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Stumbling blocks to infrastructure development in SADC: Implications for the Regional Development Fund (RDF) © Flickr, CIF Action
Friday, 27 July 2018 12:55

Stumbling blocks to infrastructure development in SADC: Implications for the Regional Development Fund (RDF)

Written by  Chelsea Markowitz and Ali Parry

An assessment of SADC’s current infrastructure financing challenges is important in determining how the RDF can better support infrastructure development within the region.

While countries’ financial wherewithal is a key element of a successful development drive, there is much more to infrastructure development than accessing the necessary funds to kick-start and sustain projects.

At the core of SADC’s regional infrastructure development efforts is the Regional Infrastructure Development Masterplan (RIDMP). However, progress in implementing the RIDMP has been slow, with only 10% of SADC-focused Programme for Infrastructure Development for Africa (PIDA) projects (which are more or less comparable to RIDMP projects) currently operational. Regional stakeholders point out the challenges in prioritising projects and that the RIDMP has advanced some projects in an arbitrary fashion, without sufficient preparation and consultation. This has been attributed to institutional capacity constraints in national governments as well as the inevitable political motivations behind project championing. In addition, there are competing definitions of ‘regional’ projects among different stakeholders, giving rise to confusion and uncertainty. For example, is a regional project only one that is cross-border, or can it also be a national project with regional impact? And in that case, how does one measure regional impact?

Many infrastructure-related projects in SADC also run into trouble from the outset or fail to gain traction because of skills/capacity shortcomings, which result in a lack of ‘bankable projects’. A country’s specific needs have to be determined, stakeholders consulted, project plans designed and aligned with socio-economic priorities and prevailing legislation, and costs, benefits and risks assessed. It is often in the early, pre-feasibility phase that serious obstacles occur – typically due to a lack of technical and project management skills. Many projects lack dedicated project sponsors, which have the capacity to undertake activities such as applying for feasibility funding, as well as the critical championing work that is needed to encourage buy-in and ongoing cooperation across institutions, departments and countries. Skilful navigation of different regional interests is required in the face of different levels of development, economic priorities, political agendas and regulatory regimes, which frequently clash with one another. As a result, many proposed projects actually do not progress into the active project structuring, tendering, construction and operational phases; alternatively, they experience unnecessarily long lead times.

Crucial to the success of the RDF is member states’ contributions, as they constitute the largest portion of the Fund’s initial capitalisation. Yet a lack of public funding is a frequent lament by countries in the SADC region. Many competing public financing needs means that countries find it difficult to raise funds for national social and infrastructure development projects, let alone sustain contributions to a regional fund. In many cases, financial resources that ideally should support long-term capital projects are used to plug short-term expenditure holes or service external debts. Sometimes funds are forthcoming to cover the early phases of a project but are depleted later on, leading to aging infrastructure in need of finance for maintenance. SADC member state GDPs also vary greatly, and so the funding to kick-start the RDF will likely largely fall to member states with sufficient means, which could give rise to the free-rider problem, or alternatively the perception that the larger economies are driving the regional infrastructure financing agenda.

In our next and final blog in this series, we will provide a number of recommendations for policymakers, indicating how the prevailing obstacles to regional infrastructure development can be tackled so that the Regional Development Fund can play a meaningful role in building and sustaining SADC’s infrastructure capabilities.

Authors: Chelsea Markowitz and Ali Parry