Africa needs $93 billion a year for infrastructure

Infrastructure is key to Africa’s growth, but financing is coming in far too slowly. Katherine Sierra, the World Bank’s vice president for sustainable development, told the fourth annual U.S.-Africa Infrastructure Conference on 28 April that studies show that $93 billion of investment is needed each year in Africa’s infrastructure, but only $45 billion is arriving. She said African leaders were putting priority into infrastructure and it is an urgent challenge to close the financing gap through additional funding and increased efficiencies.
World leaders in 2005 (G8 summit at Gleneagles, Scotland) highlighted Africa’s infrastructure as a key factor in determining the pace of sustained economic growth and development on the continent. In response, the World Bank and other groups put together the Africa Infrastructure Diagnostic to determine the status of African infrastructure. Data was collected for 24 countries, and the study is expanding to include 40 more countries.
According to a report of the meeting, she said: “We all know that Africa’s infrastructure is sparse. We should also recognize that it is extremely expensive compared to other regions of the world.” She said costs of infrastructure services in sub-Saharan Africa are at least double those in South Asia, and in some areas are five times higher. She attributed this disparity to a lack of large-scale economies, the high costs of electric power, and a lack of competition.
“Thin markets in Africa are often characterized by monopolies or cartels leading to high profit margins for a limited number of service providers, inefficiencies and therefore high prices. So we need to tackle more economies of scale issues and introduce more competition,” she said. For much infrastructure, including water and hydropower, there should be emphasis on regional solutions since Africa’s geography complicates management. Twenty countries have less than 5 million people, another 20-plus countries have a gross domestic product of less than $5 billion. Sixty international river basins are shared between several countries
There is a power crisis, she said: “We have 30 countries facing chronic blackouts. As a result, businesses are giving up in some cases on public- and private-sector solutions, and resorting to expensive individual options… The entire capacity for electric power in sub-Saharan Africa with its 48 countries and population of 800 million is not more than Spain, with a population of 40 million.” Guinea-Bissau, for example, has the ability to generate only a small amount of electric power – the same amount of power it takes to electrify the World Bank complex in Washington, she said.
Only 20% of Africa’s population has access to electricity or modern forms of energy, compared to 50% in South Asia and 80% in Latin America, she said. Even by 2050, universal access to electricity in sub-Saharan Africa will not happen – a situation that she called “totally unacceptable.”
Air transport has expanded in eastern and southern Africa but remains “cumbersome and declining” in west and central Africa. Safety also remains an issue, she added. The volume of cargo in ports has more than tripled in the past decade. That is an “early marker” for growth across the continent, she said. But she warned that containerization is still low and inland transportation linkages are weak. “We need to focus on regional hubs and the efficient trans-shipment around the coast and inland linkages,” she said.
Sierra said the railways are less significant over the past 30 years, partly because of poor maintenance and other adverse economic and infrastructure factors. Every $1 of delayed road maintenance ends up costing $4 to restore the existing road. Africa needs more agricultural productivity, but many countries have failed to harness water for development and water storage facilities and dams are inadequate to mitigate floods and droughts. “Today, only 5 percent of Africa’s land is irrigated,” she said.
Africa has made great progr6ess is telecommunications. In 1999, only 5% of the population lived within range of a mobile phone signal but now it is 60%, which could expand to 90% through deregulation and greater competition.
The Corporate Council on Africa conference on “Building Dynamic Growth in Africa” focused on key sectors of African infrastructure that present investment opportunities and asked how to mitigate the effects of climate change.

Comments are currently closed.