The Government of Cameroon and the International Monetary Fund (IMF) jointly organized a high-level conference entitled "Financing the Future: Infrastructure Development in Central Africa" in Yaoundé, Cameroon on March 10, 2014.
The conference brought together ministers, governors and more than 250 senior officials, academics, and representatives of financial institutions and civil society from across countries of the Economic Community of Central African States and beyond to discuss international experience and best practices to finance infrastructure development.
The outcome of this conference will be presented at the high level Africa Rising conference organized by the government of Mozambique and the IMF in Maputo on May 29-30, 2014.
Participants agreed that investment in infrastructure can drive growth, raise productivity, and help reduce poverty, but also acknowledged that large infrastructure gaps remain in central Africa.
The lack of infrastructure is a key obstacle to achieving faster growth because higher transportation, water, and power costs are estimated to reduce private sector productivity by almost half. Regional infrastructure projects and good coordination of national investment will also foster regional integration.
Upgrading infrastructures is, however, very costly and implies large financing needs. For Central African countries, scaling up investment without taking on excessive debt constitutes a crucial policy challenge.
The conference addressed several key issues: first, the need to optimize domestic resources, especially from natural resources, and streamline inefficient expenditures to free fiscal space for investment; second, the desirability of tapping private sector financing, including through private-public partnerships (PPP) while mitigating the fiscal risks tied to them; third, the prospects for innovative financing, the role of capital markets and sovereign bonds issuance and enhanced credit access. Each of these areas presents challenges and solutions that governments should address with the assistance of bilateral and multilateral partners.
While the wider choices of available financing options can open up opportunities for African countries, governments have to be savvy about how they finance the scaling up of their infrastructure investments. It is important to realize that non-concessional borrowing, in particular, should be reserved for investments that have a significant economic return so that the higher costs associated with such borrowing are covered.
Participants also widely acknowledged that to scale up investment while avoiding the pitfall of high indebtedness, countries need a good debt management strategy, while boosting the efficiency of public investment spending and developing their domestic revenues.
It was also agreed that the growth return to public infrastructure investment depends on a robust private sector response. It is therefore paramount to accompany infrastructure development with structural reforms that will promote a strong private investment climate. A large portfolio of bankable infrastructure projects will trigger - at the national as well as the international level--a broader contribution from, the sub-regional banking sector and the capital markets.
The Mozambique will bring together policymakers and others from Africa and beyond to discuss how to build upon the great progress Africa has seen in recent years, but also how to deal with the remaining challenges. It will also provide an opportunity for Central Africa to make its voice heard on infrastructure-related issues. .
The participants thanked the people of Cameroon for their hospitality, the Government for organizing the conference, and the President of the Republic, H.E Paul Biya, for his leadership.
The program of this conference and some of the speeches and presentations are available at: http://www.imf.org/external/np/seminars/eng/2014/CMR/fra/index.htm