Philippe Eponon, President, Ivorian Group of Construction and Public Works: Interview

Interview: Philippe Eponon

How can different financing methods help to develop the country’s transport infrastructure?

PHILIPPE EPONON: The government’s road construction and rehabilitation programme is very ambitious and will require innovative financial engineering models to succeed. In my opinion, although projects capable of being developed through a public-private partnership model account for one-fourth of the total programme, the rest are simply not economically feasible for private operators. The suboptimal utilisation of the infrastructure – especially outside of Abidjan – results in long returns on investment, and despite recent efforts by commercial banks, interest rates remain high, making them unattractive to private operators. Because of this, the government will need to provide the main source of funding through concessionary loans or by tapping into its coffers. The most recent example is the Henry Konan Bedié Bridge in Abidjan. To be constructed, the developer required the state to guarantee a certain amount of traffic, but recent numbers showed lower-than-expected volumes, resulting in the state having to make up the difference. In the future, we hope to see new products emerge that allow for more private sector participation and for the value of projects to be distributed among local firms. Given Africa’s massive infrastructure needs and tight government budgets, project bonds could offer an interesting alternative.

What do you see as the main challenge facing local operators in the Côte d’Ivoire construction sector?

EPONON: Our primary challenge remains our access to construction projects. Out of a total 4500 km of rehabilitation works planned, close to 1500 km have already been granted to foreign companies. These contracts not only overlook partnerships with local firms, but they contractually prevent multinationals from collaborating with Ivorian companies. This is partly due to the lack of experience and suitable references at domestic firms; however, our inability to partner with capable foreign companies on value-added activities perpetually prevents us from gathering the necessary skills to eventually lead our own projects. Knowledge transfer and profit sharing is thus implicitly inhibited in current negotiations. More recently, we have successfully lobbied the government for a change in regulation, ensuring fiscal incentives and competitive advantages to international firms willing to partner with local operators. However, the targeted projects only account for 10% of all calls for tender, none of which involve projects financed by multilateral development banks. Our association has successfully persuaded the Islamic Development Bank to require local firms to contribute 10% of the capital requirements of a project in order to participate in it, down from 30%, and we are seeking to convince other such entities to follow suit. Nevertheless, the government should side with local operators to ensure that part of these projects goes to develop the backbone of Ivorian construction companies.

How can regulations and better construction methods improve the quality of road infrastructure?

EPONON: The main factor affecting the life of infrastructure in West Africa is its misuse. The UEMOA has finally released Rule 14, which sets an axle load threshold for trucks that use the union’s road network. This regulation comes amid the noticeable impact overloaded trucks have had on the deterioration of our roads. However, as transport costs are set to rise by an estimated 15-20%, this policy will enter the political arena, as it puts pressure on more remote countries with less developed transport foundations. If this policy were to be respected, road infrastructure would maintain its 20-year lifespan, and further rehabilitation works would cost a fraction of what they do today. Moreover, the association has unanimously decided to modernise our construction practices by integrated road recycling methods and the use of premium products, to better respond to environmental concerns.