Infrastructure has played a significant role in Africa’s recent economic turnaround, and will need to play an even greater role if the continent’s development targets are to be reached.
Simulations suggest that if all African countries were to catch up with Mauritius in infrastructure, per capita economic growth in the region could increase by 2.2 percentage points. Catching up with Korea’s level would increase economic growth per capita by up to 2.6 percent per year. In a number of countries—including Cote d’Ivoire, Democratic Republic of Congo (DRC), and Senegal—the impact would be even larger.
In most African countries, particularly the lower-income countries, infrastructure is a major constraint on doing business, and is found to depress firm productivity by around 40 percent. For most countries, the negative impact of deficient infrastructure is at least as large as that associated with corruption, crime, financial market and red tape constraints.
For an important subset of countries, power emerges as the most limiting factor, being cited by more than half of firms in more than half of African countries as a major business obstacle.
Deficiencies in broader transport infrastructure and infrastructure for information and communication technologies (ICT) are less prevalent, but nonetheless substantial in some cases.
Infrastructure Deficit
Africa’s largest infrastructure deficit is to be found in the power sector. Whether measured in terms of generation capacity, electricity consumption, or security of supply. Africa’s power infrastructure delivers only a fraction of the service found elsewhere in the developing world. The 48 countries of Sub-Saharan Africa (with a combined population of 800 million) generate roughly the same amount of power as Spain (with a population of 45 million).
Power consumption, at 124 kilowatt hours per capita per year and falling, is only a tenth of that found elsewhere in the developing world, barely enough to power one 100-watt light bulb per person for three hours a day.
With regard to ICT, Africa is staying closer to developments elsewhere in the world. The percentage of Africa’s population living within range of a GSM signal rose dramatically from five percent in 1999 to 57 percent in 2006. Over the same period, more than 100 million Africans became mobile telephone subscribers. Indeed, in some countries, household access to mobile telephone services now exceeds that of piped water. Internet penetration, however, lags considerably behind, with little more than two million subscribers and a further 12 million estimated to be making use of public access facilities.
Africa’s road density is sparse when viewed against the vastness of the continent. As a result, only one-third of Africans living in rural areas are within two kilometers of an all-season road, compared with two-thirds of the population in other developing regions.
Africa’s water resources are abundant, but owing to an absence of water storage and irrigation infrastructure, they are grossly underutilized. The continent experiences a particularly high level of hydrological variability, with huge swings in precipitation across areas, across seasons, and over time. This variability will only be exacerbated by climate change. As a result, achieving water security—defined as reliable water supplies and acceptable risks from floods and other unpredictable events, including those from climate change—will require a significant expansion of water storage capacity from current levels of 200 cubic meters per capita to levels of at least 750 cubic meters per capita, a level currently found only in South Africa.
In addition to water storage, there is further need to distribute water for agricultural use. At present, only six million hectares, concentrated in a handful of countries, are equipped for irrigation. Though less than five percent of Africa’s cultivated area, the irrigation-equipped area represents 20 percent of the value of agricultural production.
The cost of redressing Africa’s infrastructure deficit is estimated at US$38 billion of investment per year, and a further US$37 billion per year in operations and maintenance; an overall price tag of US$75 billion. The total required spending translates into some 12 percent of Africa’s GDP. There is currently a funding gap of US$35 billion per year.
Solutions
Regional integration lowers the cost of infrastructure by giving smaller countries access to more efficient technologies and a larger scale of production. For example, many African countries have power systems that are too small to be able to generate power efficiently.
Regional cooperation on infrastructure also helps to harness and share the benefits of transboundary commons. A key example is provided by Africa’s 63 international river basins, which are shared by two or more countries and require careful coordination of water resource management and associated infrastructure investments. Similarly, the ports and connecting sea corridors of the coastal nations are regional public goods that typically service multiple landlocked countries in the hinterland.
Closing Africa’s infrastructure financing gap will not only involve raising additional funds but also improving the efficiency with which existing resources are used. Lack of timely maintenance activities, inefficiency distribution networks, weak revenue collection performance, under-pricing of services, and low capital budget execution all lead to substantial wastage of resources currently available for infrastructure development. Thus, bridging Africa’s infrastructure funding gap is as much about improving the performance of the relevant institutions as it is about raising additional finance.
The World Bank’s Role
The World Bank has reversed the historic decline in investment lending to SSA infrastructure, with financing commitments rising from US$600 million in FY00 to US$2.4 billion in FY08, and set to increase further during the IDA-15 period. The World Bank’s program includes support for critical areas such as energy, irrigation, information and communications technology, roads, and ports among others. The Sustainable Infrastructure Action Plan (SIAP) for 2009-2011 supports a renewed commitment to improve the reach and quality of infrastructure service delivery in a sustainable manner through increased financial and analytical support and leverage.
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