Across Africa, investments in infrastructure have failed to keep pace with growth and demand, creating a tremendous infrastructure deficit. Less than 40 percent of the population across the continent, and only 26 percent of the population of Sub-Saharan Africa, has access to electricity. Approximately 34 percent of the population has access to improved sanitation facilities, and 35 percent lack access to clean drinking water. The infrastructure deficit in Africa is remarkable even when it is compared to the infrastructure of other low income and developing regions.

It has been clear for some time that scaling up financing from the traditional sources of taxes, government borrowing, and aid will not be adequate to successfully address the infrastructure gap. Public-private partnerships (PPPs), which use private expertise and funding to construct, operate, and maintain infrastructure and deliver public services, are one of the solutions African governments are turning towards to solve this deficit. Yet, such projects need to overcome a range of challenges to ensure that they are well structured, deliver value for money, and transfer operational risk to the private sector. In the least developed countries, three of the most significant of these challenges are: (i) political instability, (ii) balancing the interests of investors and consumers (and keeping them balanced), and (iii) a shortage capacity in the public sector. 

Many of the least developed countries have suffered political instability and conflict at both the national and the regional levels. It is difficult to attract investors and debt financing for projects that are located in such regions, but it is not impossible – there are tools to address these issues. 

Take, for example, the Ruzizi III Regional Hydroelectric Project currently being promoted by Energies des Grand Lacs (EGL), a regional organisation that operates under the auspices of the Economic Community of the Great Lakes Countries with a mission to foster regional cooperation in energy projects. The site of the project is on the border between the Democratic Republic of Congo (DRC) and Rwanda. The offtakers include the parastatal utilities of Burundi, the DRC, and Rwanda – three nations with a long history of conflict. Many projects would simply get derailed in such an environment, but Ruzizi III has benefited tremendously from EGL’s cross-border facilitation of the project. The key has been transparency, consultation, and an unwavering focus on the technical, legal, and economic problems that must be overcome. 

The project has also benefited tremendously from the support of a broad range of bilateral and multilateral development finance institutions, which financed the initial steps in the project’s development, have signaled interest in lending to the project company, and are likely to offer political risk insurance and guarantees that cover the risk of sovereign defaults under the project agreements.