By the Governor of the Bank of Uganda, at theTrans-East African Networks Regional Match-Making Conference, Kampala, 4 July 2013.

I would like to begin by thanking the organisers for giving me the opportunity to speak at this important conference. Sub-Saharan Africa lags way behind other developing regions in most indicators of infrastructure provision, such as electricity production per capita and paved road density. The closing of the infrastructure gap will only be possible if resources can be mobilised in a sustainable manner; i.e. in a manner that is consistent with the economic viability of projects, taking into consideration their commercial nature, and the fiscal sustainability of the Governments which back infrastructure projects. It is these issues that I will focus my discussion on today.

In assessing the appropriate frameworks for financing infrastructure projects, it is useful to consider separately two distinct types of project. The first type is projects that produce “public goods”; which can be defined as goods for which it is not normally optimal or even possible to charge consumers for their use. Most roads, with the exception of toll roads, fall into this category, as do many other types of public infrastructure. Infrastructure services which have the character of public goods are paid for out of general Government revenues (i.e. by taxpayers). Hence, any debt that is contracted to finance the construction of this type of project must be serviced out of general Government revenues. As such, the key factors which will determine whether Government can mobilise finance from the private sector for these projects, and the terms on which finance can be raised, depend on the overall sustainability of public finances and the credibility of the Government’s management of public finances, as well as the Government’s credibility to maintain macroeconomic stability. Let me elaborate further on these points.

Leave a Reply

Your email address will not be published. Required fields are marked *