“This growing infrastructure demand presents a critical challenge for Africa as the continent seeks to compete in global and regional trade markets that rely on just-in-time production and flexible, speedy and reliable delivery. Closing the infrastructure deficit is vital for economic prosperity and sustainable development.”
So says Shem Simuyemba, chief infrastructure economist at the African Development Bank (AfDB). In the Commonwealth Business Council’s 2013 Africa Infrastructure Investment Report, Simuyemba introduces the initiatives covered by the Programme for Infrastructure Development in Africa (PIDA) and highlights some investment opportunities presented by Africa’s infrastructure deficit.
“Numerous studies, analysis and forums, conducted by the AfDB and others, have brought out the fact that one of the biggest constraints to Africa’s growth and competitiveness has been fragmented, inadequate and underperforming infrastructure systems in terms of transport, ICT, energy and water,” stated Simuyemba. “The key to unlocking Africa’s growth potential is investment in its infrastructure.”
PIDA was recently formulated by a number of partners – including the African Union Commission, AfDB, the NEPAD Planning and Coordinating Agency, the UN Economic Commission for Africa (UNECA), the Regional Economic Communities in Africa, with contributions from African countries. In January 2012, PIDA was approved by the African governments and heads of state at their 18th Summit in Addis Ababa.
“PIDA provides a strategic framework for African stakeholders and partners to build the infrastructure necessary for more integrated transport, energy, ICT and trans-boundary water networks to boost trade, spark growth and create jobs,” explained Simuyemba.
Africa’s infrastructure demands and opportunities for investment
PIDA estimates that the average economic growth rate for African countries will be around 6% per year between 2010 and 2040. According to Simuyemba, this growth will be driven in part by a rapidly growing population, rising levels of education, and improving technology absorption. “This growth implies that, over the 30 years to 2040, the GDP of African countries will multiply six-fold, and the average per capita income will rise above US$10,000 for all countries.”
However, this expected growth will inflate the demand for infrastructure, which Simuyemba argues is already “one of the continent’s greatest impediments to sustainable development”.
If this growth is achieved, Africa’s infrastructure will need vital investment to meet the predicted 2040 demands in power, transport, water and the ICT sector. Simuyemba stresses that in order to unlock the continent’s infrastructure potential, leveraging private sector financing will be critical.
Power: The power demand in Africa in 2010 was 590 terawatt hours (TWh). It is estimated that by 2040 this demand will increase to over 3,100 TWh, which is almost an average growth rate of 6% per year. “To keep pace, installed power generation capacity must rise from present levels of 125 GW (comparable to the United Kingdom) to almost 700 GW in 2040,” noted Simuyemba.
According to PIDA, there are opportunities for investment in Africa’s energy in:
- Hydro power plants such as the proposed Inga project in the Congo
- Transmission lines and interconnectors
- Oil pipelines
- Gas pipelines
Transport: It is estimated that by 2040 transport volumes will increase by six to eight times the current amount, while some landlocked countries will see volumes increase by up to 14 times. In addition, port throughput is expected to rise to two billion tons in the year 2040, a huge growth from its 2009 levels of 265 million tons.
The following investment opportunities in transport infrastructure have been highlighted:
- The Trans-Africa Highway (TAH) network
- The transport corridors
- The Africa hub port and railway projects
Water: The predicted water needs for the year 2040 will put some of Africa’s river basins under “immense ecological pressure”, according to Simuyemba. These include the Nile, Orange, Niger and Volta. To avoid this, Africa would need to invest in measures for sustainable water management, such as the development of multi-purpose dams and building the capacity of the continent’s lake and river basin organisations for the purpose of planning and managing hydraulic infrastructure. “The water-food-energy nexus is particularly critical in this respect,” added Simuyemba.
Investment opportunities in Africa’s water include:
- Multi-purpose dams such as Fomi, Palambo and Gourbassy
- Water transfer projects such as Lesotho Highlands Water Project
- Management systems/infrastructure for river and lake basins
ICT: Before the year 2020, the information and technology demand will grow significantly, “as Africa catches up with broadband,” stated Simuyemba. “Demand, around 300 gigabits per second in 2009, will reach 6,000 gigabits per second by 2018.”
PIDA proposes the following ICT infrastructure investment opportunities:
- National and regional integrated broadband infrastructure across Africa
- Internet infrastructure (exchange points) across Africa