Africa Infrastructure

8/3/2019 Africa Infrastructure

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A Time for Transformation

Africas Infrastructure:


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About AICD

The Arica Inrastructure Country Diagnostic (AICD) is an innovative knowledge program toimprove public understanding o what network inrastructure does to promote economicgrowth in Arica. By rigorously evaluating past inrastructure policy reorms, the AICD assists

policymakers in setting priorities or current inrastructure investments and provides abaseline or monitoring progress.

The AICD has undertaken unprecedented data collection and analysis on the status o themain network inrastructures, including energy, inormation and communication technolo-gies, irrigation, transport, and water and sanitation. The analysis encompasses publicexpenditure trends, uture investment needs and sector perormance reviews.

The AICD is being implemented by the World Bank on behal o a steering committeecomprising the Arican Union Commission, the New Partnership or Aricas Development,the Arican Development Bank, Aricas regional economic communities, and donorsinvesting in Arican inrastructure.

The main contributors nancing the AICD are the UK Department or InternationalDevelopment, the Public Private Inrastructure Advisory Facility, Agence Franaise de

Dveloppement, the European Commission, and the World Bank.


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The lieblood o a modern economy

Air and seaports, roads and railways, electricity grids, power stations, telecommunications,water and sanitation are critical or economic growth and sustainable development. Soundinrastructure:

Powers economic growth Enables trade Connects people and ideas Reduces poverty Protects the environment Fosters social cohesion Promotes regional integration.

But on just about any measure o inrastructurecoveragewhether road density, telephone density,generation capacity, or service coverageAricancountries are lagging behind their developing coun-try peers. And the gaps are only widening over time.

Aricas pronounced inrastructure decit is hold-ing back per capita economic growth by 2 percent-age points each year, reducing the productivity o

rms by as much as 40 percent.

Lagging infrastructure coverage

Low-income countries

Sub-Saharan OtherNormalized units Arica countries

Paved road density 31 134

Total road density 137 211

Mainline density 10 78Mobile density 55 76

Internet density 2 3

Generation capacity 37 326

Electricity coverage 16 41

Improved water 60 72

Improved sanitation 34 51

Source: Yepes and others 2008.

Note: Road density is in kilometers per kilometer

squared [?]; telephone density is in lines perthousand population; generation capacity is inmegawatts per million population; electricity,water, and sanitation coverage are in percentageo population.


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Reducing Aricas inrastructure decit

The largest decit is in power. Only one in our Aricans has access to electricity. OutsideSouth Arica, power production is barely adequate to power one light bulb per person ortwo hours each day. And in about 30 Arican countries, even those with access to power

experience regular blackouts.

On an agricultural continent, only one in three rural Aricans has access to an all-seasonroad. Those acing more than eight hours o travel to an urban center are eectivelytrapped in subsistence agriculture. Only 5 percent o agricultural land is irrigated, yet itaccounts or 20 percent o the value o agricultural produce.

During the last 20 years, coverage o household services has barely improved. On current

trends, Arica will not meet the Millennium Development Goal or water and sanitation,and universal access to household services is more than 50 years away.


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Containing exorbitant costsPoor inrastructure leads to higher costs. The prices or Arica's network inrastructure ser-vices can be two to three times higher than in the rest o the developing world...and evenhigher or amilies and businesses without reliable access to networks.

Back-up generators, or example, cost a staggering US$0.40 per kilowatt-hour to run,cutting into business prots and reducing the ability o Arican entrepreneurs tocompete in international and regional markets.

Families without piped water connections otenpay prices several times higher than utility ratesto purchase water rom kiosk operators or mobilevendors.

Regional integration oten holds the key toreducing inrastructure costs. The continentsragmentary inrastructure networks isolate smallercountries and prevent them rom harnessingecient larger scale technologies.

By trading power across national borders,Arica can save $2 billion a year in energy costs.

By laying continental submarine cables, Aricacan slash the costs o international communica-tions in hal, but only i access is competitive.

Africas high-cost infrastructure

Sub-Saharan OtherArica developing

regions

Power taris 0.020.46 0.050.1(US$/kWh)

Water taris 0.866.56 0.030.6(US$/cubic meter)

Road reight taris 0.040.14 0.010.04(US$/ton/km)

Mobile telephony 2.621.0 9.9(US$/basket/mo)

International telephony 0.4412.5 2.0(US$/3 min. call to US)

Internet dial-up service 6.7148.0 11(US$/mo)

Source:Arica Inrastructure Country Diagnostic2008.

Note: Ranges refect prices in dierent countriesand various consumption levels. Prices ortelephony and Internet represent all developingregions, including Arica.


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Raising the money: US$80 billion a year

Arica is making progress. More than 50 percent o the population now lives in range oa GSM wireless signal, up rom only 5 percent in 1999. About hal o Aricas improvedgrowth perormance is due to this wireless revolution.

To replicate this kind o success, Arica needs some $80 billionsplit evenly betweeninvestment and maintenanceto address its inrastructure decit every year. About hal thisneed relates to power alone.

In 2002 Arica received $4 billion in external nance or inrastructure.

By 2007 that number reached $20 billion, thanks to more private capital fows, develop-

ment assistance, and South-South cooperation.

Despite this welcome trend, Arica aces a unding gap o US$40 billion per year in inra-structure spending. The bulk o the unding gap is associated with the power sector. Abouta third o the gap relates to ragile states.

Bridging this enormous gap is vital or economic prosperity in Arica.


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Embracing sound policies

More money is needed, but money alone is not the answer. Prudent policies, wise man-agement, and sound maintenance can narrow the gap and address Aricas inrastructuredecit.

Arican power and water utilities lose vast sums o money due to underpricing and opera-tional ineciency. So, measures to tackle current ineciencies must accompany increasedspending.

About $4 billion a year goes to subsidies, primarily beneting richer consumers. Nearly $2 billion a year is lost to unpaid power and water bills. A urther $2 billion a year o revenue is lost to thet and leakage rom networks.

Rolling out inrastructure hardware is unlikely to deliver results without the appropriateinstitutional and regulatory sotware.

Competition matters: deregulating trucking services or liberalizing international calls canreduce monopoly prots and slash prices by about hal.

Institutions matter: improving administrative procedures at ports and border crossings

can boost the speed o Aricas international road reight beyond todays glacial 10kilometers per hour.

Building new inrastructure makes little sense i there is no provision or its maintenance.About 30 percent o Aricas inrastructure needs reurbishing, refecting chronic under-unding o maintenance. Yet every dollar spent on preventive road maintenance saves$4 in rehabilitation.


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Generating solutions

Going orward, increasing investments in Aricas inrastructure will be critical or securingeconomic growth, reducing poverty, and protecting the environment. By making sustainabledevelopment o inrastructure a priority, Arican nations will be able to orceully address thecontinent's inrastructure decit but also put in place growth-enhancing policies, projects,and programs necessary or achieving the Millennium Development Goals.

As conceived, the Arica Inrastructure Country Diagnostic provides policymakers anddevelopment practitioners with a wide range o resources and cutting-edge knowledgetools to inorm and guide the scaling-up o inrastructure investments across Arica.The AICD service oerings include:

Flagship report providing a brie, non-technical overview o the main ndings

Books and technical papers containing ndings or each inrastructure sector

Online databases and a wide range o perormance indicators to inorm and enrich decision-making

Online geographic inormation system tools that allow users to independently conduct spatialanalysis o inrastructure

Online interactive models that enable users and investors to quantiy investment needs

All AICD outputs are a public good, and will be made available or ree atwww.inrastructurearica.org later this year.


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Arica's inrastructure is by ar the most decient and costly in the developing world. Inadequate inrastructure isholding back economic growth by two percentage points each year. Solving the problem will cost US$80 billion per

year, about twice what is currently being spent. More money is desperately needed, particularly or the power sector.But money alone is not the answer. Prudent policies, wise management, and sound maintenance can make current

resources go much urther, and contribute signicantly to narrowing the inrastructure gap.

www.inrastructurearica.org

Copyrights: AICD; Photos World Bank/Arne Hoel

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Africa Infrastructure