AfDB Panel Discussants Say Addressing Infrastructure Gap is Key to Africa’s Transformation

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Lack of sufficient and reliable infrastructure continues to constrain Africa's potential for growth and economic transformation.

This view was the focus of a high level  debate on the theme, “Africa Transforming Africa” at the ongoing annual meetings of the African Development Bank(AfDB), where participants underscored the continent’s infrastructure deficit across all sectors including roads, water , energy, transport and poor communication networks as a key issue limiting the continent's economic transformation.

Contributing to the AfDB President, Donald Kaberuka underscored that though the continent faces a financing gap for its infrastructure projects, better coordination at the institutional level is also needed to address the infrastructure gap.

He particularly referred to the inefficiency of institutions across the continent that not only cause unnecessary delays but also constitute major constraints to implementation of infrastructure projects.

“It (Africa’s infrastructure problem) is not just about money, many other things need to be fixed. We need to fix regulation and institutions,” Mr Kaberuka said. He highlighted the need for a better institutional framework to facilitate implementation of infrastructure projects.

The AfDB President emphasized the need for regional economic communities such as the EAC, ECOWAS and SADC to take up a leading role in addressing the continent’s infrastructure deficit.

“We have enough institutions in Africa but we need to get these institutions working.  The Bank is ready to work with regional economic blocs,” he said.

However, the AfDB President also noted that it is necessary for African countries to engage emerging markets for resources to meet the increasing financing needs for infrastructure development.

“The big money is in emerging markets,” Dr. Kaberuka said, adding that resources from emerging markets can complement existing resources such diaspora funds.

Lack of basic infrastructure such as dependable electricity supply hampers production; the absence of good roads slows transportation; and insufficient access to modern technology limiting the continent’s industrialization and integration into the global market place.

The resultant inefficiencies and wastage make Africa the most difficult and expensive place in which to do business; they also slow economic growth and frustrate general development.

Aware that this sector (infrastructure) is lagging behind, the Bank has, since its establishment in 1967, favoured infrastructure by devoting 36 per cent of its total commitments, about USD 52 billion to this sector.

For her part, Nigeria’s finance minister, and former World Bank Managing Director, Ngozi Okonjo Iweala, underscored the need to mobilise more resources to finance the infrastructure gap.

“There is a need to replenish funding for infrastructure. It is not only money (behind Africa’s infrastructure deficit) but we need the money,” Mrs. Okonjo-Iweala, said, emphasizing the need for countries to step up investment in infrastructure.

She also highlighted the need for a continental institution to coordinate infrastructure projects on the continent.

According to Andrew Alli, President and Chief Executive Officer of Africa Finance Corporation, addressing Africa’s infrastructure gap not only needs innovative financing mechanisms but also improved investment climate on the continent.

“We have most instruments for people to invest now – what we need is to improve the investment climate.  There is global competition for investment money,” he said.

Mr Alli also underscored the need for governments to improve their regulatory frameworks to facilitate private investment.

“We need quicker and systematic approach,” he said, adding that the presence of lengthy procedures not only delays projects but is also a disincentive for private investment.

However, Eleni  Gabre  Madhi, Chief Executive Officer of  the Ethiopian Commodity Exchange, maintains that in addition to addressing the infrastructure gap, Africa has to step up investment in the agriculture sector to have meaningful economic growth that will lift millions out of poverty.

She also underscored the need for governments to put in place incentives for the African Diaspora to return home rather than merely concentrating on attracting remittances.

The high level debate was jointly organized by the African Development Bank and African Finance Corporation.

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