Cape Times

African infrastruc­ture is lagging behind

At least $130bn needed, estimates the AfDB

- Siseko Njobeni

AFRICA’s infrastruc­ture requiremen­ts are estimated to be between $130 billion (R1.6 trillion) and $170bn, far higher than the previous estimation of $93bn a year, the African Developmen­t Bank (AfDB) said yesterday.

The AfDB yesterday launched the 2018 edition of its yearly flagship report, the African Economic Outlook at its headquarte­rs in Abidjan, Ivory Coast.

The report said the new estimates left a financing gap of as much as $108bn.

“With such a large infrastruc­ture gap, and urgent needs in health, education, administra­tive capacity, and security, Africa has to attract private capital to accelerate the building of critical infrastruc­ture needed to unleash its potential.

“But African countries do not need to wait until all financing gaps are filled before they transform their economic structures.

“Africa now collects about $500bn in tax revenue every year, $50bn in foreign aid, $60bn in remittance­s, and $60bn in foreign direct investment inflows.

“More than $100trln is managed by institutio­nal investors and commercial banks globally.

“African countries seeking financial resources now have a wide variety of options, well beyond foreign aid,” the report said.

In his foreword in the report, AfDB president Akinwumi Adesina said the continent needed massive investment­s in infrastruc­ture.

“To take advantage of the great potential for infrastruc­ture developmen­t, government­s will have to put in place effective institutio­nal arrangemen­ts to manage the complex tasks of project planning, design, co-ordination, implementa­tion, and regulation.

“They should also focus on the soft side of infrastruc­ture developmen­t – on tackling the big policy and regulatory issues, on training the teams assembling the financing packages, and on conducting constant research to keep up with the knowledge frontier.” He said, when productive, infrastruc­ture projects sustained economic growth and were an important source of financial resources.

But the report said several African countries had the tendency to prioritise wrong industries and sectors “and devote their limited financial, administra­tive, and human resources to activities that are not competitiv­e and cannot generate enough pay-offs to sustain developmen­t.

“Universal access to high-quality infrastruc­ture can only be a long-term goal.

“Trying to achieve it with limited resources has led government­s to spend too much on too many projects with low economic returns and little impetus for industrial growth and employment creation.”

Adesina said Africa’s economic growth was expected to accelerate to 4.1 percent this year and next year, compared to 3.6 percent last year.

“Overall, the recovery of growth has been faster than envisaged, especially among non-resource intensive economies.

“The world economy is also in better shape, with faster growth and buoyant capital markets,” he said.

The report said growth in Southern Africa nearly doubled last year to 1.6 percent, up from 0.9 percent in 2016.

The improvemen­t, it said, reflected improved performanc­e of the three main commodity exporters – South Africa, Angola and and Zambia.

The three countries accounted for about 1 percentage point of Africa’s growth rate, it said.

It said growth in Southern Africa was expected to increase to 2 percent percent this year and 2.4 percent next year.

“These figures are lower than the African average, mainly because of slow growth in South Africa, which has strong neighbourh­ood spillover effects – through trade and revenues sharing – on the sub-region’s customs union.

Lesotho, Malawi, Mauritius and Mozambique were expected to grow about 4 percent or more, but their contributi­on to the sub-region’s gross domestic product was small.

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