Bridging Africa’s Infrastructure Development Knowledge Gap
Given the positive correlation between infrastructure improvements and GDP growth, this blog addresses the importance of having up-to-date data available for appropriate synthetic policy indicators in order to best treat key infrastructure policy questions. Through analysis of the most recently available African Economic Outlook infrastructure services data, it is clear that a striking infrastructure information challenge remains. The blog discusses a recent AfDB initiative, namely the African Infrastructure Development Index through the Africa Infrastructure Knowledge Program, as a tool to overcome the persistent information barrier by bringing much-needed up-to-date data on the status of infrastructure upon which policy-making can be made. It concludes by making an innovative proposal on how the data collection can be further improved.
US $93 Billion: How long must we sing this song?
We have often heard that Sub-Saharan Africa needs US $93 billion per year to build the infrastructure to support its growth and to meet its stated MDGs. Two-thirds of that sum is for investments in new physical infrastructure; the remaining third, for operations and maintenance of existing assets. Moreover, Africa spends US $45 billion a year on infrastructure. Since investment in infrastructure accounts for more than 50 per cent of the recent improvement in economic growth in Africa, it has the potential to achieve even more. Hence, it is a matter of some concern that this figure was calculated in 2008. This is not all, just as with the now famous night time map, which shows Africa as still in the dark in terms of infrastructure compared to the rest of the world, there is still in 2013 a striking absence of systematic, comprehensive and reliable information on even the most elementary data – on quantity and quality of infrastructure stocks, access to services, prices and costs, efficiency parameters, and historic spending. Such high information asymmetry makes it is tremendously difficult to evaluate the success of past interventions, prioritize current allocations, and provide a benchmark to measure future progress.
A new tool to deal with this information challenge
The AfDB has developed an Africa Infrastructure Development Index (AIDI) to monitor the status and provide comparative information on the progress of infrastructure development across African countries. The first edition of this index was published in April 2011 and the latest bulletin published in May 2013 extends its coverage to the period 2000-2010. The AIDI will henceforth be updated on a yearly basis. The component data used for AIDI include: net electricity generation (kWh per capita); telephone subscribers (% population); paved roads (% total roads); sanitation access; and water access that have an established linkage with infrastructure development. These components are further disaggregated into nine indicators that have a direct or indirect impact on productivity and economic growth. The data can easily be accessed via Table 15 – Access to Services – of the Statistical Annex of the African Economic Outlook website. The latest version of the AEO was released at the AfDB’s Annual Meeting in Marrakech. The key infrastructure findings according to the AEO are as follows:
Analyzing the Main telephone line per 100 inhabitants, we find that from 2001 to 2008 (the most recent AEO online figure) Comoros experienced the highest (+263%) percentage change ahead of Ethiopia (+232%); Mauritania (+220%) and Somalia (+216%). However, what characterizes all these Least Developed Countries (LDCs) is the very low percentage of the population, which actually had access to main telephone lines in both 2001 and 2008, although they were all slightly above the lowest ranked country, respectively Democratic Republic of Congo (0.02%) in 2001 and Liberia (0.05%) in 2008. In 2001, Seychelles had the highest percentage at 25.39%, whereas Mauritius with 28% was the top performer in 2008.
If we move on to Africa’s greatest infrastructure services success story as measured by the indicator Mobile line per 100 inhabitants, the figures clearly show why there is no doubt about Africa having experienced a Mobile Phone Revolution. In 2001, out of Africa’s 53 countries, a staggering 34 countries had less than 1% of their populations with access to mobile lines, of which Comoros, Guinea Bissau and São Tomé and Príncipe didn’t even have a single mobile phone subscriber. Seven years down the line the picture had completely changed. Surprisingly, the Seychelles went from having the highest percentage of 32% in 2001 to having the lowest overall percentage in 2008 with only 13.7%, whereas the average citizen in Guinea Bissau, which didn’t have a single subscriber in 2001, has more than two mobile lines. Three other countries also have more than one mobile line per inhabitant, these are Comoros (+118%), Ethiopia (+107%) and Libya (+107%).
Moving from telecommunications to Access to electricity, the sheer magnitude of Africa’s remaining infrastructure challenges remains clear. Perhaps better than with any of the other utility infrastructure variables there seems to be a close positive correlation between income per capita and electricity consumption measured in millions of kWh. South Africa, an upper middle income country, was ranked number one in both 2001 and 2007, even when adjusted for population size, with electricity consumption increasing by 22% during this period. The worst places to access electricity were Equatorial Guinea in 2001 with only 46 million kWh, and Sierra Leone in 2007 with only 44 million kWh due to a fall of 65%; whereas Equatorial Guinea’s consumption had increased by 317%, a higher percentage than any other country on the continent. But between those two extremes in the bottom of the ranking we especially find landlocked countries such as Burkina Faso, Burundi, Central African Republic, Chad, Ethiopia, Mali, Niger, Rwanda and Uganda only surpassing fragile states such as Sierra Leone and Somalia in 2007 when it comes to per capita electricity consumption.
Since the AEO doesn’t contain the Paved Roads (% total roads) indicator, we will have to resort to another available online data source. The first place to start looking is the World Bank’s databank under infrastructure, which features 26 indicators, including roads, paved (% of total roads) with the most recent figure going back to 2010. However, most of the non-Middle Income Countries (MICs) in Sub-Saharan Africa (SSA) record figures with the most recent going back to before 2005. However, if we just compare the most recent figures in the 2000s, we find that only one country has 100% of its total roads paved and that is Mauritius (in 2005; however in 2009 the percentage had fallen to 98%); followed by Seychelles (96.5% in 2010); and Egypt (92.2% in 2010). Basically, the only other countries with a percentage above 70% are North African MICs, which again illustrates the close positive correlation between (growth in) GDP per capita and hard infrastructure development (Canning, 1999; Calderon and Serven, 2004; Bougheas et al., 1999; etc.)
The Africa Infrastructure Development Index (AIDI) results can be interpreted to identify areas of relative strength and weakness, and to assess which infrastructure components in a country need improvement in order to achieve higher levels of overall infrastructure development in the future.
There is an urgent need for complete, accurate and up-to-date infrastructure data
In 2013 we are still analyzing data from 2008 (and 2010) using the AEO online version. This can’t be right; especially knowing how important infrastructure is for ensuring that the future economic prospect of Africa’s rise is attained and sustained in the long-run. Thus, there is an urgent need to provide an accurate and up-to-date picture of the current state of Africa’s infrastructure development.
In 2005 the Infrastructure Consortium for Africa (ICA) commissioned the World Bank to undertake the Africa Infrastructure Country Diagnostic (AICD) study to generate a common quantitative baseline database against which to measure future developments. The study has been very successful in providing a wealth of cross-country data and cutting-edge knowledge on the status of the main network infrastructures in SSA for nine major sectors: air transport, ICT, irrigation, ports, power, railways, roads, sanitation, transport, water resources, and water supply. The indicators are defined to cover key areas for policy-making: affordability, access, pricing, as well as institutional, fiscal and financial aspects. Moreover, the AICD’s key findings are also related to specific themes or cross-country issues that are relevant across countries and sectors. These include spending needs/patterns, poverty and inequality, spatial development and regional integration. The AICD has illustrated the impact of packaging these data in synthetic policy indicators and standardized analytic frameworks designed to address key infrastructure policy questions.
The AICD data collection, originally conceived as a one-off stock-taking exercise coordinated by the World Bank to create a knowledge baseline, has, since 2010, been taken over by the African Development Bank. The Africa Infrastructure Knowledge Program (AIKP) builds on the AICD, but has a longer-term perspective to provide a platform for (i) reliable and timely updating of the infrastructure database; (ii) defining and developing analytic knowledge products to inform policy design, monitoring and evaluation of infrastructure development over time; and (iii) building infrastructure statistical capacity in the region through the AIKP Statistical Handbook endorsed in April 2011 and aimed at fostering evidence-based policy-making. In May 2013, under the AIKP, the AIDI has now been updated and expanded to cover the 2000-2010 period.
Africa’s infrastructure offers many opportunities, but investors are challenged by information asymmetry. This explains the need for provision of a platform for key African infrastructure initiatives (such as the Programme for Infrastructure Development in Africa, and the Africa50Fund) to promote projects, which would improve access for nearly a billion Africans who currently face the largest infrastructure gap in the world.
One option could be to launch a Regional Integration Infrastructure Data Portal, which would aim to consolidate and promote information and (project) data on infrastructure improvements and investment opportunities in Africa in general and PIDA projects in particular, through a one-stop-shop platform, which would provide a continuous global information base for the infrastructure sectors. Such a portal should feature visually compelling interactive maps and an analytical interface to create and share customized reports in one user-friendly platform. In it, users would be able to access a wide range of regional infrastructure development data from multiple international and national official sources. A joint New Partnership for Africa’s Development (NEPAD) – Regional Integration and Trade Department – Statistics Department flagship annual publication entitled “Regional Infrastructure Development Trends in Africa” would complement ICA’s Annual Report on external financial commitments/investments and disbursement to infrastructure in Africa, and could provide the much needed ongoing data collection. Such data collection would be based on a globally consistent methodology that can yield meaningful benchmarks on infrastructure performance with a necessary associated analysis of a module of core comparable indicators covering trends across regions and countries over time. This could be done, for instance, through the launch of a global infrastructure benchmarking initiative as recommended by the G20 leaders, in November 2011 when they welcomed the recommendations of the High-Level Panel for Infrastructure Development.
There is a general consensus that what is needed is a new tool for analysts, policy-makers, global investors and infrastructure project sponsors in Africa alike to overcome the persistent information barrier by helping to discover, track, and promote infrastructure investments. Such a tool would radically improve the availability, speed, and quality of information flows between these key stakeholders. This in turn could also significantly enhance the ease and speed at which financial resources find African infrastructure investment project opportunities. This endeavour might be the trigger that will bring forward the much needed up-to-date data on the status of infrastructure on the African continent.