Friday, December 19, 2008



By Andrew Maggs Johannesburg

THE cost of addressing Africa's infrastructure deficit is estimated at $38bn in investment each year and a further $37bn a year in operations and maintenance.

This is one of the key findings of an ongoing study as part of the Africa Infrastructure Country Diagnostic (AICD) initiative, which is being implemented by the World Bank on behalf of a steering committee that represents the African Union, Nepad, regional economic communities in Africa, the African Development Bank and major infrastructure donors.

Focusing initially on 24 countries that collectively account for about 85 per cent of the gross domestic product, population and infrastructure aid flows into sub- Saharan Africa, the AICD seeks to expand the knowledge and understanding of physical infrastructure in Africa and provide a baseline against which future improvements in infrastructure services can be measured. This will make it possible to monitor better results achieved from donor support.

Given the criticism that assistance from the donor community is all to often unco-ordinated in Africa, it is hoped that the AICD will contribute to a more focused and harmonised approach to managing and utilising donor resources.

The AICD suggests that greater emphasis needs to be placed on regional initiatives to exploit Africa's resources and existing infrastructures fully. Currently the low levels of intraregional connectivity, whether measured in terms of road and rail links or power interconnectors, are doing little to accelerate development on the continent. Africa's small and isolated economies are simply too small to go it alone, according to the AICD. The creation of one-stop border posts and measures to improve linkages between ports and upstream road and rail corridors, as well as the administrative efficiency of ports, are seen as important to initiatives to bring about greater regional efficiencies.

At present, the absence of a smooth interface between maritime and land transport systems means that most of Africa's containers are "stuffed and stripped" in the vicinity of ports, rather than used as a means of facilitating multimodal transport. This practice, combined with inefficient port management, leads to truck cycle times of four to 10 hours in Africa's ports compared with one hour in other parts of the world. Similarly, container dwell times range from six to 15 days compared with seven.

Arguably the best example of Africa's failure to share resources is in the power sector. Although sub-Saharan Africa is generously endowed with hydro resources, the region has failed to exploit its power-generation potential. The AICD estimates that $500m a year through to 2015 would have to be invested in 28 gigawatt of inter-connectors to make Africa's regional power pools a reality and thus reduce the cost of power across the continent.

Although the figure appears high, the return on these investments could be as high as 160 per cent in the case of southern Africa.

For South African companies, the state of Africa's infrastructure may well be a double-edged sword. While infrastructure constraints may compromise trade in so far as it adds to the landed price of imports from SA and extends the length of delivery times, the advantage lies in reconstruction and development opportunities for contractors, consultants and exporters of goods and equipment who seek to participate in large- scale infrastructure projects.

While the cost of addressing Africa's infrastructure problem is higher than previously estimated, according to the AICD, it is comparatively modest by global standards. And although there is no quick fix to the problem, the prospects for securing funding for development projects remain favourable despite the recent credit crisis.

However, can sufficient co-operation be secured among Africa's leadership to ensure that the continent's resources are shared and that regional priorities are not overtaken by country-specific development agendas?

The writer consults to the construction industry, providing business intelligence, research and assisting in strategy compilation