Infrastructure Is the Key to Africa’s Growth

           The Corporate Council on Africa recently hosted a briefing in Washington by United Nations High Representative for Infrastructure Raila Odinga, who made the case that there was a realization on the continent that development plans, especially enhanced intra-Africa trade, could not be implemented without significant upgrades in various forms of infrastructure.  Mr. Odinga said that intra-Africa trade (he estimated it to be about 15%) lagged significantly behind that of other global regions, including those with numerous developing countries.

There are various reasons why the disconnect of African infrastructure took place.  The one most often cited is that the European colonial powers carved out protectorates separate from their rivals.  This meant roads, air travel, etc., were geared to benefit the colonial power in control. This has resulted in neighboring countries not having roads or air links without going through third countries or even through Europe.  Mr. Odinga cited an example of how skewed the infrastructure disconnect really is. 

He said that for exports from his native Kenya to the Central African Republic (CAR), they would have to be taken by ship around the Cape of Good Hope, dock in a nearby port and then be carried by road to CAR.  Mind you, Kenya is separated on land from CAR by parts of Uganda and the Democratic Republic of the Congo, but due to lack of land connections, this cargo would have to be taken to the other side of the continent – a trip that adds significant time and cost to the shipment.  Neither the English, French or Belgian colonialists thought it in their interest to make transportation between these countries more possible. Stories like this about in the annals of intra-Africa trade.

Another issue Mr. Odinga mentioned was corruption.  In the case of transportation, especially by road, this has meant that government officials sometimes either collect more than is required or turn in to the government less than they have collected.  It also sometimes leads to a proliferation of stops with official or unofficial tolls.  If you ask many of the female traders who do cross-border business, they will tell you that tolls are not always collected in money, which makes their trade much more perilous than it needs to be and seriously impacts the informal sector of most African economies that is dominated by women.

            Then there are competition or cross-border rivalries that interfere with cooperation needed to facilitate transportation links or other mutually beneficial linkages for regional projects.  Mr. Odinga cited the difficulties in establishing renovation of the bridge between Brazzaville, Republic of the Congo, and Kinshasa, Democratic Republic of the Congo.  The Congo-B port of Pointe-Noire is deep-water, allowing it to receive ships of all sizes, while the DRC port of Matadi is not deep-water.  DRC officials reportedly see an expanded bridge between the two countries as favoring shipping to Congo-B, but that is a reality of the situation until Matadi can become deep-water or until a new deep-water port in DRC can be developed.

            Closely related to that is protectionism.  Designed to ostensibly to protect so-called “infant industries” that wouldn‘t be able to develop against competition from outside firms, over- protection has frustrated many public-private partnerships and foreign investments.  In reality, the protectionist schemes more likely help the businesses of well-connected elites.

However, there apparently has been progress in at least some countries in enhancing African infrastructure.  The second continental report on the implementation of Agenda 2063, released in February 2022 by the African Union Development Agency-New Partnership for Africa’s Development (NEPAD), which manages its implementation of this AU plan, cited advancements in the six areas on which it focuses:

Trans-African Highway Missing Links

            The report stated that the aggregate performance of the continent rose from 8.12% in 2013 to 19.38% in 2021, although it still fell far below the expected 2021 target value of 81.6%.  In 2020, Kenya recorded 80% completion of the Trans-African Highways Missing Link within Kenya, a notable progress from 30% in 2013.  The completion rate in Senegal was recorded at 60% in 2020, attributed to the finalization of the Dakar-Abidjan coastal corridor that stretches from Dakar (Senegal) to Abidjan (Côte d’Ivoire), crossing The Gambia, Guinea Bissau, Guinea, Sierra Leone and Liberia. The AfDB has been instrumental in advancing Africa’s infrastructure development.

African Integrated High-Speed Railway Network

The continental-level score on the status of readiness for implementation was recorded at 12.3% in 2021. The progress, while falling far below the 2021 target value of 100%, is attributed to efforts made by some countries. For example, Senegal registered a 43% completion rate of the African Integrated High-Speed Railway Network, while Kenya increased the railway’s share from 5% to 50% of cargo freight from the port of Mombasa.

Population Using Mobile Phones

The proportion of the population using mobile phones in Africa increased from 39.8% in 2013 to 68.8% in 2021, registering a 91% performance against the 2021 target. Overall, most countries exhibited remarkable increases in this domain. For example, Togo recorded a significant leap in the proportion of the population using mobile phones, rising from 55.87% in 2013 to 83.59% in 2020. In Uganda, the proportion of households owning mobile phones increased from 55.7% in 2013 to 74.0 % in 2020, while in Namibia, the proportion of the population using mobile phones jumped from 52.6% in 2013 to 93% in 2020. Similarly, Chad recorded 74% of its population using mobile phones.

Percentage of ICT Contribution to GDP

During the period under review (2013-2020), Africa saw an increase in the contribution of ICT to GDP, rising from 5.12% in 2013 to 7.23% in 2020. For example, in line with the ICT infrastructure objectives of the National ICT Policy, Seychelles rolled out of its first submarine cable – the Seychelles East Africa Submarine (SEAS) cable – which is connected to Dar-es-Salaam, Tanzania.  The laying of SEAS has boosted Internet usage, mainly with the decrease in price per gigabyte for Internet usage and an increase in Internet speed. This also has led to the establishment of many businesses and utilization of the platform for service delivery by the private sector and government.

Single African Air Transport Market

            Africa has made significant progress towards signing the Solemn Commitment to create a single unified air transport market as part of efforts to foster the free movement of people and goods on the continent. By end of 2020, 35 countries, representing 64% of the total membership of the African Union had signed the solemn commitment to join the Single African Air Transport Market (SAATM). These countries are Benin, Botswana, Burkina Faso, Cape Verde, Cameroon, Central African Republic, Congo, Côte d’Ivoire, Chad, Democratic Republic of the Congo, Egypt, Ethiopia, Equatorial Guinea, Eswatini, Gabon, The Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Mali, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Togo, Zambia and Zimbabwe.

Additional Megawatts to the National Grid

            Efforts are underway to develop a Continental Energy Transmission Masterplan, with the participation of all Power Pools. The Masterplan will enable coordinated generation and distribution of power in Africa. Relatedly, the continent has seen a remarkable increase in overall electricity generation, rising from 16,144 megawatts (MW) in 2013 to 31,690 MW in 2021.  Similarly, AU member states have significantly increased the number of megawatts to their national grids. For example, Senegal added 234.5 MW while Rwanda and Sierra Leone added 238.4 and 67 MW of electricity respectively to their national grid over the last two years. Egypt and Côte d’Ivoire recorded an additional 3,140 MW and 275 MW of electricity respectively during the same period. Sudan and Djibouti are linked with power grids importing electricity from Ethiopia. Furthermore, the construction of the Ethiopia-Kenya electricity highway is in advanced stages.

            In his presentation, Mr. Odinga cited several ambitious infrastructure projects he said were ready to be implemented.  However, there were questions regarding bankability of such projects.  This actually is the major hitch in getting these projects funded, despite potential funding not only from institutions such as the African Development Bank and African Export-Import Bank, but also pensions funds, insurance funds and sovereign wealth funds, not to mention such sources as toll on roadways.  What project managers consider bankability is too often not what those with funds to invest see in those projects.

            Those seeking investment – African infrastructure projects and indeed African companies – must look at things from the point of view of the investor in question.  After all, this is business, not charity and involves tremendous amounts of money that must be accounted for. What does the investor want in return for its investment in this project?  How secure will their investment be?  Are the conditions outside the project itself conducive to stability and successful performance?

            This realization is becoming more widespread in Africa, which gives hope that this particular disconnect can be resolved, allowing African infrastructure to be completed as planned.