Close the infrastructure deficit
14 May 2014
The New Times
Infrastructure deficit is a big problem in Africa estimated to reduce industrial production by 40 per cent and making the cost of doing business very high.
Massive investment is required to finance the development of electricity, roads, railways, airports, seaports and waterways as well as ICTs.
Countries, sub-regions and the continent must scale up mobilisation of resources for infrastructure financing, with an affordable and diversified mechanism that would go a long way in reducing the burden on governments which are limited by how much revenue can be raised in any given financial year.
Countries need to enhance their efforts in accessing potential global sources of finance for Africa's infrastructure needs. The G-20 established a High Level Panel (HLP) for infrastructure, whose goal is to mobilise such finances.
At the AU level, a Presidential initiative, Programme for Infrastructure Development for Africa (PIDA), is expected to synchronise the long term development of infrastructure in Africa, and with the collaboration of African Development Bank (AfDB), the African Union Commission, the Regional Economic Communities like the East African Community (EAC), as well as NEPAD, it is envisaged that critical investment as well as resource gaps will be addressed.
Huge finances will be required to start new infrastructure projects as well as to maintain existing investments. To keep up with the required pace for sustainable socioeconomic development, dictated by population growth, rural urban migration and need for industrialisation, the continent needs new generation capacity for up to 7000 megawatts a year.
Because of ability by some countries more than others to develop this power, there is need for regional power trade that requires about 22,000 megawatts of cross-border transmission lines.
The intraregional fibre-optic network and the continental submarine cable loop should serve to connect capitals, ports, border crossing for persons and goods. This could feed into good quality roads that connect secondary cities.
Absence of all-season roads in some parts has hindered access to high-value agricultural land.
Availability of clean and portable water would contribute to higher yields because of irrigation, better health and sanitation, hence meeting the Millennium Develop Goals (MDGs).
Compared to world standards, Africa's infrastructure network is very weak. Roads account for 90 per cent of transport, yet the present density is about seven kilometres per 100 square kilometres.
It is worthwhile for our countries to calculate the existing kilometres of road coverage against the total land mass. If we do not go up to at least 25-30km per 100 square kilometres, then we are doing badly.
Quality too needs to be addressed. For example, how many kilometres of those roads being captured in national statistics are tarmacked/paved?
What is the distribution pattern, to determine whether all the regions are served equitably to enable their produce reach the market?
Under the East African new initiative to up-scale cross-border communication, railways have been identified as key to trade, and therefore income, savings and, in turn, investment.
Today, 17 African countries do not have railway lines at all, while 20 have railways which have not been in operation for years. Where they exist, the network is characterised by variation in the type of gauge, limiting cross border use.
While 29 countries on the continent have one form of inland waterways or another, including canals, lakes and rivers, their use remains minimal because of silting, water fluctuation and the danger to use them without proper signalling and communications systems.
Seaports, on the other hand, are largely below international standards, operating merchant fleets of 20 or more years, as opposed to the recommended 13-14 years.
Air transport needs improvement in terms of fleet, navigation equipment and airport infrastructure.
In the case of East Africa, the cost of flying is very high because the air space is not liberalised, and monopoly is hampering further investment because of lack of competition.
Communications systems remain weak although the ICT sector has made a lot of improvements in recent years in telecommunication. At the sub-regional level, we need to harmonise policies and market structures, particularly in respect to interconnectivity, tariff structures.
Due to population pressure and climatic conditions, availability of usable water is diminishing. Rain water harvesting is one area that has not been attended to, despite the present deficit in dams, boreholes, pipelines and storage facilities. Water has not been efficiently harnessed as an energy source either.
Failure to address energy, especially changing focus to renewable sources presents the biggest infrastructure challenge.
Africa's power consumption is about 10 per cent of that in the developed world. Can we then compete in industrialisation and trade?
We continue to consume what we do not produce, and to produce what we do not consume as our raw exports are processed and returned for us to buy as finished products.
Thirty out of the 54 African countries experience regular power interruptions, causing 5 per cent loss in sales and, on average, 1-2 per cent of GDP.
If the current trend of minimal financing for infrastructure remains, the annual deficit will keep increasing, undermining all other efforts towards social and economic development.
The G-20 leaders at the last meeting in Seoul, South Korea pledged to support Africa through trade facilitation and regional infrastructure through Aid for Trade (AfT).
Other potential sources include global capital markets, bilateral partnerships and Public Private Sector Partnerships (PPPs), which can work if supported by sound financing frameworks.