46
Economic Development in Africa Report 2015
Regional transport and power pool infrastructure have the potential for integration and growth In Africa, regional infrastructure, such as transport corridors and utility power pools, has the potential for greater integration and widening access to infrastructure services due to economies of scale. National Governments may also induce greater competition between national power producers, though this depends on whether they ease controls on access to distribution networks (Wren-Lewis, 2014). One study estimates returns to cross-border transmission investment of 120 per cent in the Southern African Power Pool and 20 to 30 per cent in other power African pools (Eberhard et al., 2011). However, many countries still need to harmonize their regulatory standards and more effectively pool their resources if this potential is to be realized. In this regard, the Programme for Infrastructure Development in Africa, which merges all continental initiatives on infrastructure, is a useful step forward in trying to pursue greater harmonization.
C. REFORMING INFRASTRUCTURE SERVICES PROVISION IN AFRICA African Union efforts to prioritize increasing investments and efficiency in the infrastructure services sector can help African countries lay the foundations for future growth. The determination of the optimal policy framework and respective roles of the private and public sectors can only be made nationally. Given the capitalintensive nature of infrastructure provision, due to constrained public finances, African Governments must consider options that encourage private investment where feasible, such as targeted finance aimed at redressing market failures, in the form of equity (e.g. under the Commonwealth Development Corporation) or as long-term loans (e.g. under the Emerging Africa Infrastructure Fund). There are significant in-country investments (e.g. savings and pension funds) not currently tapped for the financing of infrastructure, mainly due to inadequate risk–return ratios and the lack of adequate risk-mitigation mechanisms. If a country decides to open up the infrastructure services sector, then establishing an institutional framework conducive to promoting competition and governing access, affordability and quality control is an essential prerequisite to privatizing infrastructure services, and policy sequencing and institutional development are therefore important. Critically, policymakers in Africa need to continue their efforts to develop an appropriate legal and regulatory framework for infrastructure services,