Infrastructure Rising in Africa

Tom Cargill, Bechtel

Tom Cargill, Africa specialist at Bechtel, explores the role infrastructure plays in unlocking growth on the continent and the opportunities for businesses to play a part. 

The Africa Rising narrative is wearing a bit thin, with even the influential head of the African Development Bank, Donald Kaberuka, stating he believes it far too simplistic to describe the varied trajectories of Africa's 54 countries - one third of the world's total – in this way.

"We need to work together - governments, industry, and indeed civil society - to address these complex issues together. The economic benefits will be enormous."

Having worked on business and policy issues related to Africa for over ten years, I am seeing a sea change in western investor attitudes to the continent - a growing recognition that a civil conflict in one country, tragic as that is, does not impact the promising performance prospects for countries as diverse as Gabon, Sierra Leone, Mozambique or Tanzania.

Indeed, the recent global financial crisis was the first time we saw Africa's economic prospects decoupled from those of Europe and North America, and Africa was the only global region not to enter recession - in fact, after a small dip, economic growth accelerated across the continent, to a point where about half of the world's 10 fastest growing economies have been in Africa for some years.

To take just one example, Sierra Leone, once a byword for conflict, is attaining more stability and democracy than many of its peers outside Africa, and is enjoying the second highest economic growth in the world.

There are signs though that, after ten years of reforms, economic growth is beginning to plateau, and struggling to reach the 7% target that many experts claim is required for growth to outstrip population growth and to transform many of the poorest countries into comfortably middle income economies.

"Economic growth accelerated across the continent, to a point where about half of the world's 10 fastest growing economies have been Africa for some years."

The missing element? Infrastructure.  

According to the World Bank, African states collectively are spending only half of the$93 billion dollars a year required to make up for a massive deficit in all forms of infrastructure across the continent. From insufficient economic diversification to high trade costs, lack of infrastructure appears again and again as an obstacle to growth.

The issue is how to fund it sustainably. That last word is important, because whilst companies from emerging markets have played an often valuable role in providing basic and urgently required roads, rail and other links, there are increasing questions over issues such as quality and sustainability, including of the debt offered by some governments.

Now African states are increasingly looking to other partners, including from the UK, for alternative commercially viable solutions and, though early days, these are beginning to emerge. The challenge for African governments, as for many others, is to prioritise projects, and to build momentum around them. Again, there are signs of this happening, and the African Union's Programme for Infrastructure Development in Africa recently highlighted 16 priority projects across the continent that political leaders have chosen to champion (see below).

But it is a race against time, with population growth and youth unemployment threatening to unravel progress unless some of these projects are implemented soon.

A growing number of multinational and UK based companies are recognising there is opportunity here, and the UK government itself is playing an important role in supporting them.  But this is a prime example of where the challenges and opportunities are larger than any company or government, no matter how big, can handle alone. We need to work together - governments, industry, and indeed civil society - to address these complex issues together. The economic benefits will be enormous.

Programme for Infrastructure Development in Africa, Priority Action Plan

1.    Ruzizi III Hydropower Project, Burundi, Democratic Republic of Congo/Rwanda, $600M

2.    Dar es Salaam Port Expansion, Tanzania, $384M

3.    Serenge-Nakonde Road (T2), Zambia, $674M

4.    Nigeria-Algeria Gas Pipeline, Nigeria, Niger, Algeria, $23.7bn

5.    Modernisation of Dakar-Bamako Rail Line, Senegal/Mali, $3bn

6.    Sambangalou Hydropower Project, Gambia/Guinea Conakry, Guinea Bissau, Senegal, $1.1bn

7.    Abidjan-Lagos Coastal Corridor, Nigeria, Benin, Togo, Ghana, Cote d’Ivoire,, $67.2M

8.    Lusaka-Lilongwe ICT Terrestrial Fibre Optic, Zambia/Malawi, $1.5M

9     Zambia-Tanzania-Kenya Transmission Line, price not stated

10   North Africa Transmission Corridor, Egypt, Libya, Tunisia, Morocco, price not known

11   Abidjan Ouagadougou Road-Rail Projects, Cote d’Ivoire, Burkina Faso, $600M

12   Douala Bangui Ndjamena Corridor Road –Rail Project, Cameroon, Central African Republic, Chad, price not known.

13   Kampala Jinja Road Upgrading, Uganda, $74M

14   Juba Torit Kapoeta Nadapal Eldoret Road Project, South Sudan, $420M

15   Batoka Gorge Hydropower Project, Zimbabe/Zambia, $6bn

16   Brazzaville Kinshasa Road Rail Bridge Project and the Kinshasa Illebo Railways, Democratic Republic of Congo, $1.65bn

(source: Financing Africa's Infrastructure Development, Dakar Financing Summit for Africa's Infrastructure, June 2014.