Africa needs $93bn yearly for infrastructure, says report

Sub-Saharan Africa needs to double its infrastructure spending to $93 billion a year, 15 per cent of regional output, to drag its road, water and power networks into the 21st century, a report said on Thursday.

The research compiled by the Infrastructure Consortium for Africa (ICA), identified the continent’s woeful electricity grids as its most pressing challenge, with 30 countries facing regular blackouts and high premiums for emergency power.

Despite the gulf between its target figure and the $45 billion spent now, the report said governments could narrow the funding gap to $31 billion by making $17 billion in relatively simple efficiency gains, such as making more electricity users pay their bills.

The report said that infrastructure improvements to date, mainly in telecoms, has accounted for more than half of the pacy growth rates of recent years on the poorest continent. Analysts and policymakers have tended to regard high commodity prices, debt relief and improved governance as drivers of the five per cent average annual growth experienced from 2003 to 2008.

But frequent blackouts and poor roads still cause headaches and unnecessary costs for business and trade, the report said.

If all sub-Saharan Africa’s 48 countries caught up with Mauritius, the Indian Ocean island that leads the region in infrastructure terms, overall growth would rise by 2.2 percentage points, it added.

“In most African countries, particularly the lower-income countries, infrastructure emerges as a major constraint on doing business, depressing firm productivity by about 40 per cent.”

Lights out

In the power sector, sub-Saharan Africa needs to build 7,000 megawatts of capacity a year to meet the demand of the region’s 800 million people, who currently have access to the same amount of power as Spain, with a population of just 45 million.

“Power consumption, at 124 kilowatt-hours per capita annually and falling, is only 10 per cent of that found elsewhere in the developing world, barely enough to power one 100-watt lightbulb per person for three hours a day,” the report said.

In other comparisons highlighting the extent of the problems, the report said the region had less than a quarter of the paved roads found in other parts of the developing world – but three-quarters the number of mobile phones.

Poor economies of scale or lack of competition in many countries meant Africa’s services costs were “exceptionally high by global standards”.

“Whether for power, water, road freight, mobile telephones, or internet services, the tariffs paid in Africa are several multiples of those paid in other parts of the developing world.”

For instance, moving a tonne of goods one kilometre in Africa costs between 4 and 14 U.S. cents, compared to between 1 and 4 cents in other developing regions, the report said.

African taxpayers are funding two-thirds of the current spending, with the remaining coming from outside sources, such as private investors or overseas aid. Private investment was highest in technology and telecoms, the report said.

The ICA was launched at a G8 Summit in Scotland in 2005 and its members include, among others, the G8, the World Bank, the African Development Bank and European Commission.