Overview
Infrastructure accounts for a large share of Africa’s recent growth performance, and could contribute much more. But Africa's basic infrastructure lags far behind that of other developing regions. Infrastructure services are twice as expensive in Africa as elsewhere. To raise Africa's infrastructure endowment to a reasonable level within the next decade, will cost $93 billion a year, split two to one between investment and maintenance. Africa already spends $45 billion, half the required amount. Efficiency gains could raise an additional $17 billion from within the existing envelope. Even then, an annual funding gap of $31 billion would remain. This overview summarizes the key findings and recommendations.
Chapter 1
Inadequate infrastructure suppresses Africa’s per capita growth rate by as much as two percentage points each year. Several decades ago, Africa's infrastructure was comparable to that of other developing nations, but it has since fallen behind and the gap is widening over time. This chapter details where and how it falls short and presents estimates of the spending needed to fix the problem within a decade. The price tag: $93 billion a year over 10 years (or 15% of the region’s GDP). Two-thirds of the total is needed for capital investment and rehabilitation of assets; the remainder, for maintenance. The power sector accounts for 40% of the required spending, while transport and water account for an additional 20% each.
Chapter 2
Africa already spends $45 billion a year on its infrastructure needs. An additional $17 billion could be captured by staunching losses and improving efficiency. But even if all the holes in the present system were plugged, a funding gap of $31 billion a year would remain. Chapter 2 explains how different policy measures could be used to improve efficiency, explores options for raising additional funding, and concludes that an important subset of African countries may have to postpone the achievement of their infrastructure goals—or to switch to lower-cost technologies to reduce the cost of meeting targets.
Chapter 3
Coverage of modern infrastructure services in Africa has been stagnant since the mid-1990s and remains skewed in favor of better-off households. Chapter 3 explores how poverty and inequality affect access and affordability of modern infrastructure services. How much can African households afford to pay for services? And how far can African governments go to subsidize basic services for those who cannot afford them? Governments now spend around $4 billion annually to subsidize consumption of networked power and water services. These subsidies largely bypass the poor who lack access to services and might better be spent on expanding service coverage.
Chapter 4
The quantity and quality of infrastructure services are affected by many institutional factors, such as the political will of policy makers, the capacity of planning agencies, the expertise of regulators and technicians and the quality of corporate governance. Despite extensiveefforts, institutional reform is only half-way along in Africa. Private sector participation has been effective in improving service quality and efficiency in some (but not all) areas of infrastructure. Since public provision remains dominant, governance reform in state-owned enterprises deserves attention, with emphasis on strengthening incentives and accountability. Developing regulatory agencies in Africa has also been challenging, and results are not yet fully evident.
Chapter 5
Africa is urbanizing rapidly—generally a good thing on a sparsely settled continent that is more rural than any other region of the world. The demand for food created by large cities pulls surrounding rural areas out of subsistence farming by offering a nearby market for agricultural goods. At the same time, the “agglomeration effect” kindled in large cities greatly enhances economic productivity. These salutary benefits hinge on effective infrastructure: telecommunications, urban transport, and reliable electricity, as well as serviceable urban-rural links. But in most of Africa infrastructure has not kept pace with urbanization. The weak financial base of African cities lack of effective urban planning and malfunctioning land markets are key constraints.
Chapter 6
Africa is home to many small, isolated economies, an economic geography that presents severe handicaps. Regional integration can break that isolation, providing larger and more competitive markets, lowering prices for food, power, industrial inputs; and harmonizing customs and other administrative procedures that presently raise the costs of traded goods. Integrating physical infrastructure is an essential precursor for deeper integration. Chapter 6 identifies the benefits of regional integration across the infrastructure sectors and documents the institutional challenges that stand in the way, such as building political consensus, establishing effective regional institutions, prioritizing regional investments, and facilitating cross-border finance.
Chapter 7
The mobile telephone revolution has been a boon for Africa contributing significantly to growth. Sector reform, especially in the mobile segment, has improved the availability, quality, and cost of connecting across Africa. Yet prices remain high, and in many places competition is stifled by needless regulation and other obstacles. While the use of mobile telephones has burgeoned, fixed telephone service—still dominated by state-owned monopolies in many countries—has not expanded. The rollout of broadband Internet service is constrained by similar factors and by the absence of sufficient fiber optic backbone networks. Chapter 7 identifies some of the key determinants of change in ICT and outlines the reform agenda for the sector.
Chapter 8
Paltry generating capacity, limited electrification, low power consumption, unreliable service, and high costs plague Africa's power sector, hampering growth and productivity. Solving the problem requires an annual spending of about $40 billion for at least 10 years, four times what is currently being spent. Power utilities are highly inefficient and squander $3.3 billion annually in distribution losses, uncollected revenues, and overstaffing. Underpricing drains $2.2 billion a year. Regional power trading is a promising way to harness Africa’s ample hydropower resources, providing secure supplies of low-cost power while reducing the continent’s vulnerability to varying oil prices and reducing carbon emissions in the bargain.
Chapter 9
An effective transport system requires that different modes—road, rail, air, and water—work seamlessly together. This depends on smooth physical links across modes, and on consistent policies and streamlined regulatory and administrative processes. For Africa, efficient multimodal transport is the exception rather than the rule, and its absence poses a shocking economic cost. Multiple blockages stall freight, pile on costs, and hijack the logistics systems on which global trade depends. Chapter 9 details the challenges of multimodal transport, exploring policy options that can be implemented at the national and regional levels.
Chapter 10
Africa has benefitted from a decade of institutional reforms for the maintenance of its road networks, primarily the inter-urban network. Despite solid improvements, much remains to be done. For example, the building and improvement of urban roads lags urbanization. Urban transport systems are disorganized and unsafe. The rural road network leaves millions diconnected from markets and services, hampering agricultural productivity. Urban–rural links are poor. Freight tariffs are high, less because of poor roads but more due to cartelization of the trucking industry and inadequate competition. The Trans-Africa Highway, a symbol of modern Africa, has long gaps.
Chapter 11
Following economic liberalization and major improvements to the road network, most of the continent’s railways (except for those of South Africa) lost their economic edge. Few still play an integral role in the economy, except to link mining sites to ports. As a result of declining traffic, few railways are able to generate significant revenues to fund investments: the remaining passenger lines fail to recover costs, and freight service tariffs are constrained by road competition. The standard policy response has been to concession many of Africa’s railways. But while concessions have led to significant service improvements and helped to regain market share, they have not proved capable of generating enough revenue to finance much-needed track rehabilitation.
Chapter 12
Since the mid-1990s, general and containerized cargo passing through Africa’s public ports has tripled in volume. But many ports are both poorly equipped and poorly integrated with road and rail links. Most of Africa’s ports are too small to attract direct calls from international shipping lines, yet an efficient hub and spoke system for transshipment was yet to develop. Many ports fall short of international best practice in equipment and in efficiency of operation. The answer may lie in converting publicly owned and operated ports to the so-called landlord system, where port management is contracted out to an independent operator that adheres to solid business principles and adopts practices of the most sophisticated ports.
Chapter 13
Africa has seen strong growth in air traffic in recent years, but regional disparities are great. The eastern and southern regions are developing rapidly around three major hubs—Addis Ababa, Johannesburg, and Nairobi—each associated with a successful national carrier. Central and West Africa lack an effective hub and strong carrier, though several nonviable flag carriers linger on. As operating costs have soared with the price of jet fuel, many countries have seen their air connections shrivel. Infrastructure capacity is not a serious constraint, but air traffic control facilities need to be upgraded to improve Africa's baleful safety record. Full liberalization laid out in the Yamassoukro Decision and strengthening regulatory oversight are key issues facing the sector.
Chapter 14
Africa’s hydrology is particularly challenging. National boundaries bisect 60 of the region’s major river basins, complicating water resource management. Exceptionally high variations in rainfall between years and across seasons lead to severe cycles of flood and drought, necessitating large-scale storage to buffer the shocks. Water resources in Sub-Saharan Africa are generally underutilized, yet conflicts between users abound. As a result, Africa must invest heavily both in transboundary river basin organizations and major storage infrastructure to facilitate rational management and ensure that water is available when and where needed.
Chapter 15
Less than 5% of Africa’s agricultural land—barely 7 million hectares—is equipped for irrigation, and much of the equipment is in need of rehabilitation. An additional 7 million hectares could be opened up to irrigation if spending increased to $3.3 billion a year. The bulk of this would be small-scale irrigation with the remainder consistign of large scale schemes associated with large or existing dams. Viability hinges on keeping development costs to no more than $3000 per hectare, and focusing irrigation efforts on higher value crops yielding at least $7000 per hectare per year. Done right, an aggressive scale-up of investment in irrigation could offset the anticipated adverse effects of climate change on food security.
Chapter 16
Coverage of piped water has barely expanded in recent years, making it unlikely that many countries will reach the Millennium Development Goal for access to an improved water source. Chapter 16 estimates the annual price tag for reaching the goal at $15 billion, far greater than present-day spending ($3.6 billion). While some headway could be made by improving the efficiency of utilities (they currently waste $2.7 billion a year) and improving cost recovery (to capture an additional $1.8 billion), an annual funding gap of $7.8 billion would remain. The solution lies in exploiting simpler forms of service such as public standposts, boreholes, and latrines.
Chapter 17
A third of Africans continue to practice open defecation, and half rely on unimproved latrines, the health effects of which are largely unknown. Despite this sobering picture, progress has been made in recent years by individual households eager to protect their health and improve their quality of life. The immediate sanitation challenge differs depending on prevailing practice. Where open defecation prevails, the policy focus should be on hygiene education. Where there is already widespread adoption of latrines, the challenge is how facilitate upgrading to improved models. Where improved sanitation is already prevalent, the key question is how to develop low-cost sewerage in the most densely populated areas.
