of projects across Sub-Saharan Africa, says a new World Bank (WB) report.
Investment commitments in Africa by these emerging financiers jumped from less than US$ 1 billion per year before 2004 to US$ 8 billion in 2006 and US$ 5 billion in 2007, signalling a growing trend in cooperation among developing economies (South-South cooperation), the WB said in the report.
China’s growing role as infrastructure financier for Sub-Saharan Africa shows how new infrastructure partnerships are emerging, driven by strong economic growth in the region, an improved business-friendly climate, and rising demand for petroleum and other commodities from China and India.
The report said “China’s success story in reducing poverty through rapid and sustained growth is remarkable. Massive investment in infrastructure was a key factor. Today, China’s growing infrastructure commitments in Africa are helping to address the huge infrastructure deficit of the continent.”
“There are of course challenges which will need to be addressed by African nations and China coupled with the support of development partners,” says Obiageli Katryn Ezekwesili, the World Bank’s Vice President for the Africa Region.
Ezekwesili, a former Nigerian minister, added “By working together, we can create win-win partnerships.
“One in four Africans does not have access to electricity. Travel times on African roads and export routes are two to three times higher than in Asia, increasing the prices of traded goods. Power generation capacity is around half the levels achieved in South Asia.”
The WB report notes “the investment commitments being made by emerging financiers are unprecedented, both in scale and the focus on large infrastructure projects. In a changing world, with new actors and financing modalities coming into play, there is a learning process for investors and recipients.
“This will place new demands on national capacity to negotiate complex and innov ative deals, and apply appropriate environmental and social standards needed for the long-term success of such partnerships.”
According to the report, China is not the only emerging financier playing a major role in Africa.
In recent years, India is increasing its investments, committing US$ 2.6 billion since 2003 – The bulk of Indian investments are in Nigeria.
Oil-rich Gulf states and Arab donors are also playing a substantial role in African infrastructure, committing on average US$ 500 million every year over the past seven years.
While more South-South cooperation backed by strong infrastructure investments marks a positive trend, says Chuan Chen, co-author and a former professor of civil engineering at Tsinghua University, China, the key challenge is to maintain the momentum for lasting development results. Panapress .