Africa on the Rise

Fifteen African countries have sustained high growth levels above five percent for over a decade. Sound macroeconomic management and key sectoral reforms have underpinned this growth.

The number of African states in conflict has also fallen from 15 to around five countries as countries tackle difficult political and social problems.? However, in order to consolidate the peace it will be essential to support shared growth in these fragile states.

African governments are increasingly recognizing the importance of governance and making their own anti-corruption efforts. A clear example of this is the seventeen countries that have already signed up to the Extractive Industries Transparency Initiative.

Recent high commodity prices are offering the African continent a unique opportunity to continue to grow at such rates by exploiting its considerable oil and mineral reserves. However, for this growth to be sustainable, resource rents will have to be reinvested prudently to diversify the economic base. A key area of investment is infrastructure.

The widespread adoption of cell phones has been a remarkable infrastructure success with the number of Africans living within range of a cell phone signal rising from less than 5% in 1999 to more than 50% in 2006s.? Such progress is being driven by both foreign and domestic investment averaging US$3.5 billion per annum since 2001.

But the Challenges are Significant

When asked in business survey, African entrepreneurs consistently cite poor infrastructure as the number one constraint to doing business and single out power as the most problematic infrastructure sector.

African Countries Experiencing Power Crisis

Thirty-five countries are experiencing an energy crisis with frequent power blackouts, leading to major economic and social disruptions (see map below for details). Due to decades of under-investment, the 47 countries of Sub-Saharan Africa (excluding South Africa) have a combined generation capacity less than that of Argentina. As a result power consumption is little more than 100 kilowatt-hours per person per year, and close to 600 million people (or three out of four) Africans do not have access to electricity. In addition, many African nations pay very high prices for electricity, around US$0.15 per kilowatt-hour on average, or around twice as much as in the rest of the developing world.

Africa has the lowest density of paved roads of any other developing region in the world. Movement of road freight along key trading corridors is also severely affected by port bottlenecks and cumbersome administrative procedures at border crossings.

On water broadly, less than 5% of agriculture is under irrigation. Several countries are facing losses of 1-2% of GDP every year from weather shocks like floods. Africa is unlikely to reach the UN Millennium Development Goals for access to improved water and sanitation. That leaves more than 300 million people without an improved water source and more than 400 million people without improved sanitation.

Africa's infrastructure investment needs are enormous and estimated by the World Bank in excess of US$ 20 billion a year, with nearly US$17 billion needed for operations and maintenance. Overseas Development Assistance at roughly US$5-6 billion falls well below the required amounts. Some part of the shortfall will be met by private sector investment plus the increasingly significant contributions of new development partners (China, India). But even so, some gap remains.

What is the Bank Doing?

The World Bank is rapidly ramping up its support for infrastructure. Our level of commitments for our FY 2007 for Africa was US$2.4 billion, leveraging a similar amount from other development partners. This FY2008 is expected at a similar level since we are at the end of the current IDA 14 envelope. We expect to increase our support to around US$3 billion per year over the next three years with the hope of leveraging a similar amount from partners and the private sector.

We will be focusing our support to the power sector (generation, transmission and distribution), road networks with a strong regional focus, river basin programs, irrigation and continued support for water and sanitation. More than 10% of our lending will go to projects focusing on regional integration of infrastructure networks across national borders in Africa.

Our Partnership with Japan

We are grateful with our partnership with Japan over many years and are very appreciative of its generous contribution of US$3 billion to the IDA 15 replenishment.

We also welcome Japan's leadership of the upcoming Tokyo International Conference on African Development (TICAD) which will bring all of the development partners together to build a shared approach to Africa's needs and encourage a stronger and more accelerated global response to help one of the world's great potential but lagging region.  We look forward to Japan's own ramped up efforts in financing and the sharing of technical expertise and experience in the continent.

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