The Global Economic Governance (GEG) Africa programme is a policy research and stakeholder engagement programme to strengthen the influence of pro-poor African coalitions at global economic governance fora.
Wednesday, 28 November 2018 09:00

G20 Africa Monitor

The G20 Africa Monitor (G20AM) is a pilot initiative to support the work of the T20 Africa Standing Group and is supported by the GEG Africa programme. The Think 20 African Standing Group (ASG) was launched formally in May 2017 by the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), the South African Institute of International Affairs (SAIIA), and the Kiel Institute for the World Economy (Ifw). It was inspired by the need to galvanise greater focus on Africa by the G20 but also to mobilise more African think tanks to follow and to engage on global economic governance issues. At the Annual Meeting of the T20 Africa Standing Group in 2018 members agreed to create a platform that would track G20 initiatives in Africa. In subsequent meetings it was decided that the first step would be outlining a baseline against which the future decisions and actions of the G20 and their impact on the African continent would be measured. Infrastructure development was selected as the first focus area for the monitor since it was a key objective of the G20 and the Sustainable Development Goals. Infrastructure is also a priority of the African Union and its Agenda 2063.  The baseline, developed by the South African Institute of International Affairs is built on the following existing monitors that track and promote infrastructure development in Africa:

G20 Infrastructure Initiatives

G20 Infrastructure Initiatives

G20 Compact with Africa The Compact with Africa (CwA) was launched during the German G20 Presidency in 2017 to enhance private sector finance, especially in area of infrastructure (albeit not exclusively) in support of African countries’ development objectives. It is a voluntary programme supported by the International Monetary Fund (IMF), the African Development Bank (AfDB) and the World Bank and rests on the principle of mutual commitment (both the African countries and the international partners) to improve the investment climate while promoting foreign direct investment into participating African countries. Twelve African countries have thus far signed up: Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia.

  • African countries commit to identify needed improvements under the three Compact pillars and to undertake relevant reforms. Many are addressing issues such as domestic revenue mobilization, Doing Business reforms, and easing constraints to SME financing.
  • The “International Organizations” – the World Bank, International Monetary Fund, and African Development Bank – agree to coordinate more closely, step up technical assistance to implement the identified reforms and increase support for infrastructure project preparation.
  • G20 members commit to encouraging their investors and companies to invest in Compact countries.
  • Compact teams in each country are the glue holding all this together. They are led by the country representatives of the international organizations and include senior government officials from finance, trade, and investment ministries.
  • A reform matrix developed by each Compact team prioritizes reforms that Compact partners commit to collectively addressing through a multi-year approach.

The G20 Africa Advisory Group (AAG) progress report on the CwA, published in April 2018 and based on the participating countries’ self-assessment as well as assessments done by the AAG, highlights progress areas. The document reports against the 101 commitments made by nine of the CwA countries and reviews investments made by G20 countries. The report is supplemented by an independent review done by the African Centre for Economic Transformation (ACET), a T20ASG member. The next report will be issued in early 2019. There have been 101 commitments by the nine countries covered under the monitoring round. These reflect high levels of commitment around a global agenda to maximise financing for development. The commitments fall under three pillars:

  • Commitments made to improve the macro-economic environment
  • Commitments made to improve the business environment
  • Commitments made to improve the financial environment

Status of Commitments by Pillar (in numbers)

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Green = Achieved
Orange = On Track
Red = Unachieved


Source: G20 Africa Advisory Group progress report on the CwA

  • Reforms were launched across virtually all of the 101 commitments: 23 of the commitments are reported as fully achieved while 74 of the commitments are reported as on track.
  • The majority of the commitments focus on macroeconomic stability: 43 of the reforms monitored relate to macroeconomic measures. The macroeconomic area also records the highest number of wholly achieved commitments compared to the other two pillars.
  • Of the Compact countries:
  • Ethiopia and Ghana reported the highest percentages of wholly achieved commitments.
  • Ethiopia wholly achieved four commitments in the business framework: it realised 27.6% growth in FDI inflow during 2016/17 financial year, held the first public-private dialogue in November 2017 and enacted a comprehensive legal framework on private-public partnerships.
  • Ghana achieved four commitments within the macro-economic framework: reducing the fiscal deficit, improving the primary surplus and reducing the short-term debt.

Compact Countries Self-Assessments

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Source: G20 Africa Advisory Group progress report on the CwA


Status of commitments by country

Tunisia
benin
Senegal
Rwanda
Morocco
guinea
ghana
ethiopia
cote
blank
Red = project in discussion but not yet implemented
Orange = in implementation
Green = completed
 
 
The CwA report makes use of the World Bank’s Doing Business Indicators and methodology. Tracking the ease of doing business indicators since 2005 has allowed the World Bank to develop a distance to frontier (DTF) measure where the ‘frontier’ represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s DTF is reflected on a scale from 0-100, where 0 represents the lowest performance and 100 represents the frontier. The CwA interim report of October 2018 finds that the countries participating in the CwA initiative have shown better progress towards the frontier than non-participating countries. According to the report, CwA countries’ average DTF score stood at 50.3 in DB2010 and 57.3 in DB2018 (ranging from 73.4 for Rwanda to 47.8 for Ethiopia), whereas non-CwA countries’ average DTF score was at 46.1 in DB2010 and moved to 49.3 in DB2018 (highest DTF for Mauritius at 77.5 and lowest at 20.0 for Somalia). The growth rate in DTF score for CwA countries stood at 14 percent, with only half of that for non-CwA countries, which suggests that CwA countries may have been implementing reforms and improving their business environment more effectively.

Direct Support for Inward Private Investment by G20 members

Japan and Norway supported the highest number of inward private investments in Compact countries.

G20 African Advisory Group Self-Assessments

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Source: G20 Africa Advisory Group progress report on the CwA

Japan
netherlands
Norway
spain
Canada
UK
Germany
USA
France
Italy
Red = project in discussion but not yet implemented
Orange = in implementation
Green = completed


Source: G20 Africa Advisory Group progress report on the CwA


Global Infrastructure Facility

The Global Infrastructure Facility (GIF) is a partnership among governments, multilateral development banks, private sector investors, and financiers. It is designed to provide a new way to collaborate on preparing, structuring, and implementing complex projects that no single institution could handle on its own. The comprehensive project support provided by the GIF draws on the combined expertise of its technical and advisory partners, including financial bankers, and ensures that well-structured and bankable infrastructure projects are brought to market with a strong focus on sustainability. Funding partners provide financial contributions to the GIF. GIF-supported projects may be implemented by privately-operated entities (as under a PPP modality), or by public sector entities operating on a commercial basis—provided in either case that they are providing infrastructure as a public service, and that the project has strong potential to achieve financial viability and sustainability and to attract long-term private capital. Eligible projects that meet these selection criteria may be brought to the GIF for support irrespective of the stage of project development.

Global Infrastructure Facility Projects: Sectors and Sub-Sectors

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Energy: electricity generation; electricity transmission or distribution; and natural gas transmission or distribution.

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Water and sanitation: water supply; wastewater and sewerage; irrigation and drainage; and solid waste management.

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Transport: airports; ports; railways; mass transit; and highways.

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Telecommunications: landlines; and undersea cables


Within these eligible sectors, the GIF focuses on projects that are aligned with two thematic focus areas:

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Climate-smart projects that are low carbon-emitting, encourage energy or carbon efficiency in the provision of infrastructure services, or strengthen climate resilience, such as low-emissions power generation; power or gas transmission projects that bring efficiency to energy markets; loss-reducing power distribution projects; mass transit projects (i.e. metro, passenger rail, bus rapid transport, etc.); and water projects which address scarcity, security, flood management and other aspects of climate resilience.

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Trade-enabling projects that facilitate or enhance interconnectivity and trade. These include freight rail networks, seaports and inland terminals, airports, and toll roads.


Trade-enabling projects that facilitate or enhance interconnectivity and trade. These include freight rail networks, seaports and inland terminals, airports, and toll roads.


Eligibility Criteria to Access the Financing Facility

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Development impact

Projects are expected to support the GIF’s goals of poverty reduction and inclusive and sustainable growth in emerging markets and developing economies through improved delivery of infrastructure services. This is defined by higher numbers of people covered, better quality services, lower cost through improved efficiency, and/or more climate-smart modes of service provision.

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Alignment with country priorities

Projects should address a priority investment need and have demonstrable government commitment, including the availability of adequate fiscal resources to develop and implement the project and intention to seek private financing.

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Viability, Sustainability and Value for Money

Projects must be economically, technically, socially, environmentally, and fiscally viable, and represent value for money for the recipient country government and end users. This will be assessed in terms of social and economic returns for the project as well as its proposed mode of implementation (e.g. PPP).

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Mobilisation of private capital

Projects need to have significant potential to leverage public funds by attracting sizeable capital investment from the private sector.

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Complexity

Projects that require multiple parties to work together to structure, arrange and provide financial support, and/or projects that require a blend of financial or risk mitigation instruments to attract commercial finance—these are the projects where the value-added of preparing the project through the GIF platform is expected to be the highest.

Complexity could take several forms, including projects with multiple discrete operating units (e.g. pipeline and plant, or facility and supporting infrastructure) in one or more sectors; multi-country or regional projects; or those that envisage new applications of financing mechanisms in a given context—whether the first instance of private financing in a reforming sector, or an effort by a government to expand the range of investors engaged in financing infrastructure investment in a more well-established market.


Status of Global Infrastructure Facility Projects

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Source: Global Infrastructure Facility

Global Infrastructure Facility Project Preparation and Structuring Activity Approved
Country
Sector
Technical Partner
Description
Liberia
Transport
World Bank
Assist the Government of Liberia with transaction structuring and support necessary to deliver the availability-payment concession of a portion of the Ganta-Zwedru road, key link in the country’s south-eastern transportation corridor.
Water
International Finance Corporation (IFC)
The GIF will provide transaction support to assist the Lilongwe Water Board with the preparation of the PPP transaction. The funding would support IFC’s role as a transaction advisor and hiring of technical and legal consultants to prepare the transaction.
Mauritius
Water
World Bank
This is a 15-year PPP contract to increase the volume and efficiency of water supply in six metering districts, and replace pipes.
Transport
IFC
Bus-based mass transportation system in the Greater Dakar Area, including infrastructure development and operating system development.
Tunisia
Energy
World Bank
Support to the Tunisian Energy utility to undertake the necessary feasibility studies, financial analysis and modelling, and structuring for the transaction.
Global Infrastructure Facility Project Definition Activities Approved
Country
Sector
Technical Partner
Description
Côte d’Ivoire
Transport
World Bank
Consists of two PPP concessions. One for a new 2 nd  bridge crossing of the Vridi-Bietry Bay, and another one for the development of an inland port facility adjacent to the AutoRoute du Nord
Multisector
World Bank
GIF engagement includes reviewing priority project pipelines to identify and prioritise a set of early-mover projects – based on project readiness and sector priorities – and preparing project-specific action plans that detail the work needed to bring the projects to market.
Egypt
Transport
European Bank for Reconstruction and Development (EBRD)
Greenfield dry port and connecting rail bypass, intended to facilitate trade and reduce congestion, as part of a modal shift from road to rail for freight transport.
Energy
World Bank
Assist the Government of Ethiopia and the Ethiopian Electric Power Corporation (EEP) to decide on whether to proceed with an Independent Power Producer transaction and prepare the technical and commercial information on the sites to standards required for procurement.
Transport
World Bank
This is a major dry port project designed to release operational pressure at the major seaport Port of Tema.
Transport
World Bank
Undertake an initial market study to determine if there is interest from investors and lenders to provide financing the Ganta-Zwedru road project.
Transport
World Bank
Conducting an analysis of options for private sector participation and monetisation for three projects that aim to provide efficient, safe and high quality passenger and freight transportation services in Lagos.
Energy
World Bank
Major regional transmission project to help create an African-European energy market.

Source: Global Infrastructure Facility

In 2014 the G20 recognised the importance of infrastructure in boosting demand and lifting productivity and growth and established the multi-year Global Infrastructure Initiative to support public and private investment in quality infrastructure. The Global Infrastructure Hub was created by the G20 to provide dedicated resources to help implement the agenda under the Initiative and deliver on the G20’s objectives.

Based in Sydney and staffed by infrastructure professionals from public and private sector backgrounds from around the world, the Global Infrastructure Hub seeks to grow the global pipeline of quality, bankable infrastructure projects. By facilitating knowledge sharing, highlighting reform opportunities and connecting the private and public sectors, the Global Infrastructure Hub helps improve the functioning of infrastructure markets.

In 2017 the impact of the Global Infrastructure Hub went through a process of self-evaluation to determine whether it was making a positive impact on infrastructure development. Findings showed that its impact had been low due to its short implementation time and the Global Infrastructure Hub was given another 4-year mandate to continue the work.

The Global Infrastructure Hub’s primary function was regarded as its relationship with the G20, both as an organisation that could advocate for infrastructure at the G20, and one that could leverage G20 support to drive change. It was seen as important that the G20 give the Global Infrastructure Hub the authority to apply pressure, particularly to the multilateral development banks, to improve infrastructure outcomes. It needed to be assured of this support, and to leverage this support so as to be more catalytic in the infrastructure market.

In sum, the Global Infrastructure Hub has been commended for filling a data gap in the infrastructure development space and for showing good potential in the infrastructure compass and risk matrix tools. The infrastructure compass allows users to explore the capability of 56 countries to deliver infrastructure projects, identify priority reforms and pinpoint leading practices across infrastructure governance & institutions, regulatory frameworks, permit, planning, procurement and delivery. The risk matrix tool has been designed to assist developing economies better assess potential infrastructure investment risk. Correct risk allocation is crucial to the success of PPP projects and when not structured correctly, can stop projects from getting off the ground or cause failure in the financing, construction or operational stages, with adverse consequences for governments or investors. The tool forms part of the GI Hub’s G20 commitment to deliver a guidelines suite of guidance on leading practices that will enable governments to take projects to market faster and more cost-effectively, and help to address the trillion dollar infrastructure gap worldwide.

However, the Global Infrastructure Hub failed to engage effectively with the private sector.

As part of its support to the Compact with Africa, the Global Infrastructure Hub committed to expand the InfraCompass tool from 49 to 56 countries, thereby ensuring that the following African countries are now included: Benin, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Nigeria, Rwanda, Senegal, South Africa and Tunisia. In addition to the inclusion of some of the new CwA countries, the latest World Bank public-private partnership (PPP) Benchmarks for each of the 56 countries were included in this expansion. This should allow greater effectiveness of the InfraCompass tool.

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