Quality Infrastructure in Africa: Japan and the Compact with Africa

By Rob Floyd

A year ago, I wrote about the Argentine Presidency of the G20.  At that time, I indicated that little had been said about Africa by the Argentine hosts, which was unfortunate.  Of course looking back, the entire Argentine presidency was somewhat unfortunate, with the least progress made at any summit since the G20 began in 2008.  This was due to a confluence of factors including Argentina’s recession, a frontal attack on globalism and the specter of spats among world leaders.  The 2018 G20 communique has exactly two mentions of Africa – and both were referencing initiatives – not the continent itself.

Now we pivot to the Japanese G20 Presidency, where Africa has returned prominently to the agenda. In part, this is because of Japan’s long and robust development and trade linkages with Africa.  The Japan International Cooperation Agency alone invests $3.4 billion in Africa annually while the Tokyo International Conference of African Development has, for the past 20 years, become a seminal event highlighting Japan’s development objectives in Africa.   It is also in part a response to the Chinese Belt and Road Initiative and other global forces.  Just a week after the 2018 Forum on China-Africa Cooperation in Beijing resulted in $60 billion of new financing announced from China, the European Union announced a new Africa-EU Alliance with even more billions in promised investment.  The Asia-Africa Growth Corridor announced by Japan and India in May 2017 has not shown much traction, hence Japan’s presidency of the G20 provides a unique opportunity to position Japan vis-à-vis the rest of the world and Africa.

Under the Japanese presidency, the focus on Africa will include some traditionally important Japanese priorities such as agriculture, health and nutrition, as well as governance, debt and industrial development. Importantly, Japan has indicated that the G20 Compact with Africa (CwA) will remain a priority.  The Compact is an initiative of the German G20 presidency, aimed at enhancing investment in Africa. CwA countries comprise Benin, Burkina Faso, Guinea, Côte d’Ivoire, Ghana, Egypt, Ethiopia, Morocco, Rwanda, Senegal, Togo and Tunisia, while other partners are the G20 countries themselves, the World Bank, the International Monetary Fund and the African Development Bank. The CwA is governed through the G20 Africa Advisory Group (AAG), co-chaired by Germany and South Africa.  The African Center for Economic Transformation (ACET) supports the CwA through peer learning, investment promotion, analysis and peer review.

The CWA was welcomed in 2017, in part because big challenges remain in Africa that will require private sector participation. While there have been periods of strong growth, most African countries have not transformed their economies, and doing so is complex and difficult. Some countries have shown great strides in certain sectors or around a few policy areas, but not in broad economic transformation, which will require private financing, particularly for infrastructure. While it is evident that infrastructure investment is needed to achieve the 2030 Agenda for Sustainable Development, Africa’s infrastructure development since 2010 has been uneven. What private investment does exist is heavily concentrated in sectors such as energy, on a limited number of projects, and largely in just a few countries such as Morocco and South Africa.

Japanese support to the CwA is positive as it will maintain momentum and policy coherence and also highlight the importance of “quality infrastructure”.  This is not new, as the G7 Ise-Shima Summit in 2016 had a strong focus on the same topic and led to the “Expanded Partnership for Quality Infrastructure” whereby Japan pushes an all of government approach for infrastructure investment – particularly beyond Asia.  At that time Japan committed USD 200 billion for infrastructure projects over five years.  While the definition of quality infrastructure can be debated, it centers on economic efficiency and inclusiveness. Although infrastructure development should have low life-cycle costs, it should also align with socioeconomic development and the development strategies of the recipient country. Ultimately, infrastructure that does not meet minimum standards of economic efficiency, safety and long-term sustainability will likely impose significant and largely unforeseen costs.

Some CwA stakeholders are embracing quality infrastructure. For example, international organizations such as the World Bank are shifting to life-cycle cost procurement and of course Japan is leading the global community in quality infrastructure protocols and approaches.  At the same time, some members of the G20 have shown little active interest in making investments in infrastructure – particularly in Africa – cost effective and long lasting through globally recognized guidelines.

Japan’s active support for the G20 Compact with Africa, coupled with its commitment to quality infrastructure, provide a unique opportunity to strengthen a G20 initiative that can have even greater impacts than initially envisaged. Addressing Africa’s infrastructure gap is a prerequisite for its economic transformation.  Addressing Africa’s infrastructure gap with quality infrastructure is a prerequisite for more rapid, more inclusive, and more effective economic transformation. As Japan rolls out the red carpet for nine Ministerial Meetings and the G20 Summit in Osaka next month, it can also continue to make quality infrastructure a global priority – particularly for Africa.

 

Rob Floyd is Director and Senior Advisor at the African Center for Economic Transformation.

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