Transformative Opportunities in Natural Resource Management, Energy and Transport Sectors in Africa Presentation to Japanese Companies By Jamal

Transcription

1 Transformative Opportunities in Natural Resource Management, Energy and Transport Sectors in Africa Presentation to Japanese Companies By Jamal Saghir Senior Regional Adviser Africa Region The World Bank Tokyo, November 2014

2 Structure of the Presentation: I. World Bank Strategic Vision: Critical Development Challenges and Need for Transformative Activities in Africa II. Examples of Ongoing Transformative Projects III. Illustrative Additional Opportunities for Transformative Projects IV. Next Steps to Make These a Reality Nov 2014

3 I. Strategic Vision: World Bank s10-year Vision for Africa: 3 Accelerated growth: At least 20 countries with GDP growth of 3 4 percent a year Another 20 countries with growth of 1 2 percent per year Poverty rate reduced by 12 percentage points Growth achieved with a more diversified production mix, with manufacturing and services growing rapidly and absorbing labor, and agricultural productivity increasing. Aim is for 15 countries up from the current 8 to register at least 5 percent average annual agricultural GDP growth. The continent s share in world trade doubled to 8 percent, with regionally integrated infrastructure providing services at globally competitive costs. Access to modern energy services increased to at least half of households. Climate change adaptation measures will be put in place. Source: Africa s Future and the World Bank s Support to It, March 2011

4 I. Strategic Vision: To Meet the Transformative Challenge, Bank s Africa Strategy Rests on Two Pillars 4 Pillar 1: Enhancing competitiveness and increasing employment to harness private sector growth for sustainable poverty reduction and wealth creation Pillar 2: Reducing vulnerability and building resilience to shocks of all kinds Both pillars to be supported by a foundation of improving governance and public sector capacity

5 I. Strategic Vision Strengthening these Pillars Requires Action on Many Fronts 5 Three key areas are: Water and Other Natural Resource Management Transport Energy

6 I. Strategic Vision Better Management of Water, Land, and Other Natural Resources is Critical to Increase Competitiveness, Reduce Vulnerability to Climate Shocks, and Promote Sustainable Growth 6 Critical for increasing agricultural productivity: yields lag other regions, partly because irrigation is underutilized While less than 3 percent of total renewable water resources are used, Africa has by far the lowest irrigation development rate of any region in the world: < 5% of farmers benefit from water management. Intensification needed to combat land degradation and deforestation Disaster management: resilience hinges on water management Overwhelming majority of Africans hurt by disasters are affected by droughts or floods Climate change will increase frequency of extreme events Urbanization: basic services need scaling up to close the access gap in fast-growing urban centers In many countries, less than 65% of population has access to an improved water source

7 I. Strategic Vision And Transport Challenges Must be Addressed to Make Africa Competitive in Global Markets and Promote Intra-regional Trade 7 Challenging geography: Land-locked countries cover 30% of Africa s area and population including Ethiopia, the most populous landlocked country in the World with on average 50% higher transport costs. Road systems are in poor condition: of the 50,000 km. of trans-african highways, 30% are unpaved and 50% in poor condition. Poor inter-modal connectivity. Congestion in ports: delays and higher costs for shippers. Aged infrastructure facilities and technology. Many man-made inefficiencies Inefficient customs and logistics services Illegal roadblocks/ checkpoints Trucking cartels/ monopolies Bottom line result: the cost of transport in Africa is the highest in the world. Without fixing this, Africa will never be competitive.

8 I. Strategic Vision Energy access reduces poverty, promotes shared prosperity 8 Access to modern energy services linked to each of MDGs and SE4All targets call for universal access to energy: Low access and low supply: currently, generation is ~80 GW; 600 M people and 10 M SMEs without access Competitiveness: energy growth not in pace with GDP growth; demand growing to about 800 TWh by 2020 Quality of life: many countries below the 500kWh/capita consumption; 80% of households rely on solid biomass Great opportunities for transformative impact for the WB along the energy value chain Generation Transmission and Distribution Access Reduced cost of production (low carbon, low cost generation) Regional integration (regional power pool development) Knowledge and Partnerships Improved pricing (sector reform, effective tariff structures) Leverage our limited resources and expand south to south cooperation

9 II. Examples Ongoing Transformative Projects: Global Examples (1) 9 Some high risk/high reward projects are transformative because of their impacts, stemming from environmental, social and economic good practices (strategic environmental and social assessments upfront, the use of offsets and associated conservation measures, systematic monitoring of impacts, livelihood programs, adaptable management, etc). Examples: Loess Plateau, China Terraced 3000 km 2 of degraded land More than 2.5 million people in four of China s poorest provinces Shanxi, Shaanxi and Gansu, as well as the Inner Mongolia Autonomous Region were lifted out of poverty. Sediment flow to Yellow river was reduced by 100 t/yr Nam Theun 2, Laos Created1,070MW hydroelectric capacity: 75MW use in Laos, 995MW equivalent export to Thailand Government of Laos transferring revenues (e.g. US$19 million in FY11) to poverty reduction and environmental protection Risks: resettlement of 6,000+ people, livelihood improvements in adjacent areas, biodiversity protection, road access enhanced to mitigate isolation.

10 II. Examples Ongoing Transformative Projects: Global Examples (2) 10 Some projects are transformative because they fix the missing links in regional transport corridors, playing a central role in enhancing intra-regional trade and eventually catalyzing sustainable growth in many sectors, especially for landlocked countries. Examples: The TRACECA corridor (Europe-Caucasus-Asia corridor the New Silk Route ) Planned to be operational by 2015, the corridor will run from Romania to Georgia and Azerbaijan, and will cross the Caspian Sea to Turkmenistan, Uzbekistan, Kazakhstan, ending in China Will transform economic relations, trade and transport communications in Europe, the Black Sea region and Asia Will ensure intermodal access to the world market for road and rail transport and commercial navigation Includes traffic security, cargo safety and environmental protection, as well as harmonization of transport policy and legal structure The Brazil-Bolivia-Peru-Chile corridor Opened up trade opportunities for western part of Brazil and landlocked Bolivia through Port Arica in northern Chile Regional transport volume through Bolivia increased significantly (about 40% increased) in 5 years after the corridor opened. This has contributed significantly to the growth of Bolivia s economy

11 II. Examples of Ongoing Transformative Water and NRM Projects in Africa 11 Nigeria Erosion and Watershed Management Project $500m program addresses severe erosion issues in south-eastern Nigeria that threaten livelihoods and assets Program seeks to develop partnership across Federal and State agencies for common goal Kandadji Growth Program (Niger River Basin) Access to water for 45,000 ha irrigation development Additional 130MW hydroelectricity capacity IDA resources leverages co-financing from 10 other development partners as well as counterpart financing from the Government of Niger (total US$785 million program). Risks: political insecurity/instability, regional complexities, substantial resettlement of 35,000+, multi-purpose objectives, and weak institutions. Shared River Basin Programs (e.g. on Niger, Senegal, Nile, Zambezi, etc.) Institutional capacity, networking, and knowledge enhancement Facilitating cooperative investments Irrigation Development and Agribusiness Programs (e.g. Zambia, Burkina Faso, Ghana, Senegal etc.) Irrigation projects involving public-private partnerships (PPPs) with commercial agribusiness investors, with spillover effects for smallholder farmers and local communities. Small projects can be ''transformational'' if they are innovative and replicable on a wider scale. Humbo Village, Ethiopia,-- innovative carbon emissions reduction project has had transformational impacts through a landscape approach. It restored over 2,700 hectares and a barren, degraded landscape four years ago with a 70% loss in yields affecting nearly 50,000 impoverished people now enjoys good yields; more water and wood availability; tree products; more biodiversity; and up to 880,000 metric tons of CO2 over the course of the 30-year carbon crediting period. Revenue from the carbon credits is being reinvested in additional community-driven activities such as firewood sales, clothes tailoring, etc.

12 II. Examples of Ongoing Transformative Transport Projects in Africa: Moving Beyond Incremental Changes 12 Regional W. Africa Transport and Trade Facilitation Project Help improve land-locked countries access to ports; develop alternatives to historical corridors Relieve congestion in Tema, a Ghanaian port, and increase efficiency at border crossings in the region Reduce non-tariff barriers by introducing more mobile customs transit monitoring system to replace escort system Regional E. Africa Transport and Trade Facilitation Project Support implementation of EAC customs union Improve efficiency and reliability of transport and logistics services Reduce need for fiscal transfers to railways Projects to reduce man-made inefficiencies, smuggling and corruption Abidjan-Lagos Corridor Project: improve trade facilitation in port of Abidjan; monitor implementation of policy decisions in corridor; improve roads CEMAC Corridors Project: improve customs efficiency and reduce legal and illegal barriers through cargo tracking systems, border post construction/ upgrading, custom performance contract systems, upgrading roads and railways Projects to enhance inter-modal connectivity Tanzania Intermodal Rail Project: Rehabilitate railway tracks and rolling stock; strengthen regulatory framework

13 II. Examples of Ongoing Transformative Energy Projects in Africa 13 Bujagali Hydropower Project, Uganda (Commissioned in 2012) $360 M in loans and guarantees, Approved by Bank Board in FY MW additional capacity Reduces electricity tariff by 25% (From $0.17/kWh to $0.13/kWh) Improves access to electricity, economic development, reduces grid carbon intensity Eastern Africa Electricity Highway (Ethiopia-Kenya Interconnector) $900 M under APL1 (Regional) approved by Bank Board in FY12 Key interlink (backbone) for EAPP MW bilateral trade initially Kenya expects 20% reduction in tariff (From $0.17/kWh to $0.14/kWh) Promotes regional trade, increases regional energy security & cooperation Nigeria Electricity and Gas Improvement Project and Sector Reforms PRGs for gas suppliers for an amount up to US$400 million (Approved in 2009) Improves the availability & reliability of gas supply to increase power generation Improves the power network s capacity and efficiency to distribute electricity Establishes credit enhancement and commercial framework for gas sales Support for utility privatization and increased private sector participation Improved pricing with multi year tariff orders (MYTO) Kenya Geothermal Development and Electricity Expansion Project US$330M IDA project (Approved in 2010) - total investment US$1,391M 280 MW green geothermal additional capacity in African Rift Valley Adding 220,000 customers a year, up from 60,000 customers four years ago Electricity for some of the country s largest slums and most remote rural areas

14 III. Additional Opportunities: Transformative Water Projects Throughout Africa 14 Sampling of projects presented here are in are at various stages of preparation, and with varying degrees of World Bank involvement. Projects include: Niger Basin Fomi Project Rehabilitation of Lake Chad Benue Investments Zambezi Basin Kariba Dam Rehabilitation Malawi Shire valley Irrigation Project Nile Basin Kenya Water Security and Climate Resilience Project Eastern Nile Multipurpose Development Nile Equatorial Lakes Water Resource Management Regional Rusumo Falls Hydroelectric Volta Basin Pwalugu MPP Regional & sub-regional S. Africa Transport and Trade Facilitation Project Tanzania Inter-modal and Railway Rehab (incl. Rwanda and DRC in later phases) Regional intermodal study for EAC transport corridor Lesotho Highlands Water Project - Phase 2 Africa Hydromet Program Africa Sustainable Land Mgmt

15 III. Additional Opportunities: Planned Water Projects with Transformational Benefits 15 Enhanced government revenue -- Lesotho Highlands Phase 2 could provide Lesotho revenues of 3-5% of GDP from water sales to South Africa Hydropower generation -- Rusumo Falls Hydro uses run of river to minimize environmental and social footprint; Inga Hydro Should be joint use (hydropower & irrigation)whenever possible Fomi; Benue Investments; Kariba Dam Rehab; Batoka Gorge; Eastern Nile Multipurpose Development; Pwalugu Multipurpose; Kenya Water Security and Climate Resilience Irrigation for agriculture/water supply for rapidly growing urban areas -- Malawi Shire Valley Irrigation Project; Pwalugu Multipurpose; Lesotho Highlands Phase 2 Flood control -- Most dams enhance flood control for areas downstream; Kariba Dam rehab could prevent devastating downstream damages from dam failure Community development -- Nile Equatorial Lakes WRM Preservation of biodiversity and environmental services -- Lake Chad Rehab: 22 million people depend on resources of Lake Chad Watershed management/ Adaptation to climate change -- Nile Equatorial Lakes WRM, Africa Hydromet Program for Climate Resilience; Kenya Water Security and Climate Resilience; Africa Sustainable Land Management

16 III. Additional Opportunities: Planned Transport Projects with Transformational Benefits 16 Example: Southern Africa Trade and Transport Facilitation Project Project rationale The North-South corridor (Dar-es-Salaam to Durban) is a very important strategic trade route Well-endowed with physical assets, but transport costs along the corridor are among the highest in the world: 7 days and 5000$ for the 2000km trip by road between Dar and Lusaka Port performance remains a crucial issue for the corridor Border crossings: 15% of the cost and 37% of the time between Durban and Lubumbashi, DRC Proliferation of legal and illegal checkpoints: the total additional time is more than 5 hours more than time savings from any physical improvement Patchwork of (sometimes inconsistent) national regulations The corridor also has a high social cost: spread of HIV/AIDS and road traffic crashes Regional, multi-sector, and multi-phase project intended to facilitate trade integration by contributing to the alleviation of institutional, legal, policy and road infrastructure constraints Activities Institutional arrangements for transit and transport facilitation Assessment of options to improve the port at Dar-es-Salaam Definition and piloting of a regional customs bond Diagnostic of divergence between different agreements and practice Improvement of the professionalism of customs brokers, and harmonization Upgrading or rehabilitating road transport infrastructure and improving transit facilities Mitigating the social costs

17 III. Additional Opportunities: Other Planned Transport Projects with Transformational Benefits 17 Tanzania Intermodal Rail Project A new intermodal transport strategy, integrating rail, port and road systems, based on a clear business model for key market and reliable services at a regional level. It will alleviate bottlenecks, delays and increased transport costs for six landlocked neighbors (eastern DRC, Rwanda, Burundi, Uganda, Zambia, Malawi) Activities Implementation of regular and reliable containers rail services from Dar-es-Salaam to Isaka intermodal platform Rehabilitation of rolling stock and railway tracks between Dar-es-Salaam and Isaka Strengthening of railways Institutional framework and regulation, with clear functional separation between infrastructure, operation and regulation. East Africa Community Transport Corridor Scope of the study: Definition of a Regional Intermodal Strategy and Action Plan to implement an efficient rail-centric intermodal transport system along the Central and Northern EAC Corridors Stages: Review of current operations and state of infrastructure and inter-connections (including ports) Identification of effective maintenance and operation concepts Preparation of traffic forecasts, cost estimates and business plan Environmental and social scoping study Expected completion: end 2013

18 III. Additional Opportunities: Planned Energy Projects with Transformative Impact through Increased Generation 18 Country Hydro developed in last decade (GW) Hydro potential in next decade (GW) Ethiopia Guinea DRC Sudan Mozambique Others ~2.2 ~6.6 TOTAL Hydro 8.5 GW developed in last decade 30 GW potential for next decade 5 highest potential: Ethiopia, Guinea, DRC, Sudan, and Mozambique Country IPPs to date (GW) Potential (GW) Technologies South Africa Coal, Gas Nigeria Gas Botswana Coal Kenya Geothermal, oil Mozambique Coal, Gas Others ~ Coal, Gas, Oil Next 5-7 years 4.0 Mainly gas TOTAL Thermal 3.1 GW of thermal IPPs to date 4 GW potential in next 5-7 years 5 highest potential: South Africa, Nigeria, Botswana, Kenya, and Mozambique Opportunities in Gas to Power, in particular

19 III. Additional Opportunities: Other Planned Energy Projects with Transformative Impact 19 Power Pools West Africa Power Pool Finance key regional interconnection and large generation (e.g. hydro) projects Support national utilities in project preparation & implementation TA to WAPP Secretariat for investment planning Key potential project: Cote d Ivoire-Liberia-Sierra Leone-Guinea (US$400 m.) East Africa Power Pool Finance investments on key system-to-system interconnectors Capacity building to national utilities TA to EAPP Secretariat for regional planning and coordination Key potential projects (US$ million): Kenya National Backbone ($2,400m.); Ethiopia-Kenya ($1,200m.); Zambia-Tanzania-Kenya line (780) Southern Africa Power Pool Finance investments on national transmission backbones and key interconnectors Support national utilities in preparation of key generation expansion projects (Inga) TA and risk mitigation at national/regional level Key potential projects (US$ million): Inga-Zambia Interconnector ($655m.); Zambia Backbone ($100m.); Zimbabwe Backbone ($96m.) DRC-Angola (TBD); Mozambique Regional Transmission Backbone ($2,094m.) (Phase I, Stage I) Central Africa Power Pool : Support early thinking about developing power pool. Scaling up Energy Access Major investment in large-scale high impact projects and PRGs for expanding generation base Efforts to enhanced energy access and on fragile states Complementary off-grid solutions (Lighting Africa, Clean Cooking) Continuous policy dialogue to create better institutions/frameworks - can help bring private sector Enhanced Affordability reforming tariff structure taking into account the political economy of tariffs Reducing inefficiencies of supply to reduce costs Regulatory regimes to provide incentives and penalties Sustainable business model for the utilities Key projects: Inga III(DRC- $8,000m.); Lom Pangar (Cameroon -- $460m.); Menengai (Kenya -$850m.); Souapiti (Guinea - $1,000m.); Kaleta (Guinea - $450m.); Cahorra Bassa North Bank (Mozambique$1,300m.)

20 IV. Next Steps High Reward, but not Without Challenges 20 Resettlement/ environmental issues require careful assessments. Complex financing issues require innovative solutions. Implementation capacity lacking. Regional water, energy and transport projects require regional, watershedwide, power pool-wide cooperation, which has proven difficult. Bank seen as go-to institution to tackle complex transboundary issues Lack of adequate knowledge base in some areas at present. No system for monitoring quality and quantity of freshwater resources to Lake Chad Need for assessment of impacts of climate change on hydrology for dams The potential of gas to transform national and regional power markets The role of mining sector as an anchor customer for energy generation Strong vested interests oppose reform: e.g. trucking cartels and corrupt officials fight measures to increase competition and reduce barriers to transit. Poorly understood political economy of reform. Asymmetrical distribution of benefits from improving transport, especially between landlocked countries and those with sea access.