The countries forming the West African Economic and Monetary Union (UEMOA) have unveiled a $21 billion infrastructure deal pipeline in a bid to convince private investors of their commitment to further economic development and integration in the sub-region.
Announced as the leaders of the relevant states and regional organisations convened in Dubai at the first edition of the West Africa Investment Forum, the projects cover sectors including transport, energy, food security and water management.
The event, billed as a forum for dialogue between public entities, private investors and potential lenders, concluded with the signature of Memoranda of Understanding (MOU) for all but one of the 17 initial deals, for which a total of $19 billion has been secured.
These included the Yamoussoukro-Ouagadougou highway corridor (budgeted at $5.7 billion), the rehabilitation and construction of regional railways ($8.3 billion), a new coal-powered thermal power plant in Niger ($730 million), the construction of a dry port at Ferkessedougou, Ivory Coast ($700 million), the construction of a dry photovoltaic power plant for the UMEOA ($300 million), and bridges between Senegal and Guinea-Bissau ($122 million).
The only project from the announced list that was not mentioned during the signing protocol was the construction of an international airport at Glo-Djigbe, Benin, the cost of which has been projected at about $1.1 billion. Road infrastructure represented $9.2 billion of the total; railway, ports and airports for about $10.1 billion; and energy for $1.2 billion.
The projects will all be structured as public-private partnerships (PPP) between the governments of the UEMOA member states and “international commercial entities”, with the private sector responsible for providing at least 15 percent of the equity financing. The balance will be covered by debt.
The projects come as part of the second phase of a plan devised by the members of UEMOA, dubbed the Regional Economic Program, aimed at equipping the sub-region with the facilities and frameworks to foster long-term growth and tighter economic integration.
The forum also marks the 20th anniversary of the launch of the organisation, which includes the states of Benin, Burkina-Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. Altogether, its members represent a population of nearly 110 million.
It was not immediately clear when closing would be reached on the projects or when construction would commence. Responding to questions from journalists, Cheikhe Habjibou Soumare, president of the commission of UEMOA, said private investors who signed the MOUs yesterday would have three months, possibly extended by another three, to complement government-commissioned studies with their own due diligence and take a final view on the investment. Failing this, he explained, public entities would be free to go again to the markets and look for other partners.
It also remained unclear what volume or traffic assumptions the tendering authorities have used to forecast projected costs and how risks would be shared between the public and private sector.
While seeing the day’s announcements as positive steps, a number of delegates Infrastructure Investor spoke to expressed doubts as to how fast the pipeline would translate into up-and-running infrastructure.
Two Ivory Coast-based businessmen, currently raising funds for capital-intensive projects, said political risk and governance issues remained serious concerns for international investors. They saw top-driven reforms to make administrations more investor-friendly as in their infancy.
A European adviser to Africa-focused infrastructure investors also thought projects would take time to get off the ground, and described some projects, such as the new international airport in Benin, as ambitious and possibly relying on over-optimistic initial assumptions.
Two investors from a Dubai-based firm also said they wanted to see projects pass tangible milestones before getting overly enthusiastic, and said the region’s leaders would have more convincing to do to attract overseas investors from the Gulf and beyond.
Christian Adovelande, president of the West Africa Development Bank (BOAD), saw much potential for profitable, private sector-backed infrastructure in the region beyond the announced pipeline. In order to help generate such opportunities the bank is in the process of raising FDE, an investment fund focused on public works with a target of $1 billion, and another fund, dedicated to supporting the private sector, aiming to reach a first close on a similar target.
Adovelande said that the BOAD had already committed $500 million to FDE, and would strive to garner the balance of commitments from “financial institutions”, notably Middle Eastern ones. The second fund would soon be marketed to potential investors, he added.
West Africa, projected to grow at about 7 percent this year, is one of the continent’s most dynamic economic regions. It also enjoys low inflation and healthy public finances, and counts a young, fast-growing middle class.
UEMOA leaders hope significant bottlenecks to further growth can be removed by addressing the region’s infrastructure needs, which they say far surpasses available public funds.