I think it's still morning. Good morning everybody. I am here to present this paper which is a little bit different from a little bit different perspective from what people have been seeing about infrastructure. I have a finance background and I'm going to approach it from a finance point of view. I will not bother you much with the introductory expert. We all know what has been in the news what has been in journals and everything but we are actually going is that over the years we've had a lot of literature and work done on infrastructure development in Africa and South Africa but most of the studies concentrate on mathematical exposition of relationship between one variable and the other. One variable and the other all the time. But very few studies have been done on relationship between infrastructure and how are we going to finance that infrastructure. We always have this assumption that once the opportunity or the potential to make money is there infrastructure will attract finance automatically but this has not been the case. We've had a lot of studies showing how important it is but despite that we are still backward in infrastructure development. So that is why this study is approaching the topic from a different perspective. Want to look at how can we finance infrastructure. What are the options do we have for financing them. What are the implications of these options and what needs to be done or be changed so that we can have this much needed infrastructure. Now the motivation for this study is just what I just said now but the major thing is let me show you a little bit of what the infrastructure processes look like in West Africa today. As of this moment just about 10% of the GDP as of this investment of GDP is just about 10% compared to 10% other developing countries. Less than 50% of roads in the region are paved compared to other areas. About 40% of the population of the region lack access to safe photo board and some other things like that. But these are all things that we often we've all known from the past but the major thing we are doing here today is want to look at how are we going to finance this infrastructure and like I said what are the implications of financing them. Now I'm just I just these are things we all know for so it's a there's a literature review what are the what are the issues been talking to review this story basically there are two things they are about two or three things being called talking to each other review. One is is infrastructure actually adding to output while a set of it just says it's adding to output some say well it's adding to output is not that important compared to what people are saying about it but the construction here is that whether it's adding much or it's adding little there's a need for infrastructure for industrial takeoff in society that's one. Another aspect of literature is looking at what's amounts or combination of infrastructure is important and at what level should the society or an economy reduce the amount of infrastructure to get the possible to get the to get the highest possible return on investment. Well some literatures have shown that well at a percentage point at a point where the society is making at the point where the society feels that the proportion of what is coming from manufacturing is about 30% of the GDP or 40% of the GDP then the society should think of where else to invest and not necessarily pouring money into infrastructure because return infrastructure will not be as much as is being is being talked about but now let me go to what this in this study is actually about. Now with literature recently shows that between 1980 and year 2011 foreign direct in foreign capital flow to developing countries as a whole increased from 78 million dollars to about 1.4 trillion dollars but surprisingly or not surprisingly only about 20% of these money came to sub-Saharan Africa which is the poorest of all the regions. Now why is it that there are opportunities for investment in sub-Saharan Africa but the finance is not coming. One of the one of the factors that's been put in place and one of the fact that have been talked about is the unique nature of sub-Saharan African markets the unique nature and the sense that preparation of car of projects is a little bit the way they prepare the projects is doesn't meet international standard because government is pertaining too much and the possibility of making profit is not really really there. Now we now want to look at why should government produce or why should not government not produce not get involved in infrastructure as much. There's some basic infrastructure that are needed in society but government producing these all the time brings some problem for inside the first consideration is equity consideration. If we look at our society very well we all get from infrastructure but not equally. Some gain more than the others some don't even need them. For instance if we have if a society has a school we are getting from that society but if a society has a mall not everybody goes to that mall to go and buy things not everybody goes there to sell commodities so it should be better for those that are gaining from the services being rendered by that facility to at least pay something towards the upkeep of the society. If that is done then there will be what we consider to be equity in the way the the the facility is being provided or equity in in the boarding in the share of the boarding of the of the commodity of the facility. Another thing is allocation efficiency. Literature shows that the way when government gets involved in in provision of services and infrastructure is always done with less efficiency compared to when the private sector does those things. One of the things is bureaucracy. You have to the people have to move from one office to the other all the time waiting for somebody to sign it waiting for another person all these things brings in efficiency. Another thing is the cost of those facilities in most cases when government gets involved in projects the cost of executing the projects is higher than when the private sector gets involved in this in the program when the when the private sector provides the the facility. Now looking at these three considerations one will agree that it is time for Africa and South Africa in particular to shift from government provision of facilities all the time to a market base where there will be money to produce those things and there also be money to maintain them over the years because research have shown that the problem of infrastructure in Africa in West Africa in South Africa is not only that of inadequate provision but inadequate maintenance as well. Some countries have very good structures very good facilities but they lack the maintenance culture. Not that they don't know how to maintain it but they don't even have the money to maintain it because of what it costs. Now I now go back to what are the unique nature of sub-Saharan African continent that makes finance that is preventive in us from flowing to that area compared to other regions of the world like Asia and the Americas and part of Europe. The first one is inadequate projects preparation just as I've said earlier. In some cases we realize that engineering drawings and designs do not even meet present standard requirements. So when investors come and see all the things they don't get attracted to those things to those to those projects and once they are not attracted to projects they are not ready to finance it and that thing is underdeveloped capital markets. Most capital from a lot of capital for investment all over the world now comes from the capital market of those countries. But if you look at the capital markets in sub-Saharan Africa it's not as developed as those areas. Market capitalization is very very low. That's true. Another thing is that even in those markets where like market like South Africa which is the most developed capital markets in Africa so today people don't invest in long-term projects. They are not ready to buy a bond that will take long time to mature. Most bonds they buy and even the one most of the one that South Africa government is issuing now is about five years maximum ten years bond. So the market doesn't have the capacity to come up with the money to finance projects that has long gestation periods. That's the risk of the project. The South Saharan African region compared to every other region the world has specific risk that are not even common to those areas. The first one is political risk. When a project is being designed there are some factors that are taken into consideration like return to investor. Our investor will repatriate his profit back to his country. But along the line if the government of those countries changes through either coup or anything a new government can come in and say you know what no you cannot repatriate 60% of your profit anymore it has to be 30% take it or leave it. So when a country when investors sees that such factors are very possible in such countries they get skeptical of investing in those countries. That's one that's one part of the risk. Another part of the risk is even when there is money when investors present when investors are bring out the money for this investment. At times there is no demand enough for the services of those projects. And if there's no demand enough there's what we call financial risk. And if once there's financial risk or I think once there's financial risk and the investor is unable to recoup his money from the project then there's a problem. Once this possibility is there investors get scared of investing in this kind of project. Now let's look at what are the giving all these factors what are the options that the sub-Arafrican countries have for investing. Now previously before this time a lot of most of the capital invested in infrastructure development comes from single banks like the first banks the backlays bank and some other banks around. But the present demand for infrastructure goes beyond the capital those single banks can provide. There's a need for what we call public sector subordinated notes. In this case the federal government or the government of the country will provide something like a loan to investors to invest in those projects. When they give those loans the loan needs return to the government and the investor also make money. The investor has the rest of mind that at least it's not the only one bearing the burden of the project the government is also sharing the burden. If the government is sharing the burden then it feels that well the burden of the project on him is limited and the government might not even want the money to go around the drain like that government will always come out with policies to support those projects. Another one is a public sector minimum guarantee. Some projects don't have enough demand for their services. For instance now like somebody just mentioned studios in Africa now if some even investor had invested about twenty million dollars on the stadium and just maybe that stadium holds about five ten football matches in a year. That means the investor will not be able to recoup his money from such investment but if the government can say you know what we guarantee you a minimum of two million dollars worth of business every year on your investment. The such investors okay two million dollar in a year maybe in about 20 years I can recoup my money but that's fine you will not feel too bad investing in that those kind of business. Investors will always be interested in investing in those kind of business. Another thing is public sector debt. Another thing is a public sector debt capital. Here the government gives loan to investors just like commercial bonds gives loans to them and this loan we're giving just as that the the term of interest on those loans is just as the term of interest on commercial loans. The government is not partaking in the running of the business but all the government was doing is just to make sure that the public sector are encouraged to invest in those business. The public sectors feel saved and the government also makes money from this kind of investment. Another way we can look at this is what we call task incremental finance. Task incremental finance is a system where in facilities in areas where governments provides public infrastructure. Those people are people living around those facilities have some gains that people living beyond the facilities don't have. For instance the location of a train station close to a community increase the value of property in those areas and if those people are gaining from those kind of location it is normal for them to be able to part away with some of the profits that come to them. Not as a result of the fact that maybe they are making business but because of that they are luckily located close to the projects. If for instance the house the value of houses goes up, if for instance the value of houses goes up by maybe about 10% government can make loans. If property goes up by 10% in this location between this period, 5% of those of the value increments will be taxed that government will collect back from the people. There are some places in Europe that have done that especially in Austria they've done those things. And that is infrastructure development cooperation. This system the government established like a corporate entity that is saddled with the ability of developing those infrastructures. Any big infrastructure the government wants to do those companies does it make money for the government and private sectors can also invest in such kind of a business. Now let's I want to quickly look at the sources of finance. As I've mentioned earlier we have syndicated bank loans, banks coming together to provide large amount of finance and that one is institutional investors bring money to finance infrastructure projects but the problem with this institutional investors is that in sub-Saharan Africa the institutional investors are not well developed compared to some other areas so there's need for government to see how this kind of institution can be developed more than they are today. The major one is capital markets. The capital markets is a major source of capital for investment but the way it is in sub-Saharan Africa today because of the low capital base they cannot do this as much but to one of the advantages that can come out of capital market is the bond market but for the bond market to work there is a need from the countries to have a credit rating for the country and to make sure that what the project they are about to finance is also rated that's the major two problem with this. Just one minute. Now let me quickly go to the conclusion from what from my research we realize that without moving towards a business oriented or a business approach to infrastructure development it's going to be very very difficult to get infrastructures developed in sub-Saharan Africa because the revenue available to the government is not increasing as the demand on government services and projects are increasing so there's a need for the private sector to come in and kind of augment infrastructure services and facilities in this site. Another thing we mentioned in our conclusion is the fact that there is going to be higher competition for investable funds all over the world as time goes on. It's happening now it's going to get tougher. The only way South Africa can gain from this is to make sure that we have the the service the conditions necessary to attract foreign investors into our country or to the region generally. Without this it's going to be literally difficult for government alone to provide the services we are we all needed because the rate at which government revenue is increasing is really low compared to the rate at which population and demand for infrastructure is increasing all over South Africa. Thank you. Thank you very much.