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Friday, 27 July 2018 12:59

Bringing the SADC Regional Development Fund to life: Recommendations for policymakers

Written by  Chelsea Markowitz and Ali Parry

While the RDF has the potential to make the SADC region more self-sufficient when it comes to its infrastructure development plans and initiatives, we have seen how a number of obstacles might complicate the full operationalisation of the Fund. Governments must move beyond talk if they are to realise their vision of a more economically agile and trade-friendly region.

For this reason, it is critical that the envisaged operationalisation of the RDF is grounded in strong funding and policy support.

The most urgent priority facing the region is improving early-stage project development as this is clearly a weak link in the infrastructure development process. Special attention therefore needs to be given to the most significant project bottlenecks, including project conceptualisation, definition and preparation. Furthermore, it is important that those projects and sectors currently receiving the least support (but which could be transformative in spurring development, such as transport and water) are targeted. While the SADC Project Preparation and Development Fund (PPDF), housed at the Development Bank of Southern Africa (DBSA), exists for the purpose of providing early support and will continue to make an important contribution, it is mainly ICP funded and also hosted in South Africa, and therefore regarded as being insufficiently geared to SADC interests. The intention is to collapse the PPDF into the new RDF and ensure a more regional flavour to its operation. It is therefore important that the bulk of member state contributions be directed to this component of early-stage support within the RDF

The RDF can support capacity-building initiatives in a number of areas. For example:

  • technical support to institutions identified by member states as being able to serve as early-stage champions for potential projects
  • support to encourage stakeholder engagement and the securing of dedicated project sponsors/managers to drive the process
  • assistance in promoting greater understanding of and achieving regulatory and legislative harmonisation, without which infrastructure development is inhibited; and
  • support for the ongoing review and restructuring/refinement of the RIDMP to streamline its project base. This should dovetail with a clearer prioritisation of projects within the context of national,
  • regional and continental economic development-focused plans and strategies, especially the Regional Industrialisation Strategy and Roadmap.

Overall, capacity-building will go a long way towards getting private sector actors on board and strengthening partnerships when projects move into the active phase. Constrained government budgets will necessitate increased infrastructural spending by the private sector, with relevant structural reform and regulatory changes being necessary accompaniments. Public-private partnerships (PPPs) do not have a particularly good track record in Sub-Saharan Africa and so new mind-sets are needed to take advantage of the infinite potential of PPPs.

Of course, with all the emphasis on the early-stage project development, regional finance should not neglect subsequent steps in the project life cycle, such as project structuring, transactional support and implementation, but these should be a secondary focus, as more external finance is available for these less risk-prone stages.

It has not yet been decided how the RDF will be formally established and governed, but stakeholder interviews have suggested that it is to be set up as a trust governed by the SADC Finance Ministers. While this suggests that it will be given high-level attention, the operation could nevertheless be weighed down by bureaucracy, which is common at the regional ministerial level. It will be important to consult with stakeholders who have been involved in the SADC PPDF (and have come up against such bureaucracy) to devise mechanisms that balance the need for representative oversight at the regional level with overall efficiency.

Against the backdrop of a fast-changing world SADC needs – more than ever before ‒ to pull together so that member states can leverage their resources and turn the corner economically. A regional infrastructure financing solution in the form of a well-oiled RDF is an intriguing idea and would be a game changer. Whether SADC will be able to put it in motion will depend on stakeholders having a clear grasp of the issues and the determination to push forward the RDF politically.

Authors: Chelsea Markowitz and Ali Parry