SPEECH BY AMB(ENG) MAHBOUB MAALIM

EASTERN AFRICA REGION CANDIDATE FOR THE POSITION OF

COMMISSIONER FOR INFRASTRUCTURE AND ENERGY OF THE
AFRICAN UNION COMMISSION
TO
MEMBERS OF THE PERMANENT REPRESENTATIVE COMMITTEE
(PRC) ON THURSDAY, JULY 7TH 2016 IN HOTEL RADISSON, ADDIS
ABABA
Excellencies,
All Protocols Observed.
I really appreciate this opportunity to address you and for the fact that I have made it thus
far; into the main list of candidates for commissioners in our esteemed organisation. I do
not delude myself as to aspiring to get into an easy job. I am cognisant of the fact that
Energy and Infrastructure from the bedrock of development and growth in our continent;
and that they need to be transformational and provide a stable level base upon which to
build.
Excellencies, The much hyped economic growth in Africa between 1990-2005 (1st
historic notable growth trend), has half of it attributable to Infrastructure development.
Energy and Infrastructure though requiring an initial heavy capital investment, provides
the highest rate of return and is best choice for public private partnerships.
Excellencies, I will in my endeavour to undertake my responsibility as Commissioner for
Infrastructure, guided by our own Agenda 2063 and the United Nations Sustainable
Development Goals (SDGs) among other policy frameworks. The most notable
requirement in vision 2063 is the fact that Africa has to wean itself from foreign aid and
mobilise its own resource through trade. I note that this is achievable only through
sustained infrastructure resourcing and development which I pledge to make my
hallmark. I do also realise that Energy is goal No. 7 in the SDGs and Infrastructure is
goal No. 9. I further note that Energy and Infrastructure cut across all other 15 goals.
Excellencies, I now wish to turn to more substantive technicalities in the subject and
bring up my vision:
Agenda 2063 is the vehicle that will deliver the aspiration of the continent
towards a prosperous Africa. It will be based on an inclusive growth and
sustainable development process. The blueprint aims at increasing intra-Africa
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trade to more than 50% compared to the current 11%. Within this period it is
forseen that Africa will wean itself off foreign aid and become capable of
mobilizing its own financial resources, reliant on trade, not aid. The vision of the
Africa in 2063 proposes goals, milestones, key drivers and enablers as well as
priority actions. Agenda 2063 requires synergy between the AU and the RECs
in order to deliver the vision. This must begin with domestication at the national
level though policies, strategies and constitutions. The Agenda envisions seamless
and well networked borders; free mobility of labour and capital; and a continental
visa that is accessed by all Africans, Implementation, monitoring and evaluation
coordination of Agenda 2063 will be driven by the Regional Economic
Communities (RECs). With this, The African Union Commission (AUC) has
outlined the blueprint on how the continent ought to look like in the next 50 years.
Agenda 2063 is in line with the Official United Nations Agenda for Sustainable
Development adopted on 25 September 2015. This has 92 paragraphs, with the
main paragraph (51) outlining the 17 Sustainable Development Goals and its
associated 169 targets. This sustainable Goals explicitly talks about energy and
infrastructure on the goal no. 7 (Energy Ensure access to affordable, reliable,
sustainable and modern energy for all) and goal no. 9 (Infrastructure Build
resilient Infrastructure, promote inclusive and sustainable industrialization and
foster innovation) but, the theme of Energy and infrastructure cuts across all the
remaining fifteen goal as they are the major enabler of all of them. The emphasis
here is to get efficient to utilize African resources, research and development will
be crucial, an opportunity for continental collaboration.

The Current Status of Infrastructure

African countries lag behind their developing country counterparts on
infrastructure, but, spending on African infrastructure is higher than previously
thought, and is estimated at $45 billion. At the moment, 4 per cent of Africas
Gross Domestic Product is invested in infrastructure. Poor performing
infrastructure attract major socio-economic challenges that affect every aspect of
society. The increase in infrastructure project uptake by both the private sector and
governments always presents the challenges of financing, with less emphasis on
planning of these initiatives and adaptation to get more out of these projects for
less, without compromising quality. A lack of capabilities and modern skills has
prevented infrastructure players from taking advantage of improvements in
construction methods and saving both time and money, while innovating on how
to deliver modern infrastructure. In the next 5 years, the Gross Domestic Product
of Africa is expected to be US$ 2.6 trillion; to keep pace with this Gross Domestic
Product, and with a rapidly growing population, there will be a direct increase in
infrastructure spending by governments as the demand for infrastructure will rise
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faster than availability. In the next 15 years, 40 per cent of Africans are expected
to live in cities, this, requires commensurate growth in infrastructure. The
inefficiencies in the power sector stem from the sectors fragmented production,
distribution, and transmission networks. Without enough Power the continent
cannot industrialize hence reducing the growth in Africa. The inadequate
infrastructure is inhibiting the regions ability to trade. A positive development is
the integration in the power sector which has started in the Horn of Africa with
Ethiopia, Djibouti, Kenya and Sudan having transmission arrangements.
One recent development is the entry of China as a major player into the
infrastructure Arena; China has in recent years become the Worlds largest
investor in infrastructure, and consequently has grown to have a great reputation in
infrastructure development, especially in Africa. Will the example of China
encourage more foreign investments?

Gaps in Infrastructure and Energy

It is estimated that Africa needs $93 billion a year to catch up with its huge
infrastructure backlog over the next decade and an estimated cost savings of $17
billion could be achieved if existing resources were used more efficiently. Taking
the potential for efficiency gains into account, a substantial infrastructure funding
gap of $31 billion a year remains. Closing this gap will undoubtedly entail
significant efforts to increase funding from all the sources. This may require a
business approached to the development of energy and infrastructure. It is
estimated that 620 million citizens on the continent lack electricity. Infrastructure
is a key enabler to productivity, and infrastructure development needs to address
the major impediments to financing and partnerships. Over the decades to come,
many sub-Saharan African countries with middle income aspirations will continue
to increase their investments in infrastructure exponentially, but with historically
proven deficit budgets. The African continent, have the potential to deploy 11
terawatts of solar energy, 350 GW of hydro, 110 GW of wind and 15 GW of
geothermal. All this potential has not been developed.

My Vision
Increased Investments
Bold and innovative approaches are required to meet the infrastructure needs of
the continent. With reforms, it will be easier to raise new resources to eliminate
inefficiencies in the existing system making the investment sustainable for the
private sector while affordable for people. The gaps that need to be funded are
quite enormous, but, the demand side needs to be looked as, as well as efficiency.
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 The Private Sector

The private sector must promote modernization and adoption of technology
through strategic partnerships. Recognizing the critical role that private financing
sources, such as, sovereign wealth funds, pension funds, and insurance can play in
financing major energy projects, African countries will be encouraged to create an
enabling/friendly environment to attract private funds in an arrangement of PPP,
aimed at supporting economic growth and development by increasing access to
reliable, affordable, and sustainable power in Africa. Similar work is already
underway in power Africa-AfDB2).
A Business Approach
Energy and infrastructure are expensive in its initial investments but once
established it is a sector that can have a high return on investments besides
multiple benefits to the overall economy. It has been argued that infrastructure
investments contributed to more than half of Africas improved growth
performance between 1990 and 2005, and increased investment is necessary to
maintain growth and tackle poverty. The returns to investment in infrastructure are
very significant, with on average thirty to forty percent returns for
telecommunication (ICT) investments, over forty percent for electricity
generation, and eighty percent for roads.
Renewable Energy
Africa has enormous natural resources for clean energy. The development of
geothermal projects in East Africas Rift Valley, wind in North Africa such as in
Egypt and hydropower across the continent has been proven to have enormous
possibility.
Economies of Scale
The integration in the power sector such as the one that has started on the Horn of
Africa with Ethiopia, Djibouti, Kenya and Sudan having transmission
arrangements should be the trend of the future. Such collaboration achieves the
desired economies of scale; negotiations may include negotiating power purchase
agreements, transmission and distribution agreements, licensing agreements,
leasing agreements, and other related transactions.

 Technology Inputs
Africa has the opportunity to line up with the latest technology, a good example is
the revolution in Africa with mobile telephony, Africa was lagging behind in land
connectivity, but, once mobile technology was developed Africa entered at the top.
Technology advanced in Africa enabling her to catch and surpass other regions in
utilizing mobile technology. Development of indigenous technologies from
universities and research institutions will be encouraged. Significantly, the cost of
switching to Green energy for Africa is small compared to developed nations with
already infrastructure in dirty energy sources.
Protection of Critical Infrastructure
Critical infrastructure is those infrastructure elements that, if significantly
damaged or destroyed, would cause serious disruption of the dependent system or
organization. Africa needs to build in an element of risk management against
natural disasters; lots of infrastructure is damaged with resultant loss of lives,
costly damages and disruptions. Replacements might prove too costly
undermining overall economic growth and societal welfare.