Chronicles of Infrastructure in Africa
Episode I: Investment, Events, Policy and Technology, Opportunities (missed and realized) – with implications for African Economic Growth
Agenda 2063 is an ambitious 50-year vision of what Africa aspires to be. It is a blueprint for the economic transformation that delivers a prosperous, integrated and internationally relevant Africa. The transition from a mere aspiration to reality requires investment – where investment is the cost of change.
A multiplicity of weaknesses and challenges impede the progress of this vision, with inadequate infrastructure headlining that list. Weak or non-existent roads, rail, energy, communications, and water systems, plus deferred maintenance on existing infrastructure impose huge costs on the most basic social and economic activities.
This infrastructure challenge – an annual deficit of up to $100 billion constrains the continent’s growth undermining economic complexity and the possibility of a diversified export basket.
These challenges, notwithstanding, African governments, multilateral institutions, regional and sub-regional entities and private sector actors are making meaningful and significant investments to alter the African infrastructure landscape and this update captures some of these efforts in real time.
GUARANTEES:
World Bank Group Prepares Major Overhaul to Guarantee Business
“The World Bank Group today announced a major overhaul to its guarantee business that will deliver simplicity, improved access, and faster execution through a new, convenient marketplace. The new reforms are critical to achieving the goal of tripling annual guarantee issuance to $20 billion by 2030.”
“This is an important reform - World Bank guarantees are some of the most efficient ways to attract more private sector investment into Africa’s infrastructure.” – Sim Tshabalala, CEO Standard Bank.
“The World Bank’s guarantee programs can be instrumental in mobilising investments for critical infrastructure across emerging markets and developing economies.” – Shemara Wikramanayake, CEO & Managing Director, Macquarie Group
My colleague, Clemence Landers, is not ready to celebrate yet, however. She wants to see tangible proof that this is not just a remapping of roles “on paper”. So like Clemence, we will adopt a “wait and see” approach.
POWER:
New $1.3 bln energy fund for transmission links across Southern Africa
The Regional Transmission Infrastructure Financing Facility will have a fund life of up to 25 years and is expected (hopefully) to reach financial close ($1.3 billion) in two years. It will allow the construction of a regional grid that will allow the South African Power Pool’s 12 members to integrate their energy access.
Africa’s five power pools (CAPP), COMELEC (North Africa), EAPP, SAPP and WAPP are the building blocks for an African Single Electricity Market. The Continental Master Plan is the blueprint to develop and deliver the single electricity market. As each region integrates its generation and transmission assets – it draws ever closer to continental interconnection.
Africa’s Regional Power Pools
Image AUDA-NEPAD
PORTS:
African ports unable to benefit from the increase in vessels avoiding the Red Sea. In December, the number of vessels sailing southern Africa was up 85%,
“However, most ports in Africa are inefficient and not in the best condition to be able to fully realize all the benefits. This could be a real opportunity for Africa, but several ports were already congested due to inefficiencies. Investments are needed to enable them to compete.” – Vinny Licata
DIGITAL:
Who is on the internet in Africa? Apparently urban dwellers and predominantly men.
The 2023 ITU report, “Measuring Digital Development: Facts and Figures 2023” is out, and it shows the scale of the challenge in Africa. The report notes that Africa “…continues to lag other regions by a sizeable margin despite some improvement, where roughly four in ten men and three in ten women use the Internet.”
The gap between urban and rural access is also sizeable with “57 per cent of urban dwellers [using] the Internet in 2023 compared with just 23 per cent of people in rural areas, reflecting a ratio of 2.5 (2.9 in 2020).”
Internet usage rose from a meager 16% in 2013 to 40% in 2022. The continent experienced a 3.3% drop in 2023 and with 37% having access now.
Speaking of who’s online –
Much of west and central Africa was without internet after undersea cable failures
“Africa has a higher proportion of its internet traffic on mobile devices than any other continent, with many of its businesses relying on the internet to deliver services to their customers.
Liberia, Benin, Ghana and Burkina Faso were heavily affected, according to data from Netblocks, which monitors cybersecurity and the governance of the internet.”
After the success of mobile phones in Africa, “leapfrogging” became an overused expression for all of Africa’s challenges. But digital infrastructure might be where the concept is most likely to be realized. Protecting Africa’s access to the internet will be crucial to this opportunity.
Instead of trying to build infrastructure for the whole continent in one go, why not just start with a few SEZs. Once you have successfully built out some SEZs you have raised enough tax revenues and foreign exchange, you can start building even more and eventually connect the rest of the country.