Thank you to the African Union for hosting such a timely event and to President Macky Sall for the invitation to join.
My remarks are mostly devoted to infrastructure but let me recognize upfront the multiple challenges you are facing with high food and fertilizer prices, with growing insecurity in the Sahel and with conflicts spilling across borders, and the devastating impacts of climate change. I had meetings last week with Victoria Kwakwa and Ousmane Diagana, the World Bank’s regional vice presidents for Africa, and I received detailed briefings on some of these challenges.
I want to assure you of the World Bank Group’s (WBG) support to people across Africa as they face these challenges on a daily basis. It is critical that our development interventions move as quickly as possible, especially into fragile situations, while there is still opportunity to prevent conflicts from escalating.
Turning now to the topic of today’s meeting, I want to highlight a disconnect between your huge investment and infrastructure needs and the too little too late inflow of capital. One of the biggest challenges is in Sub-Saharan Africa. It is home to 60 percent of the world’s extreme poor and has a high population growth rate, but the current investment rate is not enough even to maintain capital stocks, much less increase them.
In these complex circumstances, the WBG is providing rapidly increasing support through grants and concessional financing. We are committed to continuing to do so. An important part of the success of these inflows is to improve governance and transparency. This makes the existing flows more effective and helps invite greater inflows.
The World Bank’s lending to Africa has tripled as a share of total lending – from 15 percent in the early 2000s to over 45 percent today. Together with IFC investments and MIGA guarantees, the WBG support to Africa was over US$38 billion in new commitments in FY22.
We are heavily involved in regional and national infrastructure connectivity such as integrated transport, and clean energy including power pools, off-grid, and renewable solutions. These will deepen access, digital infrastructure, and transboundary water networks. For example, the Lomé-Ouagadougou-Niamey corridor and the Southern Africa Trade and Connectivity Project, that covers Mozambique and Malawi are good examples of transformational economic corridors. The Eastern Highway Electricity Project is connecting the East African and Southern African Power Pools to enhance trade of reliable, low-cost, and clean electricity. The WBG Digital Economy for Africa initiative supports the rollout of the African Union’s Digital Transformation Strategy 2020-2030.
Our projects and financing alone are not going to be sufficient to address Africa’s infrastructure needs. Africa attracts only 2 percent of global foreign direct investment, and that mainly goes to extractive industries, not energy, roads, or water.
We need a holistic approach to expanding infrastructure through private capital facilitation, which includes both mobilization and working at the upstream level to improve the environment for private capital enabling. We have recently identified several avenues to strengthen our approach to private capital.
- First, we are prioritizing activities that enable private capital flows, including by defining and tracking it. Corruption and restrictions on foreign direct investment are key factors limiting the quantity and quality of cross-border investment. Reducing business start-up costs and strengthening property rights can also help enable business growth.
- Second, we are redoubling our efforts to build robust pipelines of impactful, high-quality, and resilient infrastructure projects.
- Third, we are focused on creating efficiencies through scale and replicability. For example, we are developing new opportunities to crowd in private climate finance through standardized toolkits, such as in Scaling Solar or PPP initiatives. We are also working on options to develop a platform to securitize emerging market private debt and significantly expand the funding sources for projects by linking them with institutional investors.
We are applying this approach across different areas including climate action, energy access, digital transformation, and capital markets development. An important part of this effort is taking infrastructure State-Owned Enterprises to capital markets and supporting their transition to well-governed, market-oriented, and financially sound enterprises.
Let me conclude by recognizing again the tremendous challenges that you are facing and reiterating the WBG commitment to supporting resilient and inclusive infrastructure in Africa. Thank you.
