Dr. Ousman Gajigo, Economist Formerly With ADB
By Dr. Ousman Gajigo
The government recently admitted that its concession agreement with Africa50 ‘only’ excluded competing bridges for a 50m radius. In addition to competing bridges, a clause in the agreement prohibits the government from constructing competing infrastructure, which did not specify a limit. Senior government officials admitted to the existence of this clauseonly after my revelation, which left them with no choice. What is strange and disappointing is that the government highlighted the 50km radius exclusion clause as if it has no significantconsequences for the country. This couldn’t be more wrong. Let us scrutinize the implications of this clause.
A 50km radius from the Senegambia Bridge is equivalent to a 100km diameter centered on the bridge. The edges of this diameter range from east of Kerewan in NBR to just outside of Kudang in CRR. It covers almost 80% of Baddibu and Kiang, 100% of Jarra, 90% of Niamina and 75% of Saloum. Africa50 was extremely calculating when they chose this exclusion range. While the clause only explicitly prohibits the construction of a bridge within the 50km radius, it effectively precludes the construction of another bridge over River Gambia for the foreseeable future when one considers the geographic and infrastructure realities of the country. I will explain why.
Map of the Gambia
Given our current budget situation and the magnitude of our public debt, the only feasible area where the government can actually build a bridge is within this very 50km radius (or 100km diameter). Any bridge west of Kerewan would cost billions of dollars to build because the average width of the river is over 5km. In fact, the Banjul-Barra bridge would cost nothing less than $2 billion. Not only is that amount three times ournational budget, but it is also higher than our entire GDP (the country’s total national income).
Let’s look at the financing challenges facing the government if itattempts to build a bridge west of Kerewan (NBR). When a government decides to construct a major infrastructure, it can finance it in several ways. One way would be for the government to finance it entirely through budget allocation orgetting a loan. Another possibility is for the government to undertake a public-private partnership (PPP), where it jointly finances the construction of the bridge with a private sector entity. The third possibility is for the construction of the bridge to be done exclusively by private investors, whereby these investors would have the responsibility for the design, construction, and operation of the infrastructure.
Budget allocation is out of the question in The Gambia, given that our total budget would only be a fraction of the cost of such a bridge (west of Kerewan). Borrowing it would be next to impossible given the size of our existing debt, the repayment of which consumes about 30% of the annual budget – much larger than the allocation to any ministry or sector. Given that the country is in no position to self-finance or borrow, is it actuallypossible to get financial assistance from development partners,such as bilateral or multilateral development partners, to build a bridge west of Kerewan? No. Given the size of our economy, the total allocation that the Gambia can realistically get from the likes of the World Bank or the AfDB, any allocation from a multilateral bank – whether as a loan or a grant – would not be enough even to build the Senegambia Bridge. Most people did not realize that the Senegambia Bridge only got built becausethe African Development Bank added Senegal’s allocation to that of The Gambia.
In any PPP, the government must contribute a significant share of the construction cost. That in and of itself will be challenging for this government, given the country’s financial positionstemming from the afore-mentioned budget limitations and debt problem. But more challenging for this particular governmentwould be to find investors willing to put up more than a billion dollars towards a joint venture, which they would consider high-risk given its long-term nature and all the associated political risks. Beyond the issue of the government’s ability to finance its share of the cost, a PPP project introduces other risks that are difficult to mitigate when an investor goes into long-term business with the likes of an Adama Barrow-led government.Private investors investing in such a massive capital-intensive project would want to recoup their investments within at most25 years. A bridge built under such a commercial scheme with a cost of at least $ 2 billion and where the investors would need to earn high returns within a 25-year window would require conditions incompatible with current realities in The Gambia.
In other words, this government is highly unlikely to construct a bridge west of Kerewan, given our financial realities. However, financing the construction at Kerewan or a few kilometers east of that town is feasible. However, any construction of a bridge there would necessitate the addition of complementary infrastructure, such as a new road. But this would violate the clause of no-competing infrastructure. Moreover, any area significantly east of Kerewan would fall into the 50km radius. Therefore, the exclusion clause in the Africa50 concession agreement would explicitly rule out the construction of a bridgewest of the Senegambia Bridge.
Now, let’s consider a bridge on the eastern edge of the 100km diameter. The average width of River Gambia around Kaur is about 500m, meaning that $25 million can cover the design and construction of a bridge to span that segment of the river. Unfortunately, this is also an area that would fall within the exclusion zone, which would violate the concession agreement.
As one goes east of Kaur or Kudang, the need or the feasibility of a bridge there decreases for a number of reasons. First, most of the islands in River Gambia are located east of this area and some of those islands are nature reserves. Second, the need of a bridge also declines as one approaches the Sankule Kunda-Jangjangbureh bridge. Further, note that there are already bridges at Basse (URR) and Fatoto (URR). In other words, building a bridge east of Kudang would not violate the Africa50 concession but would also not be a priority area for such an infrastructure, given the existing distribution of bridges in the country.
So, the area covered by the 100km diameter (or the 50km radius) explicitly excluded by the Africa50 concession agreement is precisely the region where there is a need for a bridge and where it would have been affordable and feasible forthe country. By carefully inserting the clause, Africa50 secured the profitability of its investment by ensuring that no infrastructure would be constructed in the country that would interfere with Africa50’s profitability. After all, they are a commercial entity and did what they were created to do. One cannot blame them. It was Gambia’s responsibility to have competent experts at the negotiation table with Africa50. Clearly, Gambia did not.
However, government officials such as Mr. Seedy Keita, whoallowed the insertion of that clause and are still defending it,have failed the country. Mr. Keita and senior government officials of the Adama Barrow regime have abdicated their responsibility by not prioritizing the nation’s interest in a major infrastructure negotiation. It is a classic example of the failure ofduty to perform. It is a national embarrassment. In a better-functioning country, this would have been a crime.
Explicitly exempting the Barra-Banjul bridge idea from the no-bridge restriction is almost like a practical joke played on the country with the help of incompetent officials. Given the explanation above, the negotiators for Africa50 know that a Barra-Banjul bridge idea is not feasible for the next 15 years,given our current economic reality. In other words, excludingthe Barra-Banjul bridge is inconsequential to the profitability of Africa50’s investments because it is just an idea and will remain so for the foreseeable future.
It is important to stress why the Banjul-Banjul bridge is merely an idea on paper rather than an investment plan. Before an infrastructure idea reaches a level where investors can be approached, it must go through several stages. To be investment-ready, a project must have feasibility studies, traffic studies, environmental studies, and procurement documents, among others. None of these have been done in the case of the Banjul-Banjul bridge. There also has to be substantive interaction with some market participants to understand the legal, regulatory, and other risk factors that need to be considered before a realistic structure starts to take shape. These project development elements are needed before a country can claim to have an investment-ready project. Despite the out-of-touch claims by Minister Ebrima Sillah and other government officials, our government is quite far from reaching that stage with the Barra-Banjul Bridge proposal.
Undoubtedly, the 100km diameter will adversely affect our The Gambia future infrastructural development. It is an aggravating factor in a deal that was already badly negotiated and is being poorly executed. It represents the prioritization of short-term political ends over long-term development. An example of how badly this was negotiated was the fact that The Gambia did not seek out professional and expert assistance during negotiation, while Africa50 came to the negotiating table highly prepared.Africa50 pulled the wool over the eyes of Seedy Keita, who will go down in history as one of our most incompetent finance ministers.