World Bank urges in­fras­truc­ture fo­cus

Sunday Express - - BUSINESS JOURNAL -

LE­SOTHO and other Sub Sa­ha­ran African coun­tries’ ef­forts at poverty re­duc­tion and eco­nomic de­vel­op­ment are be­ing ham­pered by low lev­els of pub­lic in­vest­ment in in­fras­truc­ture, the World Bank (WB) has found. The find­ings were made in the WB’s lat­est edi­tion of the Africa’s Pulse pub­li­ca­tion which analy­ses trends in in­fras­truc­ture quan­tity, qual­ity and ac­cess. The re­port also ex­plores the re­la­tion­ship be­tween in­fras­truc­ture growth and eco­nomic growth in the re­gion; doc­u­ments stylised facts on pub­lic in­vest­ment in the re­gion; and ex­am­ines the qual­ity of in­fras­truc­ture spend­ing. Ac­cord­ing to the re­port, eco­nomic growth in sub-Sa­ha­ran Africa is seen ris­ing to 2.6 per­cent this year and fur­ther to 3.2 per­cent in 2018 and 3.5 per­cent in 2019. “The up­turn in eco­nomic ac­tiv­ity is ex­pected to con­tinue in 2018-19, re­flect­ing im­prove­ments in com­mod­ity prices, a pickup in global growth, and more sup­port­ive do­mes­tic con­di­tions,” part of the re­port states. In ad­di­tion, the re­port com­mends Sub-Sa­ha­ran Africa for the great progress in telecom­mu­ni­ca­tions cov­er­age in the past 25 years, ex­pand­ing at a fast pace across both low- and mid­dle-in­come coun­tries. It also states that ac­cess to safe wa­ter has also in­creased, from 51% of the pop­u­la­tion in 1990 to 77% in 2015.

How­ever, for all the achieve­ments, the re­port notes that the sub-con­ti­nent con­tin­ues to ex­pe­ri­ence vast and deeply in­grained chal­lenges.

It states that pub­lic cap­i­tal spend­ing lev­els were too low to ad­dress the re­gion’s in­fras­truc­ture needs.

It says that an­nual pub­lic spend­ing on in­fras­truc­ture was 2 per­cent of GDP in 2009 to 2015.

“Roads ac­counted for two-thirds of over­all in­fras­truc­ture in­vest­ments in the re­gion,” the re­port states, adding, “Cap­i­tal spend­ing on elec­tric­ity and wa­ter sup­ply and san­i­ta­tion each ac­counted for 15% of to­tal cap­i­tal ex­pen­di­tures”.

It fur­ther states that lit­tle progress had been made in per capita elec­tric­i­ty­gen­er­at­ing ca­pac­ity in over two decades and only 35% of the pop­u­la­tion in most coun­tries had ac­cess to elec­tric­ity, with ru­ral ac­cess rates less than one-third of the ur­ban ones.

Trans­port in­fras­truc­ture was also said to be lag­ging be­hind with Sub-Sa­ha­ran Africa be­ing the only re­gion in the world where road den­sity has de­clined over the past 20 years.

“When analysing pub­lic spend­ing in in­fras­truc­ture, coun­tries spend sig­nif­i­cantly less money than they ac­tu­ally al­lo­cate to projects. This re­duces the ex­e­cu­tion of projects ear­marked for in­vest­ment each year, a clear sign of the in­ef­fi­cien­cies per­va­sive in the sec­tor.”

The re­port rec­om­mended that the coun­tries should ad­dress in­ef­fi­cien­cies that af­fected pub­lic and pri­vate in­vest­ment in in­fras­truc­ture, not­ing that this was the only way to en­sure that such in­vest­ments lived up to their po­ten­tial as a strate­gic tool for poverty re­duc­tion and eco­nomic de­vel­op­ment.

“The growth ben­e­fits of clos­ing Sub­Sa­ha­ran Africa’s in­fras­truc­ture quan­tity and qual­ity gaps are po­ten­tially large. Catch­ing up to the me­dian of the rest of the de­vel­op­ing world would in­crease growth in GDP per capita by 1.7 per­cent­age points per year, and clos­ing the gap rel­a­tive to the best per­form­ers would lift this growth by 2.6 per­cent­age points per year.

“Clos­ing the gap in elec­tric­ity–gen­er­at­ing ca­pac­ity yields the largest po­ten­tial ben­e­fit, and sub­stan­tial gains also arise from nar­row­ing the gap in the length of the road net­work,” the re­port states.

Mean­while, the gov­ern­ment of Le­sotho had pro­posed M2 bil­lion dur­ing the 2016/17 fi­nan­cial year to­wards in­fras­truc­ture de­vel­op­ment of which M1.2 bil­lion was ear­marked for the Min­istry of Pub­lic Works and Trans­port to de­sign, su­per­vise and main­tain pub­lic as­sets.

And the re­port sug­gests that a ro­bust in­sti­tu­tional and reg­u­la­tory frame­work would be crit­i­cal in at­tract­ing pri­vate in­vest­ment for in­fras­truc­ture projects.

“The im­pact of pub­lic in­vest­ment on growth can be en­hanced by im­ple­ment­ing poli­cies that foster the ef­fi­ciency of pub­lic in­vest­ment.

“For in­stance, im­prov­ing the in­sti­tu­tions and pro­ce­dures gov­ern­ing pro­ject ap­praisal, se­lec­tion, and mon­i­tor­ing can ren­der con­sid­er­able eco­nomic div­i­dends.

“Ev­i­dence sug­gests that coun­tries with sound pub­lic in­vest­ment management sys­tems tend to have lower but more ef­fi­cient lev­els of pub­lic in­vest­ment, crowd in more pri­vate in­vest­ment, and ex­hibit higher growth rates,” the re­port states.

pUB­liC Works and trans­port Min­is­ter tšoeu

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