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To equip itself with the most important infrastructures that are so much lacking in development, Africa is turning more and more towards the private sector. Latest example in the Democratic Republic of Congo: Australian metal magnate Andrew Forrest is now portrayed as the future builder of the Inga Mega Pond.
A disproportionate operation. It’s about building enough to supply the whole of Africa with electricity and a business that has been stranded for thirty years! After the construction of the first two parts of the dam, in the 1970s and 1980s, no more projects were completed. Many questions remain unanswered: Fortescue Metals Group has no experience in hydraulic work and finding the $ 80 billion needed to complete the site is an achievement in itself. This amount is greater than the total number of foreign direct investments made in one year in Africa. But the principle is established: it is really a private investment that is necessary to develop such a project.
The state lacks resources or no funds to borrow to finance it?
The Democratic Republic of Congo, like most African states, is already heavily indebted. It is struggling to collect taxes and the pandemic has obviously exacerbated these recurring problems. Turning to the private sector is becoming even more urgent, as the IMF emphasizes in a blog from the Ministry of Africa recently. But this is not entirely new. Most power plants currently being built in Congo-Kinshasa are supported by private investors or public-private partnerships. Across the continent, private investors are more in demand for building roads, power plants, internet networks or hospitals.
Africa is still the continent that least attracts private investors to finance these infrastructures
Investors prefer to invest in minerals and hydrocarbons that they hope to develop at best. Infrastructure projects still arouse a lot of mistrust for the wrong reasons: we mistakenly believe that the risk is higher than elsewhere, but the failure is 6% according to Moody’s agency, which is twice less than in Latin America. But mistrust is also nurtured for good reasons: these projects are sometimes insufficiently completed, legally and technically, which is why they struggle to convince.
G7 announced the establishment of a comprehensive infrastructure support plan to compete with the silk roads promoted by China, can this help African countries?
Rebuild a better world, rebuild a better world, is especially dedicated to developing countries. To facilitate public-private partnerships. The presence of large institutions can be reassuring. Beneficiary countries must still be ready to accept these terms. For the large Inga project, for example, the African Development Bank has provided an envelope of EUR 55 million to finance technical studies and, above all, a formal call for tenders, which would also make it possible to put the World Bank back in the game, explain our colleagues from Africa Intelligence. This option has obviously been ruled out in favor of the sole Australian billionaire. It will be up to African countries to see if the option proposed by the G7 suits them.
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