Business Case Intervention Summary
Title: Regional Infrastructure Programme for Africa (RIPA)
What support will the UK provide?
This Business Case is for £39.25 million over the period 2012-2015 to support improvement of regional
infrastructure in Africa through a Regional Infrastructure Programme for Africa (RIPA).
Why is UK support required?
What need are we trying to address?
In much of sub-Saharan Africa, the poor state of infrastructure in the transport, energy, water and ICT
sectors is a major constraint on development. Improving infrastructure will certainly boost economic
growth and reduce income inequality. Much of the infrastructure investment required is regional (crossborder) in nature, for instance to improve transport corridors which give landlocked countries access to
marine ports and to build electricity interconnectors allowing countries with large hydropower capacity
to export energy This regional aspect makes such infrastructure more costly and complicated to design
and build, because it requires coordination between stakeholders in two or more countries and the
different stakeholders often have differing interests, and the large cost of the projects typically requires
many financiers to coordinate with each other. As a consequence, unless special initiatives are taken,
regional infrastructure tends to receive less attention than it deserves because governments and
financing agencies find it easier to concentrate on national level projects. Recent studies indicate
US$7.5 billion a year needs to be invested in Africa’s regional infrastructure.
The UK African Free Trade initiative (AFTi)
RIPA is a key component of the African Free Trade initiative (AFTi) as set out in the 2011 Trade and
Investment White Paper. During his July 2011 Africa visit, the Prime Minister set out the key focus of
AFTi on cutting the cost of African trade. RIPA will bring down the physical barriers to trade by cutting
the costs that poor transport infrastructure imposes on importers and exporters. RIPA will work closely
with DFID (and other donor) programmes designed to bring down the regulatory and other barriers to
African trade.
What will we do to tackle this problem?
We will invest in two existing and effective multi-donor facilities, the Infrastructure Project Preparation
Facility (IPPF) and EU Africa Infrastructure Trust Fund (ITF). Both are unusual in that they are
dedicated to regional infrastructure but both are short of funds to meet the huge demand for regional
infrastructure preparation and financing. In addition we will use our engagement in EU, African Union,
G8 and G20 processes to improve coordination between these facilities, international infrastructure
financiers, and with DFID’s existing programmes which are seeking to boost intra-African trade by
working in partnership with the private sector and cutting the cost of trade along major transport
corridors in East and Southern Africa.
Who will be implementing the support we provide?
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We will provide £15 million to the Infrastructure Project Preparation Facility (IPPF) which
commissions early stage preparation of regional projects which AfDB and other organisations
then pay to have implemented. The IPPF is the lead agency for regional project preparation for
the African Union. It is managed by the African Development Bank (AfDB).
We will provide £20 million to the EU Africa Infrastructure Trust Fund (ITF) which is
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complementary to IPPF because most ITF grants are used to help to fund implementation of
regional projects by a range of development finance institutions. The ITF is managed by the
European Investment Bank (EIB) and channels funds through EIB, the African Development
Bank (AfDB), the Private Infrastructure Development Group (PIDG), KFW and Agence
Francaise de Developpement (AFD).
We will provide £2 million for the Infrastructure Consortium for Africa (ICA). The ICA is the
consortium of G8 governments and multilateral development banks that the UK established in
2005 to strengthen coordination between infrastructure financiers and monitor infrastructure
investments in Africa. The ICA Secretariat is hosted by AfDB. The ICA will be preparing a new
Strategic Business Plan in 2013, when the UK as G8 President will co-chair the ICA Annual
Meeting. This will be an opportunity to use ICA to focus attention on the regional infrastructure
challenge.
We will provide £2 million to fund between 3 and 5 DFID secondees working on regional
infrastructure in the African Development Bank, World Bank and other international
organisations that provide infrastructure financing. The secondees will augment the capacity of
the multilaterals to work on regional infrastructure, strengthen coordination between them and
play a key role in ensuring that the UK African Free Trade initiative leverages multilateral
financing to bring down the cost of trade in Africa. The proposed secondee programme will
build on positive achievements of 3 DFID secondments over the past 3 years, which have
included strengthening links between IPPF and ITF so that projects prepared by IPPF are taken
to infrastructure implementation stage by financiers assisted by ITF.
RIPA’s approach seeks to exploit synergies between these different activities and so should have a
greater impact than the sum of its components. Our financial contributions to IPPF, ITF and ICA gain
us influence on these agencies through our seats on the IPPF Oversight Committee, the ITF Executive
Committee and the ICA Members Meeting. Our influence there will be enhanced by our improved
understanding of regional infrastructure challenges and opportunities gained from feedback from the
secondees. We will review the effectiveness of this approach annually and will consider seeking further
funding for RIPA in 2015.
What are the expected results?
What will change as a result of RIPA?
The RIPA programme will speed up investment in priority regional infrastructure projects, thus
contributing to key results in the Africa Regional Operational Plan framework, which include improved
infrastructure to facilitate trade, through strengthened preparation and mobilised financing for 8
regional infrastructure projects.
What are the planned outputs from RIPA?
RIPA will increase the supply of regional project preparation studies and will encourage financiers to
take them to implementation stage. More than 100 new studies are expected to be commissioned by
IPPF and ITF by 2015. On the basis of experience to date, our £15 million funding for IPPF which will
pay for between 10 and 12 project preparation studies is likely to lead to investment of an extra £300
million in regional infrastructure by 2018.This is a conservative estimate.
Economic appraisal of past projects shows that substantial project preparation costs are justified by the
high economic returns from improving regional infrastructure. For example, the average economic rate
of return for 25 regional energy and transport projects for which the main multilateral development
banks approved loans between 2007 and 2011 was 26%.
The RIPA investment in ITF is expected to leverage at least £180 million of loan financing by 2014 for
regional infrastructure projects from the balance sheets of European and multilateral development
banks. It will also subsidise associated project costs, for example to cover the costs of subsidized
charges for poorer consumers or costs of meeting environmental and social standards.
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RIPA will improve cross-border and cross-financier coordination on regional infrastructure programmes
which will contribute to an increase in the availability of financing (public and private) for regional
infrastructure projects.
How will we determine whether the expected results have been achieved?
Progress against these outputs will be reviewed on a regular basis through our positions on the IPPF
Oversight Committee, the ITF Executive Committee, as an active member of the ICA and in regular
contacts between secondees, their DFID line manager and senior management in both DFID and their
host organisations. Progress will also be formally monitored annually using DFID, AFDB and EIB
results frameworks. RIPA will be subject to DFID’s Annual Review/Project Completion Review process.
During 2013, DFID will be working with other donors to refine the results framework for IPPF and to
update those for the ICA and for ITF. An evaluation of the effect of the secondee programme is
planned for 2015.
If RIPA can demonstrate the results we expect we will consider further investments.
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