The Civil Engineering Contractor March 2019 | Page 40

BUSINESS INTEL
Project preparation
is the key to bridging
Africa’s infrastructure gap
By Eamonn Ryan
Development has never been limited by the lack of money, but rather the ability to spend
money, according to economics and history professor at Harvard University, David Landes.
Similarly, those projects which make it to fruition, often fail to meet expectations and targets.
A
t the Infrastructure Africa
conference held at the Sandton
Convention Centre in October
2018, a panel discussion identified poor
project preparation as a major culprit.
The panel consisted of:
• Muzi Kubeka, a partner with White
& Case, a New York-based law firm
focused on infrastructure finance
• 
Fiona Wilson of the Clinton
Foundation’s Climate Initiative
and Energy Programme (CCIEP),
based in Ireland
• Paul Mojalefa, business development
specialist at Export Credit Insurance
Company of South Africa
• 
Cleyton Barros of Global
Infrastructure
Hub,
an
organisation established four years
ago by the G20 group of nations to
facilitate infrastructure projects,
and with experience in fellow
BRICS member Brazil
• 
James Mackay, associate director
of Capital Projects Infrastructure
at PwC Advisory, and a member
of the South African Council of
the International Project Finance
Association.
Panel coordinator Nigel Gwynne-
Evans, chief director for African
Industrial Development at the
Department of Trade and Industry,
posed the panel topic: while the
conference is focused on creating
infrastructure corridors in Africa to
lower the high cost of doing business
on the continent, the issue of project
bankability is probably the single most
important constraint to making this a
reality. That in turn is dependent on
project preparation.
Muzi Kubeka
“How can we improve the bankability
of projects so as to unlock the pipeline
and realise all these high aims? The
key is project preparation and funding
for various stages of a project,” said
Kubeka. He cited a scenario where
credible advisers would rather walk
away from a project because of the lack
of technical capacity by the sponsor to
prepare the tender, and the fear that
scope creep might cripple the adviser’s
ultimate remuneration. Kubeka noted
that various development finance
institutions (DFIs) have programmes
in place aimed at building up
critical capacity within government.
Early-stage funding is increasingly
becoming available to facilitate project
preparation by government, so that
when it presents a project to potential
investors and advisers, the project
would be bankable. However, he
noted, the lack of capacity within the
public sector is such that even though
some of the available funding from
DFIs is concessionary, and even grant
funding, it still cannot be allocated
because projects are not ‘shovel-ready’.
Fiona Wilson
Wilson outlined several ways that
African governments can de-risk
political issues relating to a project.
She explained that the Clinton
Foundation partners with small island
nations to manage their transition from
primarily diesel-based to renewable
energy-based systems. “These
countries typically have high carbon
footprints, and the initiative is partly
for climate change purposes, as well as
the economics of energy — as diesel
is extremely expensive. We look at
Square Kilometer Array in the Karoo.
38 | CEC March 2019
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