Washington, D.C. – October 12, 2008 -- Africa faces an infrastructure financing gap of US$35 billion per year. This, and other pressing facts, was revealed during a recent seminar “Meeting Africa’s Infrastructure Needs: The Twin Challenges of Financing and Sustainability”.
Held on Thursday, October 9, 2008, the event brought together policymakers, business leaders, civil society, and representatives from the World Bank to discuss how this vast infrastructure gap can be narrowed, and what steps African governments can take to secure a ‘New Deal’ to address the dire power crisis gripping the continent.
“Africa’s infrastructure deficit is hindering economic growth and sustainable development,” Obiageli K. Ezekwesili, Vice President for the World Bank’s Africa Region, said in her welcome remarks. She was joined by co-chair Erastus Mwencha, Deputy Chairman of the African Union Commission, who noted that “harmonizing regulations was important for attracting infrastructure investments in Africa.”
World Bank Vice President for Sustainable Development Kathy Sierra presented in her opening remarks an overview of the Bank’s new “Sustainable Infrastructure Action Plan.”
Featured speakers included Dr. Elham Ibrahim, Energy and Infrastructure Commissioner at the African Union Commission, and Tshepo Mahloele, CEO of Harith Fund Managers, South Africa, who is spearheading the launch of a $1 billion Pan-Africa Infrastructure Development Fund financed by private investment. The event was moderated by award-winning journalist Charlayne Hunter-Gault.
African Infrastructure Country Diagnostic Study
A highlight of the seminar was the preliminary results of an AICD paper “Overhauling the Engine of Growth: Infrastructure in Africa,” which was presented by Vivien Foster.
The paper was co-authored by Foster, a Lead Economist, and Cecilia Briceño-Garmendia a Senior Infrastructure Economist, both in the World Bank’s Africa Region. The research spanned 24 African countries. The paper’s findings revealed significant facts about the enormity of Africa’s infrastructure requirements, including:
The cost of redressing Africa’s infrastructure deficit is a whopping $75 billion every year, a number split nearly evenly between investment needs of $38 billion and $37 billion for operations and maintenance
The annual estimate of investment needs of $38 billion annually is twice as high as an earlier estimate by the Commission for Africa
African countries are devoting more of their own resources to infrastructure than was previously thought, between 6-8 percent of GDP
Utility inefficiencies run high, and waste US$6 billion annually
Under-pricing of services below cost-recovery levels result in financial losses of US$5 billion every year
Power supply – or the lack of it – is by far Africa’s greatest infrastructure challenge, and on every indicator, the power sector lags behind other developing countries; the 48 countries of Sub-Saharan Africa generate roughly the same amount of power as Spain
Sixty percent of Africa’s hydroelectric potential is found in the Democratic Republic of Congo and Ethiopia, countries too poor to raise the multi-billion dollar financing needed to develop them.
On the fringes of the World Bank–International Monetary Fund Annual Meetings from October 6-13, the seminar served as a forum for an informed discussion and debate on alternatives to improving infrastructure services on the African continent. Several pertinent questions were raised: one on how the financial crisis would affect financing for infrastructure, and another on how the agenda for regional integration of infrastructure should be taken forward. Participants also discussed how careful planning can help reduce costs, for example by combining road transport infrastructure with the laying of cables for expanding communications’ connectivity.
The overarching message – Africa needs both increased funding and improved efficiency to bridge the infrastructure gap – resonated with the audience.
The seminar was sponsored by the World Bank’s Sustainable Development Network, the Africa Region of the Bank, and organized in conjunction with the Public-Private Infrastructure Advisory Facility, and the Infrastructure Consortium for Africa.