‘Regulations are needed to close infrastructure gap – they define the investment environment
Richard Kiplagat is the group chief operations officer of Africapractice, an organization that seeks to be the single most catalytic private sector actor in the transformation and promotion of Africa. Recently, Kiplagat spoke to Innocent Unah, Senior Analyst at BusinessDay Media, on the state of Africa Infrastructure and the role of regulation in addressing the yawning deficit, key regulatory risks that corporations in the continent should be concerned with as they strive to remain competitive, and how they can navigate such risks. Excerpt.
Welcome to Nigeria, Richard. Going through your bio, one gets the idea that you have a thorough knowledge of Africa. What would you say is the cause of the poor Infrastructure development in the continent?
The root cause of infrastructure deficit in Africa is under-investment and poor maintenance of existing infrastructure, and these are a reflection of poor African economies and their inability to inadequately source or attract low cost long-term capital to infrastructure investments. There are also some issues with regards to poor policies and planning and in certain countries a very high cost of project implementation.
How can Africa effectively narrow the infrastructure deficit?
African governments have since independence depended on donor funding to invest in power, roads, rail and ports. Going forward and given fiscal spending, Africa will need to improve on its ability to design, finance and deliver Public-Private- Partnership (PPP) projects. In addition, Africa needs to identify cheaper sources of long-term capital and reduce the cost and risks associated with infrastructure projects, including but not limited to land acquisition, regulatory obstacles, and local skills and capacity.
How would you advise a country such as Nigeria to go about resolving its Infrastructure challenges?
Nigeria has the resources and skills to support the transformation of its physical infrastructure. A comprehensive review of the impediments to developments in this sector could inform a new infrastructure master plan and will address the challenges – both financial and regulatory – whilst also acknowledging the importance of proactively addressing socio-political dynamics. There is also a very critical role to be played by political will and enlightened leadership.
Can you cite any country that Nigeria can draw insight from in this regard?
I will not cite a specific country. However, the African union (AU) has developed a comprehensive programme for infrastructure development in Africa (PIDA). That has taken into consideration and reviewed many of the challenges and obstacles for infrastructure development in Africa, and can provide a framework for a national review for Nigeria’s infrastructure plan and development.
What do you think is/are the role(s) of regulations in bridging the infrastructure gap?
Regulations play a very important role in closing the infrastructure gap primarily because they define the investment environment. Proactive and forward looking regulatory policies could play a huge catalytic role in attracting capital for infrastructure development. In Kenya, for example, the ability to obtain power purchase agreement supported by the government and regulator has accelerated investments in electricity generation. In my view there is a huge opportunity to support infrastructure growth by promoting enabling regulation for private capital participation.
What, in your opinion, is the reason for the increase in regulations across different industries and countries?
In my view there has not been an increase in regulations across Africa, but what we have seen is the strengthening of regulatory institutions, an increase in their dependence, size and the quantum of penalties and fines that they have levied.
Do you think there are adequate regulations across Africa?
In my opinion, there are plenty necessary regulations on the continent but what is lacking are improvements in getting government to aggressively use regulations as a catalyst for foreign direct investments and socio-economic development.
What key regulatory risks do you think corporations and businesses should be mindful of?
Each industry and business ought to dedicate adequate resources to identify their key regulatory stakeholders and ensure that they fully understand their priorities, challenges and key influencers. It is only by proactively analyzing these stakeholders that each industry, businesses and corporations can fully understand the potential risks.
How should corporations and businesses go about dealing with the risks you have just spoken about?
Organizations should invest in continually engaging and maintaining the quality of their relationships with their stakeholders. Many companies do not invest sufficient time and resources to do so and thus end up being reactive to regulatory challenges when it has become too late and expensive. If adequate internal capacity does not exist, one of the options may be to outsource to an advisory firm such as africapractice who specialises in identifying stakeholder maps, developing strategies and providing engagement support.
What are the key things you believe regulators and policy makers in Nigeria should consider in making regulations work for the country’s economy?
Firstly, regulators and policy makers need to continue to build internal regulatory skills and capacity. Secondly, develop regulation in consultation with industry. Thirdly leverage regulation as a catalyst for equitable growth and fourthly build enforcement capability.
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