The “African growth support” initiative, multi-stakeholder study group
Third meeting minuteDate: 23rd May, 2008
(18:30 – 20:50)
Place: GRIPS Room 4A
Participants: 13 people with background in government, aid implementation
agencies, research institutes, and 6 people from the GDF secretariat participated.
I. Introduction
In line with the Japanese government stated policy of making infrastructuredevelopment in Africa one of the priorities of the TICAD IV (the Government of Japan
has committed to provide yen loans for infrastructure development up to US$ 4
billion in the next 5 years), the third “African growth support” meeting focused on
how to include infrastructure development into the economic growth support matrix.
The secretariat introduced the meeting with a presentation covering various, recent
trends in international support for infrastructure development (ref. presentationmaterial, in Japanese). This was followed by two presentations from participants. The
first presentation dealt with how to boost economic growth through infrastructuredevelopment, including provision of grants and yen loans (ref. presentation material,in Japanese). The second presentation touched upon providing technical support for
infrastructure development including promoting regional integration through projects
such as One-Stop Border Post, regional electricity grid development, and so on (ref.
presentation material, in Japanese).
II. Discussions
In the ensuing discussions, participants explored several options and alternatives
available to Japan that should be considered in order for infrastructure development
to have an impact on economic growth of recipient countries. The most hotly
discussed options were (i) the use of private sector driven mega-projects as anucleus upon which infrastructure development could be linked to economic growth;and (ii) the need (or not) to support industrial strategy development andimplementation through a continuous policy dialogue process.
1. Private sector projects led growth support•Participants were of the opinion that, unlike Asia, Africa has a low population
density, which often translates into low infrastructure efficiency. Therefore, using
private sector projects as a nucleus makes good sense, since under suchconditions (viable project on the ground) developed infrastructure will beeffectively used. Past experiences have shown that, successful private sector
driven investments have led to economic rebirth of whole towns, cities, as well as
in logistics expansion, and so on.

1•Participants wondered whether the Asian model where infrastructuredevelopment through massive ODA (grants and yen loans) played a catalyst role
to promote and attract private investment would be applicable in the same way
to Africa. The example of MOZAL in Mozambique was quoted to support theargument that a private sector focused mega-project strategy could be the way
to go in Africa. This argument stipulates that, it should be the government policy
to let the private sector identify local viable commercial projects (this is what
they are good at), with good economic impact – create linkages between themega-project and the local industry or with local Small and Medium Scale
Enterprises (SMEs) – to the local economy that should justify provision of ODA for
infrastructure development.

•In light of the low infrastructure efficiency in Africa, (often resulting from low
population density), it might be practical to take phased approach and target
specific region(s) for the development of critical infrastructure such as ports,
airports, special economic zones, and so on – that improve enterprises
competitiveness.

•Participants also noted that, recent positive developments on the Africancontinent – better than usual good economic growth figures in many countries –as well as a peak of interest in Africa from the private sector in Japan presented awindow of opportunity that should be seized to do something and evaluate results
within a short-term time span (~five years).

•As far as project initiation, feasibility and implementation were concerned,
participants concurred that while the DBSA’s (development bank of SouthernAfrica) achievements and results would provide a very useful reference forassessing projects, the government of Japan should consider strengthening its
relations with the DBSA to enable it to play its role as an engine for development
in various SADC countries.

2. Industrial strategy formulation through continuous policy dialogue•

Whereas in Asia, continuous policy dialogue was effective in devising country
economic growth strategy (as in the case of Vietnam), participants questioned
whether the same would be possible in Africa, considering its limited institutional
as well as human resource capabilities.

•As a counter argument to the “private sector projects led growth support”
approach, participants conferred that, while the significance, importance ofresource based projects is recognized, instead of solely promoting mega-projects
related to resource extraction (with a negative exploitation image), that haveoften brought little backward or forward linkages to the local industry, moreconsideration should rather be given to recipient countries needs – expressed bytheir national governments (through policy dialogue) – to strengthen industries
with the best potential.

•Participants noted there should be no contradiction to have private sector led
mega-projects on-going simultaneously with policy dialogue as it can be thoughtthat policy dialogue will progress much more smoothly if backed by existence of2

private sector led projects. Hence it will not be appropriate to think that policy
dialogue is unnecessary if ODA is used simultaneously to support a mega-project.

•To support the need for policy dialogue, participants described the case study of a
vocational training program in Uganda where, instead of producing the personnel
needed to fit existing companies’ needs, vocational training (at the time) was
positioned as part of higher education without due consideration to linkage withindustry needs and requirements. In Asia however, vocational training was
successful because it was linked to industrial development strategy of thecountry. Therefore, policy dialogue to link government policy to support
economic growth in Africa is necessary. Participants agreed that thoughprivate sector led mega-projects are welcome, the reality on the ground isthat, most of Ugandan private sector activities consist of repair andreconditioning of Japanese finished products. Therefore, it would be useful if
Japanese companies could link with such local businesses at the level of staff
training without further consideration for investment in hardware andmanufacturing.
Case of El Salvador
Through a continuous policy dialogue with the national government of El Salvador,
it was decided Japan’s development assistance priorities would concentrate on
development of the Eastern region. In this perspective, Japan has madedevelopment of the La Union port the focus of its development assistanceactivities in the Eastern region, combining infrastructure development withtechnical cooperation and maintenance capabilities. However, in order to avoid
this key infrastructure facility becoming an instrument to solely promote export ofmonoculture products, Japan has been simultaneously supporting the capacity
building for manufacturing and trade promotion – including SMEs such as thoseexporting small exotic products intended for niche markets targeting a sizeable
immigrant community in the United States – in the region.
In addition, recognizing the importance to base investment decisions on reliable
and actionable information – necessary to achieve the elusive self-discovery in El
Salvador – the Japanese Government funded the compilation of a digital map thatwould enable agricultural land surveys, population census, as well as otheressential information such as maps, key statistics, and so on to be updated (byusing the counterpart fund of Japan’s non-project grant aid).
Partnership with third party development partners
As a development assistance partner, Japan alone cannot achieve accumulationof industrial clusters, although it can play the pivotal role of an anchor.
Cooperation with other development partners’ enterprises is therefore necessary.
In this perspective, Japan has been working with other partners such in Malaysia
and India to support economic development and policy dialogue in countries inAfrica. For instance, Japan has worked with a Malaysian investment promotion
specialist dispatching him to Zambia to promote investment from Asia to Zambia.
Although such cooperation with third party countries is more on a small-scale

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than would a Japanese enterprise, participants felt, Malaysia and Indiancompanies may be more suitable to African conditions, in certain sectors.
III. Conclusion
It transpired from the third African growth support discussions that, while support for
infrastructure development for economic growth was necessary, it was not by itself
sufficient. In the case of Africa, participants recognized the need to ensure higher
infrastructure efficiency either through linkage creation with private sector led
projects or through a continuous process of policy dialogue between Japan and therecipient country – including technical cooperation, linkage to the local economy toboost economic activities.
Further discussions on this important issue of supporting infrastructure development
were scheduled to continue in the next meeting that would also discuss the result ofthe TICAD IV (to be held on May 28-30).

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