Abstract:
Infrastructure acts as a catalyst for human and economic development, and is also critical to the general functioning of society. It defines a country?s business competitiveness and also creates jobs. Sub-Saharan Africa (SSA) is generally behind most developing regions on most standard indicators of infrastructure development. Lack of infrastructure is one of the major obstacles to sustaining poverty alleviation in this region, though the region is abundantly rich in natural resources, with new discoveries being continuously made. Given the constraints on traditional sources of infrastructure finance, resources-for-infrastructure (R4I) deals present one of the most promising financing techniques in bridging the infrastructure gaps in SSA. R4I agreements are a mechanism through which a state can procure critical infrastructure without having to produce enough revenue to support its financing. This model is used when a government wants to involve the private sector in resource projects, and desires to use nonrecourse financing to protect the state?s coffers from credit exposure. Moreover, it can be leveraged when a state allows a private developer to exploit its mineral resources, and can borrow against its expected income from the resource development project. Therefore, the broad research question which this study will seek to answer is: does the R4I deal guarantee remunerative returns by ensuring mutuality of benefits? The issue here is that resource-rich SSA countries may not be getting fair R4I deals because they may not have the capacity to negotiate complex and innovative contractual agreements like a typical R4I deal with corporate developers. This incapacity undermines the potential benefits of R4I swaps as an innovative financing technique for procurement of infrastructure in these resource-rich SSA countries. Thus, this study will argue that given the lack of institutional capacity in most of the resource-rich countries of the SSA to negotiate complex contractual agreements, better training and capacity building may result in R4I deals being creatively used to achieve development objectives such as the procurement of infrastructure.
