African Growth and Opportunity Act Conference - April 15, 2008
FEDERAL TRANSIT ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
AFRICAN GROWTH AND OPPORTUNITY ACT CONFERENCE
CAPETOWN, SOUTH AFRICA
APRIL 15, 2008
“Financing Africa’s Transport Infrastructure”
Good morning, everyone, and welcome to our plenary session on financing Africa’s transportation infrastructure.
On behalf of President Bush and U.S. Transportation Secretary Mary Peters, I am delighted to be here with you in Cape Town.
The Department of Transportation is enormously proud to host the first-ever transportation and trade forum, in conjunction with the African Growth and Opportunity Act.
As we all know, sub-Saharan Africa faces many significant challenges in its quest to develop a viable transportation infrastructure that can support sustained economic growth, commerce, and mobility – within and across each country’s borders.
Indeed, it is fair to say that in terms of infrastructure, the region lags behind other developing nations. For example, less than a fifth of the sub-Saharan road network is paved, compared to more than two-fifths in South Asia, and over a quarter in Latin America. And while the region is home to nearly a fifth of the population among developing countries, it accounts for less than 3 percent of the total rail infrastructure.
Throughout the sub-Saharan, geographic and demographic realities contribute to the difficulties associated with developing a transportation infrastructure. More than a dozen of the continent’s countries are landlocked, population densities in the interior are very low, and the financial and social capital needed to jump-start various development projects is not always readily available.
In addition, wars and national disasters have at times disrupted well-intentioned efforts to move private-sector rail concession agreements forward.
These are formidable obstacles, to be sure. . . They call to mind an African proverb:
“When a mountain is in your path, do not sit down at its foot and cry. Get up and climb it.”
Fortunately, our African friends do not have to climb that mountain alone.
The U.S. and other nations are joining them on the journey.
For example, through the Millenium Challenge Corporation, the United States is providing nearly 4 billion dollars in partnership grants to 9 African nations. We’ll hear more about this later this morning from one of our panelists.
In addition, China’s Eximbank has extended 2 billion dollars in loans to Angola and is involved in building roads in Mozambique.
And my agency, the Federal Transit Administration, has undertaken several initiatives through its International Mass Transportation Program. Working with officials in South Africa. . . Lagos, Nigeria. . . the Republic of Liberia. . . Kenya, and elsewhere. . . we are providing technical assistance and information on a range of projects to improve the safety, planning, design, and operation of bus, rail, and other public transportation projects.
Obviously, this is only a beginning. A great deal more work lies ahead for the region.
One of the first and most important strategic goals is to obtain access to capital and financial partners in order to secure the resources needed to build roads, rails, ports, and other transportation assets.
Unfortunately, there is a chicken-and-egg situation at work here: Access to financing has been difficult, in part because of the real and perceived risks associated with investing in complex, long-term transportation projects. . . Many potential investors have questioned whether they would see timely returns on their investments, and whether loans could be repaid. . .
Yet without secure financing mechanisms, it is difficult -- if not impossible -- for national and municipal leaders to plan, build, and deliver much-needed infrastructure.
This morning, we will examine what’s possible in the financing arena. . .
We will learn about some of the project financing models that may be available to the region, including public-private partnerships. . . uses of private capital. . . and a potentially cost-effective and efficient project management approach known as ‘build, own, operate, and transfer’.
This is a wonderful opportunity for all of us to focus on pragmatic, workable solutions that may help these nations and their people to develop a robust transportation infrastructure that will lead to greater economic freedom and mobility for everyone.