Transport in Africa
Among other things, Africa still lacks adequate transport infrastructure – roads, rails, ports and air. This creates massive trade barriers. Trade corridors, or spatial development initiatives (SDIs), are government-driven programmes, which focus investment in areas of inherent resource potential. Multimodal transport—whereby roads, railways, airlines, and shipping operate in harmony—can contribute significantly to growth and productivity if the modalities are well integrated.
Air transport has grown strongly in Africa in recent years. The availability of air freight services, in particular, has helped boost exports. Air traffic control requires major upgrades to improve the continent’s baleful safety record. Policy challenges include strengthening regulatory oversight and achieving full liberalization of the air transport sector.
Since the mid-1990s, general and containerized cargo passing through Africa’s ports has tripled in volume. Further growth will require additional investments, however, as port efficiency and performance remain well below international standards. Even though ports have been largely deregulated, many African countries maintain high port tariffs that discourage traffic and increase costs. Many are not large enough to attract direct calls from international shipping lines, underscoring the importance of developing regional transshipment hubs. Policy solutions include adopting a landlord port system that embodies international best practices.
Following economic liberalization in many African countries and major improvements to the region’s road network, most of the continent’s railways lost their economic edge. Except in South Africa, few still play an integral role in the economy, except to link mining sites to ports. Surviving passenger lines do not recover costs, and freight tariffs are constrained by road competition. With traffic declining, few railways are able to generate enough revenue to fund investments. The standard policy response has been to concession many of Africa’s railways. The opportunity to invest in track rehabilitation is large and has received much attention in South-South trade relations.
Road conditions have improved in most African countries in recent years, as governments have strived to increase the density of their road networks and carry out institutional reforms. Tremendous progress has been made in establishing institutions to manage and maintain Africa’s roads, for example, but still only one in three rural Africans has access to an all-season road. Unable to reach urban markets, millions are trapped in subsistence agriculture. In cities, road construction has not kept pace with urbanization. In many countries, road maintenance remains inadequate. Even the Trans-African Highway, the symbol of modern Africa, has long gaps. Road infrastructure development is very-needed and will be the conduit for added trade across the continent, both regionally as well as abroad.
Energy in Africa
Power is by far Africa’s largest Infrastructure challenge, with 30 countries facing regular power shortages and many paying high premiums for emergency power.
Whether measured in 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 Sub-Saharan Africa countries (with 800 million people) generate roughly the same power as Spain (with 45 million people). Power consumption, at 124 kilowatt-hours per capita annually and falling, is only 10 percent of that found elsewhere in the developing world, barely enough to power one 100-watt light bulb per person for 3 hours a day. * Source World Bank Report
Africa needs to develop an additional 7,000 megawatts a year of new power generation capacity as well as enable regional power trade by laying 22,000 megawatts of cross-border transmission lines. In Sub-Saharan Africa, the pipeline industry is gaining momentum as investment flows from private companies and development banks. Ensuring a reliable source of energy is integral to the development of other industries and a focus for governments and regional bodies.
African governments and businesses are looking to develop oil and gas pipelines to enable sustainable exploitation of the continent’s indigenous oil and gas reserves.
The potential to develop this crucial industry sector and power Africa is enormous.
Information and Communication Technologies
Information and communication technologies (ICTs) have been a remarkable success in Africa. In just 10 years—dating from the end of the 1990s—mobile network coverage rose from 16 percent to 90 percent of the urban population and by 2009 nearly half of Africa’s rural population was also living within range of a mobile network. This demonstrates the impressive growth of the sector and the potential for future growth. Large-scale investment in the sector across the continent has transformed telecommunications from a luxury enjoyed by a privileged few to a mass-market, low-cost service, used in villages and cities alike. Africa’s ICT Infrastructure: Building on the Mobile Revolution charts this ICT revolution, reviewing the rapid growth in networks and the emergence of the mobile phone as a part of everyday life in Africa.
Trans-boundary Water Resources
Water infrastructure projects in Africa are attracting many foreign companies, which are ready to partner with local companies and utilities to develop collection, purification and distribution projects worth many billions of dollars.
Africa’s complex hydrological variability complicates water resource management. Even though the continent’s ample water resources are underutilized, conflicts among water uses abound. Because rainfall is exceptionally variable, storing rainwater is critical—yet storage facilities remain inadequate. Similarly, because most of Africa’s major rivers span national borders, international cooperation is essential to resolving conflicts and removing inefficiencies in water use. There is a need to invest heavily in both trans-boundary river-basin organizations and in water-storage facilities to ensure that water is available when and where it is needed.
Africa, especially sub-Saharan Africa, ranks consistently on the bottom of developing regions in access to infrastructure services. According to Africa Infrastructure Country Diagnostic (AICD) estimates, Africa’s total infrastructure financing needs amounted to $93 billion per year in 2008, with only $45 billion financed. Closing the financing gap will require innovative financing resources with different types of financiers, including private sector, bilateral and multilateral partners. For Africa’s growth to be sustainable, all financing should adhere to debt sustainability criteria and where possible be also ‘climate-proof. Bridging Africa’s infrastructure funding gap is as much about improving the performance of the relevant institutions as it is about raising additional finance.
Infrastructure projects are also increasingly being recognised as a safe and profitable investment prospect for alternative sources of funding. Infrastructure projects can offer the long term, stable returns that are now increasingly difficult to achieve from typical investment instruments such as bonds. Finding the finances to fund infrastructure projects in a climate of global financial uncertainty is a challenge, not least of all in emerging economies such as those in Africa. Using a different approach to infrastructure investment, such as the Pension Funds, will offer a solution that will assist in getting more infrastructure projects on track in Africa.