View on Private Sector: New investors for East Africa

By Emese Balog

Presidents and policymakers from countries in East and Central Africa met in Kampala, Uganda, earlier this month (6 June), to thrash out plans for economic integration. The summit saw the launch of a joint authority to fast-track 14 major infrastructure projects in the Northern Corridor region: a group of countries comprising Burundi, Ethiopia, Kenya, Rwanda, South Sudan, Tanzania and Uganda.

Reading the communiqué that followed the negotiations, I was struck by the emphasis on public-private partnerships: the policymakers “welcomed the commitment expressed by the private sector to partner with governments … on the flagship projects”, it says. [1]

“The authority is primarily seeking to promote the transfer of technology from the private sector to the public sector, as opposed to privatisation.”

Pritish Behuria, University of London, United Kingdom

52e29cb4ec8d834898000068Pritish Behuria, a researcher on private sector-led development in Africa’s Great Lakes region, from SOAS, University of London, United Kingdom, tells me regional governments are keen on private sector involvement because they need both funding and technology transfer to get large infrastructure projects — such as transregional railway and shared energy plants — up and running.

Private sector technologies and expertise will be vital to these projects, Behuria says, but he points out that this won’t mean private ownership of the projects. “The authority is primarily seeking to promote the transfer of technology from the private sector to the public sector, as opposed to privatisation,” he says.

The idea is that public-private partnerships will benefit local businesses, explains Behuria, whose research focuses on political economy and financial liberalisation in Rwanda and the Great Lakes region. The authority would prefer it if domestic firms get involved, so that they generate jobs and boost local development, and efforts are being made to expand markets for smaller local companies, he says.

“The main aim, besides integrating economically, is to help ordinary people in the region.”

Pritish Behuria, University of London, United Kingdom

But the substantial resources that are needed for such large-scale projects will mean foreign funding is unavoidable, and Chinese investors are already playing a role, he adds.

Two of the partnership’s main focuses are energy and transport — addressing the region’s energy poverty and poor transport links.

Energy has long been a problem in the region, Behuria says, so sharing the costs of electricity generation between countries is seen as a way of improving access to power. Rwanda, for instance, plans to import 40 megawatts of electricity from Kenya, he says.

But the partnership’s priority is a rail network intended to benefit the whole region, particularly the landlocked countries of Rwanda and Uganda. The railway will run between the major Kenyan port of Mombasa inland to Nairobi and Kampala and then on to western Uganda — thereby connecting the region’s cities, and potentially transforming regional and global trade. [2] Funds for this are already being raised through public-private partnerships, including foreign investment. “They already have a few Chinese investors on board”, Behuria says.

The idea is that foreign investment of this kind would generate jobs for local people — although it is still too early to say how many jobs there will be, he says. “The main aim, besides integrating economically, is to help ordinary people in the region.”

 

References

[1] 10th Northern Corridor Integration Projects Summit: joint communiqué (Ugandan government, 6 June 2015)

[2] Investment opportunities in the Northern Corridor with emphasis in transport infrastructure (OECD, June 2004)

 

This article was originally published on SciDev.Net. Read the original article.